Déjà Vu All Over Again
A. Blanton Godfrey
agodfrey@qualitydigest.com
I recently attended a workshop
on supply chain management. After a particularly good presentation
by James Tompkins, I turned to the person sitting next to
me and remarked: "Haven't we heard all this before?
Isn't this just reengineering with a new name?"
A few months earlier, while preparing for another workshop
on the same subject, I was working with the workshop's keynote
speaker, Robert Handfield, Bank of America professor of
supply chain management at North Carolina State University.
I wanted to integrate my talk on Six Sigma with his on SCM.
We both struggled with the question of the two approaches'
differences and similarities.
Supply chain management comprises many elements similar
to those of reengineering, total quality management and
Six Sigma. An organization's biggest opportunities often
cross departmental, divisional or functional boundaries.
Changing practices in one part of an organization often
beneficially affects another part's performance. Unfortunately,
most companies can manage competently only within structural
lines, and their financial systems usually discourage any
cooperation.
Both Tompkins and Handfield have developed maturity grids
for evaluating where a company stands in its SCM implementation.
It's easy to see these grids' similarity to the work of
Carnegie-Mellon's Software Engineering Institute or Hewlett-Packard
Co.'s quality maturity grid of the 1980s. The different
stages of maturity even sound similar. Of course, many of
us questioned the differences between total quality management
and Six Sigma when we were first exposed to the latter.
However, for many companies--the vast majority, in fact--many
differences exist between the two quality philosophies.
When implementing TQM, these organizations implemented pieces
of methods or selected tools--rather than linking projects
to company priorities. They'd forgotten or overlooked the
importance of focusing on bottom-line results and often
even failed to implement the solutions generated by their
teams. Senior leadership was only passively involved at
best.
Six Sigma and supply chain management do offer new ideas,
although perhaps not as many as their proponents claim.
But the new methods indicate that we're collectively becoming
smarter about managing our organizations. Driven by intense
global competition, companies actively search for every
advantage and implement new ideas at speeds only dreamed
of a few years ago.
Supply chain management's time has come. Within their
organizations, most companies still struggle with managing
across boundaries. One of supply chain management's new
ideas, or at least new emphases, is working not only across
organizational departments but also upstream and downstream
with customers and suppliers. Truly outstanding organizations
go beyond their immediate suppliers and engage their suppliers'
suppliers. They're beginning to really manage the supply
chain.
Another major new practice is the intense application
of information technologies. Many of us now recognize ideas
first introduced in reengineering. But almost 10 years ago,
information systems were far less sophisticated, the Internet
was just beginning to take off, and gains were possible
simply by flowcharting previously hidden processes. What
we now recognize as supply chain management was still in
its infancy.
A third outstanding application of SCM is its emphasis
on collaboration across organizations. This goes beyond
sharing information, straight to the problem of complex
supply chains that exist in almost every industry, where
several organizations must work closely together to design,
produce, distribute and sell to an increasingly competitive
marketplace. With SCM, we see designers co-located with
major customers, cross-functional and cross-organizational
improvement teams changing processes, shared cost information
and decision making, and long-term relationships established
between customers and suppliers throughout the supply chain.
Tompkins also emphasizes synthesis, a continuous improvement
process to harness the energy of change, and velocity, the
ideal state of synthesis in which the chain works faster
and faster.
Is this really new? In many ways, no it's not. As long
ago as 1983, I organized and led benchmarking teams from
Bell Labs, AT&T and Western Electric to study the relationships
between leading companies such as Toyota and key suppliers.
Didn't we also learn many of the ideas we now call lean
manufacturing from the Toyota Production System? Most of
the best modern business practices start within leading
organizations, are copied, modified and improved by other
leading companies, and then named and popularized by an
enterprising consultant, professor or author. Later, researchers
formalize these practices' theories and write books about
them.
The same process is now happening with supply chain management.
Companies such as Toyota, Dell, Procter & Gamble and
others are pioneering new methods, and companies within
other industries are beginning to see the significant gains
possible by incorporating many of these ideas into their
own management systems.
A. Blanton Godfrey, Ph.D., is dean and Joseph D. Moore
Distinguished University Professor at North Carolina State
University's College of Textiles. Letters to the editor
about this column can be e-mailed to letters@qualitydigest.com.
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