The supply chain approach is well documented and, at any level of development, will require changes to “the way we do things around here”. It will require a business to change and this, in turn, will mean changing the thinking from a current and known position, towards a possibly unknown but planned for future (see Fig 1). As the way we think affects what we do, then the way we think is an important process to be considered.
Research suggests our brain is in two parts – the left hemisphere and the right hemisphere. At least, this is the simple view – front and back, upper and lower quadrants are other “divisions”. Indeed, research into brain activity, continues to contribute to our understanding at a rapid pace.
Meanwhile, the left and right view suggests we have a Logical Left side Brain and a Creative Right side Brain. The Left side brain will firstly conduct an analysis, will then act, and finally will feel – is the action “correct” and “right”, for example. The Right side brain works the other way, feeling, action, then analysis.
Most people are flexible in this brain wiring and of course the influences of environmental forces and the way we are nurtured, treated, handled also has a powerful impact to our thinking and to our personal behaviour. In exploring the simple left side-right side brain differences, most individuals can usefully recognise which side is the most personally representative one (see Fig 2).
As companies are collections of individuals, it is therefore possible to see left side and right companies (see Fig 3). Left-sided companies will often work with fixed assumptions for development and growth as they are incapable of “going outside of the box”. When they are pushed to change from “tradition”, they will react negatively as they fundamentally believe the way forward is “more of the same” and they see the only solution to for example, company growth, as needing a bigger share of the existing market.
The ways of thinking will also translate into all management approaches including how supply chains are managed and structured, for “as a person thinks then so they are”:
Older Approach/Linear thinking: this model has given proven benefits to the previous non supply chain ways of functional silo management. It will be seen that this approach represents linear thinking, which is classically left brain mode. This is also a major model currently used in the UK for supply chain development. By following the above left brain explanations, we can see that this means having short term task centred approaches with an incremental view of the supply chain, with relationships to the next level only. This may or may not involve a collaborative approach and will more than likely have fixed arrangements and contracts in place. The supplier may also feel that the supply chain coordination’s are all one way and that “coercive power” is being used. It will tend to use a rigid and reactive approach to customer service with scheduled and rational replenishment.
Newer approach, network thinking: here there is some attempt to go further into the supply chain using collaborative approaches and extending beyond the first supplier level. Fixed arrangements with boundaries/contracts may exist but the collaboration will be more open and sharing. Customer service can be more responsive and flexible with real-time replenishments.
Emerging Approach/Systems Thinking: here much more fluid arrangements occur with systems thinking recognising the complex interactions that affect each other player in the specific supply chain. Right brain thinking concentrates on the wholes of the supply chain and perhaps uses seamless collaboration and virtual arrangements. Collaboration will be totally open and shared, and is unbound and innovative. Each specific supply chain could be viewed as a small company in itself comprising of cross internal functions and jointly managed with suppliers / customers, maybe following a matrix/project management structure organised into specific supply chain cells with decentralised control and shared responsibility from all involved. This following the basic principles of “small within big” that has for example, worked successfully when adopting TQM and JIT methods for production cells internally within product manufacturing/assembly organisations. Such approaches were pioneered in Japan, a more natural right brain culture which have been actively adopted and managed in the UK culture. Some changing in thinking went on!
A summary of the three models on supply chain thinking can be seen in Fig 4:
There are many well known examples of former company sector leaders who have slipped from the number one position and former state-owned monopoly companies that no longer exist. Companies can therefore be slow to change their thinking. In supply chain management, the consequence of “sticking to the knitting” thinking can be as follows:
Adversary play offs with suppliers.
Long production runs of not needed products. l”Just in case” expensive stock holding.
Customers get fed up and go elsewhere.
Inspection, reworking, warranty claims.
Vertical silo management structures.
“Turf conscious” reactive “fire fighting” managers.
“Rowing the boat” upstream and resisting change.
Companies are a collection of individuals and it is the thinking of the individuals in companies that needs to change. Individuals tend to be more “happy” in one of the brain sides. This then means they can miss out on the other side. To be complete, we therefore need both sides – the classic whole brain thinking. Clearly many companies do try to reflect such whole brain thinking through their recruitment policies and in the way they structure the organisation of the business.
But for efficient and effective supply chain management then perhaps, companies and the individuals in companies need to take conscious responsibility for the thinking. Business channels change and when taking the view that supply chains now compete, this can mean thinking in a different way. Those individuals/companies who do not do this may well find that they will not be “invited to the party” in the future.
For instance, some supply chain approaches acknowledge that the supplier numbers will be reduced, yet some suppliers maintain a “head in the sand” ostrich incremental approach perhaps believing the reductions could not possibly affect them.
Our brain is very similar to everyone else’s – the difference comes from how we use it. Individuals and companies should be challenged to use the brain differently. If more on the creative right side, then the need is to be more of a logical left (see Fig 5).
If you are more on the logical left side, then the need is to be more of a creative right (see Fig 6).
The optimum and the whole will only be found by using parts from all sides of the brain. The concern is that remaining with traditionally British left side thinking that this will very likely mean that the trends and ways forward for supply chain management are never realised. This can mean missing a future of:
A few long term suppliers and joint action teams in the whole supply chain.
Short production runs with quick changeovers.
Minimal stockholding, JIT type supply through the supply chain.
Being able to serve more demanding customers.
Obtaining right first time quality throughout the supply chain.
Having process and flatter cross functional management structures.
Empowered proactive fire lighting managers.
Continuous improvement and change.
The way of thinking and the way the supply chain is structured and managed are therefore critical. The reported benefits of following a supply chain approach have been usefully documented (see Fig 7).
It will be seen that by following a supply chain approach then the inventory costs fall, profit increases and the service fulfillment increases – the “best of both worlds” for the company undertaking the approach. It is very clear that supply chain management “works”.
What is especially interesting is that the structure of the supply chain is shown. Additionally, the network thinking supply chain that goes beyond first level suppliers and the “future” one of systems thinking should indicate savings beyond those of the supply chains that stop at the first level integration only.
Thinking differently and looking for more creative and innovative ways to manage the supply chain may be a future only a few companies are able to undertake. Moving to more collaborative approaches involves win/win and involves trust. This remains a difficult aspect for left sided rational thinking companies who prefer to use the German word for partnership of partnershaft.
It would seem a possibility that supply chain development in the UK may well falter because of the prevalent way of management thinking. One thing is very sure – what worked for many years may not work for many more. Therefore there is a real challenge to learn anew and in so doing, to change. Learning and changing are indelibly connected. You cannot have one without the other. n
Stuart Emmett is an independent trainer and consultant, trading as Learn and Change. Email: stuart@learnandchange