Consumers are driving the marketplace, and they have high expectations.
“When can I get it?” Consumers have an insatiable appetite for speed. Just a few years ago, Dell made the news that you could get a customized laptop in just a few weeks. Now, Amazon sets the pace that you can get almost anything in 2 days, and some items much faster. The perception of free delivery with their Prime program has accelerated customer’s expectations. I must admit, the other day I ordered a small household item on a Saturday afternoon, I had a credit on file, and it came on Sunday afternoon with a net charge of $0. I felt like I got something for nothing. Nice.
You might think you don’t compete with Amazon, but if you have a customer, whether a retailer or consumer, they mentally benchmark you against them. If it’s not a physical product, then speed of information is expected to be instantaneous, and Google has set that pace for all of us. Have you ever been frustrated because it took 3-4 searches to find what you are looking for? Think about that for a minute. Now apply that to your company. Do you deliver instantly or within 48 hours? It may be impossible for you to hit those downstream speeds, but you must be focused on getting faster across the whole supply chain.
The supply chain is a business process, it can be re-engineered.
There are several classic programs to review your supply chain. If you already use Six Sigma, Lean Manufacturing or Statistical Process Control, then you already have a tool to review the major steps. However, for most of us this is overkill for a classic supply chain that has less investment involved. To improve speed, you can take the simple approach to conduct a Business Process Review. This is to simply chart the process, major steps, inputs/outputs of each step, and the time required. Pay special attention to the information flow that is required for each step. Then with a cross-functional team, dive into the details, confirm the must-haves in each step, and reduce the steps and time. You will find some trends in this exercise described next.
Time Killers: Handoffs, Rework, Changes
As you address the new process, you can make significant improvements if you eliminate these items. Let me describe each one.
Hand-offs occur when one step ends, and another step begins with another party. That can be another person in the same location, or another department across the globe. Hand-offs have dead-time as it sits in queue for the next step. Studies have shown the actual work involved is typically only 10-25% of the elapsed time.
Rework is when a step is done, but, does not meet the original requirements. This causes the previous step(s) to be redone. This is especially true on prototypes having to be redone. It may have taken 30 or 60 days to make the first prototype, and now another 30-60 days is being reworked. Sure, if may go faster the second or third time, but, its rework. You will find that clarity of initial requirements or failure in quality checks are key areas to review.
Changes to the original requirements can cause major time-loss. The initial attempt may be done exactly as wanted, no re-work, but now that it is finished it is clear it must be changed. These failures in initial requirements are very costly. Pre-testing of these requirements is the key.
All these items have an information flow that you see clearly when international trade process is involved. Often a legal advisor is called in to fix the critical “information issue” and help get the process moving again, but much of this can be eliminated by looking at the entire business process and re-engineer it for flawless execution.
How does all this play out? On one assignment, Brad Menard, VP of Braumiller Consulting was instrumental at assisting me re-engineering the business process for a watch company. The initial process was 270 days (9 months) from concept to delivery of a new watch model. The whole team felt this was insane. The new process came in at 199 days. The 71 days savings was found in all areas from design, prototyping, production, and logistics. Handoffs, rework, and changes were virtually eliminated.
Although this may seem like a daunting task, knowing your supply chain from concept to delivery, is a relatively straightforward process. Often there are additional benefits gained during this review, which could include duty savings, lower transportation costs and tighter C-TPAT compliance.