Why dampen Supply Chain Variations?

Supply Chain inherently have variations. Nothing that is of surprise or unknown to a Supply Chain practitioner. Huge amount of Supply Chain resources are committed to identify root causes of the variations with a primary objective to "dampen" the variations.

I see a lot of Supply Chains professionals who dislike variations. They would like the make a detailed analysis to discover the root cause of the variation(s) leading to efforts of reducing the frequency as well as the amplitude of the variation(s). A Purchase person dislikes variations in Sales forecasts which lead to change in Procurement plans. Similarly a Production person dislikes variations in Supply Schedules. Above all the Sales person dislikes variations in Production or Logistics leading to consequences of customer relationship. Each of these links of the Supply Chain invest heavily to find ways of dampening the variations.

Question really is - In an attempt to dampen variations, what has the Supply Chain actually done? 

At a psychological level, Supply Chains have instilled a thought process of longing for "certainty". (and that never exists!) In an effort to achieve that goal, each link of the process may create more "redundancy". Supply Chain practitioners hence have a psychology of wanting to create a "risk" free Supply Chain. I think this is the first step of a long drawn ailment which then needs a very huge effort to reverse as thought processes take longer time to change.

At the practice level, Supply Chain have implemented a lot of processes & technologies which, practitioners wish, will help them dampen the variations. e.g. Demand Planning invests in Forecasting tools to improve on Forecast accuracy. Production Planners may have one of the most sophisticated technologies to plan Production & Supply, similarly the Purchase department would invest in resources to monitor the supplier schedule adherence and so on. With all that in place the race begins to calculate the ROI of these investments. So Supply Chain further goes deep in the quest to ensure lesser variability.

My point is - Instead of dampening the variations, why not "Exploit" the variations. The world of today and tomorrow will be less and less predictable. Which means variations will increase all the time. If the Supply Chain doesn't respond to those changes in any case the Supply Chain looses. And no one then talks about "Why Variations", every one talks about "How to handle the variations".

EXPLOIT the variations to your benefit. I believe that neither technology nor processes should be oriented to dampen variations, they should be geared to Exploit to variations to your organizational benefit.

Comments

  1. interesting line of thought. And how do u Exploit the variations ? or develop flexibility to benefit from it while the opposition is not .. topic for the next post !!

    ReplyDelete
  2. Completely radical line of thinking..

    ReplyDelete

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