Another Ducking Digest?!
July 19th, 2023: Coping with Unplanned Events
Welcome to What the Duck?! A podcast with real experts, talking about direct spend challenges and experiences. And now, here’s your host: SourceDay’s very own manufacturing Maven, Sarah Scudder. Welcome to Another Ducking Digest. This is a 10 to 15-minute news show, depending on how much intel Lindsay has to share with us each week. Hosted by myself and Lindsay Smith. Lindsay has over 30 years of supply chain experience and most recently served as the SVP of Supply Chain for a mid-market manufacturer in SoCal. Each week, Lindsay will share news relevant to supply chain professionals working for small or mid-sized manufacturers. He was traveling to me; it seemed like a month.
I don’t know if it was actually, but him and his wife were in Europe, enjoying some sightseeing around the world. So he had a fabulous time. We may have to dedicate a different episode to hearing all about his adventures, but excited to have Lindsay back. And a big shoutout to Jeff Brown, who was our interim expert for the month of June. It was a joy to work with him, but glad that we have Lindsay back.
So, Lindsay, today the topic that you and I thought would be relevant to our audience is coping with unplanned events in small manufacturing environments. So I would like you to kind of dive into this topic today. Yeah, yeah, you only give me 15 minutes that are so, but we’ll try and keep it to that because it’s something that’s near and dear. And I think the big idea is: Don’t overlook the uniqueness of the small manufacturing environment. What I mean by that is we’ve all heard the cliche that all supply chains are unique. And I think that translates to a world where all small manufacturers are unique, and not necessarily unique in always good ways, right? There’s going to be some corners that got cut.
So what I’m thinking of, you mentioned Jeff. Glad that Jeff was able to step in last month. Jeff Brown talked to the idea of process maturity, organizational maturity, and he threw that he introduced that concept in terms of how long your planning horizon on your SNOP process, big company idea, as we discussed afterwards. But the takeaway is that in smaller companies, less process maturity. And what does that mean? It means that ERP might not be fully integrated. It’s implemented, but it might not be well integrated. And examples of that: Some reports don’t run, some reports are wrong. Maybe ERP throws out some weird stuff every now and again. And maybe there’s just Legacy dirty data that needs to be cleaned up or doesn’t even have the data at all. The reporting isn’t available or isn’t set up correctly, exactly. And you know, we can go on and on and on. I—I there’s limited IT support. ERP might not be universally trusted in the organization. There’s limited budget, the limited budget for process refinement.
I mean, I hear so much of media is talking about generative AI, integrating ChatGPT. Here we are, all I want to know is: Give me, give me, give me an open order Change Report from, from what changed from yesterday, are, or give me consistency week to week in my master production schedule. So two very different worlds, right? The organizationally, you know, on a small organization, the supply chain entity can have enjoy less empathy from their cohorts, you know, easy for us to get us supply chain folks in small companies just to get dismissed as just another admin person, and yeah, they just, it’s an ERP, it just looks like a PC app, and you know, they just sit there and do, you know, I call it a paper pusher stereotype, right? Which is very dangerous because now you’ve minimized supply chain and there’s far more to it than that, and they’re far more latent latent needs them to be properly set up, you know, when the big one big red flag is how do you do scheduling and someone describes an order entering process, you know, that’s a big red flag is that, that there’s an admin person, perhaps in the finance organization, that does new order entry but with little regard to or what’s the scheduling, so that’s kind of the compromises that we live in, and I think what we, what I labeled that is that’s that’s some of the artifacts of a small organization that you need to be aware of as you, as you plan if you plan to spend time in that kind of space.
Lindsay, given that, what does this translate in terms of ideal qualifications for somebody working in supply chain? Because this is a very, very different environment than working at a large established manufacturer that has, you know, systems and processes in place, yeah? And you’ve teed that up really nicely, Sarah, because the mistake that we, we all make is, well, geez, I’ve been a supply chain manager for 10 years, so I can apply for this job, you know, I’m in California, I can apply for this job at Edwards Life Sciences, well, hang on there, Bubba, you know, Edwards Life Sciences, one of the top manufacturers in Southern California, certainly in Orange County, the number one employer, thousands, tens of, you know, 12,000 employees. Plus, their employees work inside a box, they work inside a defined a defined space, whereas the small company, small manufacturer supply chain works across the organization.
So, we have to be a multitasker. We have to be flexible. We have to be more empathetic with the environment and less structured. Whereas a big manufacturer will be a highly structured, reliable, consistent process. In the small company environment, we have to go with the flow. We have to be collaborative because we have to keep an eye on what our cohorts are doing because they can influence the environment far more than in a big company. And we have to – there’s this trade-off, one of the compromises is that we’re going to get shifted to a more reactive mode versus proactive. There simply isn’t the resource, the time, or the money to plan for the unexpected, yeah. So given that, we’ve got to recognize that we’re going to be reactive. Now, someone like me who’s the company man, that means okay, right? That’s what needs to be done, then that’s what I’m going to do. But you know if you have a dialed-in idea of what you want to be or if you’re positioning yourself to go ahead to be a strategic resource in an organization, this is a dangerous thing because we, you know, Lindsay picks up bad habits. You know, how do you start your day? Well, I, you know, I go, you know, people come and tell me what’s broken and I go and work on that. Well, that’s completely reactive, right?
Lindsay, I would also throw in there, fewer KPIs because if you don’t have tools and systems in place, it’s harder to get your data and metrics, so it’s harder to track what does success look like and how do we accurately plan, yeah? And I know most at this point, most small manufacturers enjoy ISO 9002. The little bit of the jeopardy of that is a lot of small companies do a cut and paste of a standard quality manual and for our supply chain KPIs which are required, they’ll use the standard glib superficial on-time delivery, first pass yield, uh, you know, the standard metrics, versus the and a kosher cost and cost improvement versus dialing in KPIs, which is one of my evil pastimes of identifying the gaps, identifying the problems in the organization and put a KPI in place just to track that. If there’s a problem with a backlog and receiving inspection for whatever reason, give me setup ERP to send a team an alert after three days that says, “Hey, these parts have been received but not cam cleared inspection. It’s been three days.” After five days, ten days, send a second alert to the management team saying, “Hey, we alerted on late delivery, now we’ve got this lagging, what’s going on?” So, Lindsay, bringing back to our topic for today, how should somebody working for a smaller mid-size manufacturer in supply chain respond to these? We’re going to call them less uncommon events, um, right?
So what we want to do is push, I think in general, we want to minimize the problem. So push as much unplanned events to plan for. And what I’m thinking of is have a plan for what happens when MRP didn’t regenerate, have a plan for what to do if, oh yes, there are these POs, if we lost the MRP data for yesterday, small company reality, right? How do we regenerate the purchase orders we created yesterday? If in the small company environment, we expect a less robust supply chain, our supplier base. So have a plan for what happens, what happens if a supplier can’t deliver for a day, a week, a month. And that’s probably a great criteria for assigning supplier risk. If Aero Electronics can’t deliver this week, okay, what do I do?
I call Avnet easy. If my single source machined part supplier in Shenzhen can’t deliver for a month, what do I do? Do I incur a PPV and build it locally? Yeah. So have the point is to have a pro push everything into a process. And what I’m thinking of is when to learn from the politicians. The politicians are wonderful. The politicians know the answer even before you’ve asked the question. They don’t know what the question is, but they know what they’re going to say. So when someone comes out of left field, have a framework. Then that framework can be a process. So one of the classic ones in operations and supply chain is people, people, systems, process, people. You got it? Yeah, yeah, I got there. The, so no matter what the question is, how would you deal with X? How would you deal with implementing an ERP? How would you deal with an ERP hiccupping? How would you deal with going to outsourcing? How would you call it more worst-case planning? Yeah, yeah. And yes, the sad detail is there isn’t just a single worst case, right? There’s 10 or 20 or 100 of them. So how would you and the I when someone comes out of left field or in an interview and says, “Okay, tell me how you would deal with the supplier increasing price by 15%,” and maybe I picked the wrong example. Okay, systems, process, people. Okay, look at my system, see what suppliers I have in that commodity range. Process, certainly I’m at the front line, engage the tactical buyer but also escalate to management. Maybe pull in finance, look at the impact. And then people, who do we have to leverage relationships? But what we’re doing is pushing the unknown, the unexpected into force-fitting it into a standard filter, if you will.
You got a few more things on your list, and then we’ve got a couple of questions that came in from the audience that I want to make sure we have time to get to as well, okay? You, I, let’s see, another process is steal from the quality guys, right? Corrective action response. When we have a quality defect in the production line or the environment, the first step is containment.
Contain the damage. The second thing we should do that behooves supply chain is not just work the problem, I think that’s a mistake. You got to communicate the issue. You got to be part of the discussion thread. Supply chain can’t expect to have a seat at the table if they don’t escalate the issues or broadcast the issues. Then they’re not, the sky’s falling and not all the minutia, but be able to say, “You know, we’re working 320 new buyer requests. We’ve got 37 open orders that are tracking behind schedule, and we’ve got three identified supplier issues.” That kind of condensed thing that forces the rest of the management team to think beyond the administrative facet of supply chain. I would also –
Into kind of the people aspect of things, and I think humor and having a positive attitude is so, so important. We talked about process and all this planning and you know the data side of it, but if you can laugh at yourself or have fun in the process, I think it will really help your mental health and help you stay in an organization longer and be able to handle the craziness that happens, right? And humor is a two-edged sword, right? We see people laugh at a discussion and you think, “Why did they laugh or make a joke in the middle of a fairly serious discussion?” Well, it’s a nervous reaction, right? They don’t know what to say, so they put in this little humor to try and divert the conversation. I know oftentimes it does. But being able to, you know, I once was part of a delegation that went to a CEO and said, “You know, the sky’s falling. This has happened, you know, what are we going to do? This is very serious.” And he sat there from Jay Wilt, he sat there and smiled and said, “I remember this happened 20 years ago.” And you know, it took all the wind out of our sails. It was like, “Okay, here we go again. It’s not the end of the world. It’s something that happens as part of our business.” So, Lindsay, we have a question: How can an Industrial Engineer improve supply chain processes? Oh, goodness. Well, you know, okay, if you want the top five, 10, or 20 ways, yeah. Have you given, let’s do three, three, three takeaways for him.
Yeah, recognize they’re different, recognize they’re uniquely qualified. Don’t try to replace the buyer. The buyer is going to be possessive and want to hold on to the supplier relationship. What’s causing the buyer to lose sleep at night? Which supplier, if of the 200 typical suppliers in a small manufacturing company, you know, which one’s giving them the most grief? How might they, how might I assist? How might I solve a technical problem? How might I improve a delivery? How might I help a supplier? Yeah, because we can, uh, as a specialized technical resource, can go off in a myriad of directions, and you know, we all have favorites, you know, we have favorite things that we like, the work that we’re comfortable with. What’s causing other people the most problems? And especially if the process engineer is blessed with people skills or team-building skills or, you know, I’ve seen process engineers come and visit me as a supplier, and they come in as Six Sigma experts. And they asked, instead of berating a customer service person, they said, they asked to pull together the team, do a brown bag lunch and talk about, talk about problem-solving, talk about process management, walk through the process, you know, we’ll work on my own issues, but just walk through the process to understand, you know, what’s being glossed over, what’s being forgotten. You know, they, as a technical subject matter expert, just go through and look and see and look at the process instructions. Are they including the granular detail that we want to see to keep us at a Christmas performance? Awesome, all right. Join us next Monday at 10 A.M. Central for your next round of news for supply chain people working in manufacturing. Thank you.