Archive for Planning

Learning from Crisis Leadership

tornadoMonday, May 20th started out as a normal day for people in Moore, Oklahoma, a community of about 56,000 people about 10 miles south of Oklahoma City. By late afternoon the world had turned into rubble and ruin for many in this town. Rescuers worked through the night to pull people out from under destroyed homes, businesses and schools. 29 people died including 9 children. Clean up will take months. Recovery will take years.

Immediately after the tornado passed, the local police, firefighters and EMTs took action. Within hours, the Oklahoma National Guard arrived at the scene with fully rehearsed rescue teams. They had the tools, skills and communication processes in place to call in more help. The additional help was triggered based on what they saw when they got there. By nightfall the Red Cross had shelters set up. The nearby medical facilities were ready for an emergency and all hands showed up to help the wounded. Now, neighbors are showing up to cook, find pets, deliver gloves and generally serve. The town is mobilized.

What kind of leadership is required to get a community through a crisis like this? What can we, as students of leadership, observe and thus learn and apply in our areas of influence?

  • Act quickly – There is no time to hesitate when a crisis occurs. Decisive action is important in triage. Even in a business context this remains true. Get moving on the critical issues of life, safety, continuity, sustenance. Know where your staff is. Get the facts. Gather your resources. Assess the damages. Send out the first responders. If the problem is with a supplier, fly there. If the issue is in your own manufacturing plant, visit and evaluate. If the problem is with a new product launch, get to where the action is and gather the information at the source.
  • Ask for help – There is no virtue in going it alone. If the problem is really a crisis, call in others. Get suppliers, partners and other functional groups involved in solving the problems. Tell the boss.
  • Communicate regularly – Perhaps the information will not be precise. Perhaps you will have to revise after more is known. But getting information out to those impacted will serve two purposes. First, you will calm those impacted. You and your team know what is happening and action is being taken. Second, you will get everyone on the same page. When should updates be expected? Who is doing what?  What are the near term instructions?
  • Create structure – Put together a war room with a steering team. Put people in charge of different parts of the problem. Ask for a cadence of information flow. Meet regularly.
  • Be visible – If you are running a local team, be there. If you are running a global team, be there virtually by calling into team meetings or even creating video updates. Be accessible. Talk with the team casually to understand mood and to get facts from all levels. Your ears are the most important tools you have during a crisis. Listen.
  • Be a servant leader – Pick up the symbolic shovel. Contribute at multiple levels even if just a little. Your job is to show others that you are in the situation with them. If you are seen as above it all, the team will not hit its full potential.
  • Have a plan prepared beforehand – Of course, this is wise. But many companies, families, small businesses are not thinking about the possibilities of a game changing emergency. Thinking through an action plan before the crisis can save crucial minutes when something happens. Put the plan in writing. Practice with a staged crisis situation. Involve your immediate organization and those throughout your value chain. Business Continuity Plans can make all the difference when a crisis occurs in your company or supply chain.

News of the tornado in Oklahoma struck a nerve for me. There is no way to predict when a crisis will occur in communities and similarly, there is no way to predict crisis in business or supply chains. The only certainty is that crisis of some sort will show up in the future. Be ready and be a leader when it happens.

In  preparing for battle I have always found that plans are useless, but planning is  indispensable.

Dwight  D. Eisenhower

Manufacturing for Dummies

Acmestartup has a breakthrough security product. The software bits have lovingly been stuffed in a white box server platform and volumes have been manufactured at a reputable contract manufacturer who just so happens to have designed the basic server. These initial beta boxes will be sent to early adopters of this new breakthrough product. First impressions are everything. It matters what they think. These first users will be the evangelists and the potential investors of this nascent company. Alas, when the product arrives it doesn’t work. What could possibly go wrong? How hard is it to customize an off-the-shelf server and load software and firmware. Apparently it is hard enough that the CEO of Acmestartup has made the resolution of this manufacturing problem his number one priority. When he should be worrying about the next great security algorithm, he is losing sleep over why the box shows up dead on arrival.

Startups and small companies are all about the product and customer and should be. In the same way that these small companies should get professional public relations, accounting and legal advice, these companies should be getting professional manufacturing advice. Some engineers have both development and manufacturing experience but not many of them have ramped products to volume nor have they had to choose partners, negotiate contracts or set up manufacturing processes.  And even if these engineers have had manufacturing experience is it good to divert attention away from the critical path of product development and maturity? When in doubt, hire a professional. Here are a few key pointers for those not in the field.

1. Pick the right manufacturing partner – The right partner has a focus on small companies and they have a good reputation. Ask for references. Talk with your start-up peers with similar products. Make sure that they have some local presence. Don’t rely on a company that is only in asia. You need help close to your development team. Ideally your partner should have some local manufacturing, not just reps close by.

2. Put together a cracker-jack virtual ops team – You probably can’t afford to hire all of the elements of a dynamite operations team but you can piece together experts through consultants and through your contract manufacturing partner. Make sure your collective team is thinking about purchasing, planning (and the systems that go along with the purchasing and planning), customer service, assembly and test, quality, metrics. Yes, you are small and volumes are small but all of these elements could stop you dead as you are ramping.

3. Put a manufacturing geek on the team – Do this early. Embed them with the engineers. Think about the component suppliers and final assembly process early. If possible, have your contract manufacturer supply someone to sit on your team. It is not too early to design for manufacturing if your intention is to supply a quality product to the customer as quickly as possible. Don’t design, build, ship crap, recover or try to recover.

4. Kick the hell out of the product before you ship to a customer –  HALT is Highly Accelerated Life Testing. This test will vary temperature, vibration, voltage levels until the unit fails. In other words, add variation to the process ahead of shipping. If you plan to ship your product any distance, make sure that you know what the product can withstand in terms of temperature and vibration. In addition to HALT testing, if you have multiple suppliers for a component, vary what you load on the board or use in the product and see if you can make the product fail. Ship the product across the country to your mother. See if it arrives ok and have her set it up. This works less well if the product is for the enterprise or for the construction industry but find the analogy (ship to your buddy in an IT department).

5. The devil is in the details – The small things are what get you. This is true for all companies but is particularly dangerous for smaller companies without the resources to recover. Don’t forget about customs, import taxes and regulations. Don’t ignore documentation, labeling, packaging. Watch out for long lead times for components…all it takes is one part that you can’t get fast enough. And finally, consider how you will repair and/or upgrade your product. What is your “reverse supply chain”?

While all of these considerations could seem obnoxious when you are working on a product that solves man’s or woman’s most pressing problems, they can stop you in your tracks or at the least will slow you down enough for the competition to catch up. So, consider manufacturing as a competitive weapon when launching your business. Seamless ramp coupled with highest quality at no cost to time to market should be the goal. It can be done. You aren’t a dummy!

Top Ten Global Supply Chain Mistakes

A global supply chain is the norm for almost any company in business today. In order to take advantage of the capabilities throughout the world and in order to reach markets around the world it is important to create a system that reaches across borders. Creating that system is a difficult process especially for smaller companies focused on technology and marketing as first priority. How do you build a robust supply chain that is a competitive weapon rather than a necessary evil? Below is a summary of mistakes commonly made.

1. All eggs in one basket: It is risky to partner with only one contract manufacturer, logistics partner or key component supplier. Comparing price, quality, locations and practices can give you the information you need to drive your supply chain toward best in class. Having some tension in the relationship will also give your partners a good reason to offer you the best prices, quality, technology and lead times. But if you don’t have the volume to support more than one supplier without compromising cost or attention, put your eggs in one basket…and watch that basket very closely. Even with one partner you can quote annually to keep the tension in the relationship and to give you additional information. Ask for a transparent cost model so that you know what you are paying for and can more easily disaggregate the work to look for the best combination of suppliers. Even if your volume won’t support multiple production suppliers of key components, qualify more than one supplier ahead of time to give you options if there is a problem later.

2. Out of sight, out of mind: Once a global supply chain is set up and running it is a mistake to assume that the job is done. Weekly conversations should be held with your partners either in person or on the phone or via video-conference. Virtual meetings can be set up to review metrics, current action items and future work. Monthly visits should be made to meet with the key players eye to eye. Walk the production floor. Talk with the people on the production line even if they don’t speak your language. Use a translator and convey your thanks and interest in their work. That will help you later when fast action is needed and you are not there to oversee. Observe and ask questions. Make sure that you are getting what you expect. Remember, people respect what you inspect.

3. Too little, too late: It is unwise to assume that a verbal contract or purchase order with legal sounding words on the back is good enough. Draw up a contract and negotiate the details. While you are unlikely to ever sue your supplier, the value of a solid contract is that you have talked over the problems before they occur. Don’t wait until you have a field quality issue to decide who will take lead and drive to root cause. Don’t wait until there is a sub-tier issue to decide who is liable for the resolution and cost. There are templates available for supplier contracts and it is okay to start there but don’t stop there. Think about what is important in the relationship and write it down. Even if it doesn’t end up in the final draft at least the conversation has been held and documented and there is some understanding of expectations.

4. It’s not my job: Don’t sit back and assume that your supplier will watch your back. Supply chain design and development remains the responsibility of the product company. The inputs to strategy are targeted markets, technology needs and growth plans. Yes, the inputs also include changes to the supplier landscape and cost shifts, but it is unwise to rely on the supplier to tell you when to modify your supply chain. I recommend an annual review of labor and logistics costs, shifts in the market, tax changes and other macro-economic factors. What are the implications to your supply chain? Is it time to manufacture in a region for tax purposes? Are labor rates changing enough to consider a shift to another region of the world? Do you have a change in your product roadmap that will require new process technologies?

5. Only sure thing is death and taxes: Death is hard to control but don’t overlook the impact of taxes. The tax implications of your supply chain decisions can outweigh the labor cost benefits. Have a tax expert examine your plans ahead of time. Understand your target markets and if there are import taxes based on manufacturing content. Are you selling into government agencies? Some have restrictions about where the product is made.

6. Count the costs: Don’t make the mistake of just looking at the price tag from your supplier. Remember the cost to move the product to the market. Remember inventory carrying costs for a longer pipeline. Remember the cost of travel to manage a remote supplier. Quality costs are higher if your pipeline is longer and if the time to resolve is longer. And finally, what is often overlooked is the cost of time. If your new product slips a month due to the challenges of remotely ramping with the wrong partner, the costs are large. Do the math on the full costs of your alternatives.

7. Time Flies: Time should be mentioned a second time because it is just that important and is often not considered when designing a supply chain. It does take longer to get work done across time zones, cultural and company boundaries. However, if managed well there can be an advantage to having multiple time zones to work a product launch or a quality problem. The key is to set up the processes ahead of time with the right responsibilities and accountabilities. It is a little like a battle strategy in that you want to consider where you position your forces and how you arm them based on where the enemy lies. With new product launches the enemy is lack of documentation, lack of information flow and lack of iteration. Launching remotely needs more of all three. Don’t neglect to make that investment to save valuable time.

8. Risky Business: When natural disasters strike, the companies best able to recover are the ones that don’t ignore the inevitability of failure. Having a documented business continuity and enterprise risk management plan in place will give the troops a jumpstart on what to do. Work with suppliers ahead of time on “what if” scenarios. Know who within your organization will run the war room. Decide how you will respond to a disaster in any part of the world. Of course you can’t anticipate every problem but you can do enough to be in better shape than others. When being chased by a grizzly bear you don’t have to be the fastest, just faster than the other guy!

9. Stunted Growth: Don’t just think about what you need now. It is a big mistake to pick partners based on what you need today and not think about their global footprint, scalability, systems strengths and capacity. There is nothing worse than having to pick up and move your processes while growing just because you didn’t partner with growth in mind. If you need one assembly line now, make sure that your partner has room to give you three without moving you to another building or location. Can you claim dedicated resources now ahead of expected growth? Have you picked a supplier who has bought into your plans and will invest with you appropriately?

10. Flee, fly or flow: Last but not least, don’t staff up with a wimpy team.  Understand the importance of picking supply chain leaders who have lived through global supply chain challenges and can bring experience to the table. Resiliency is a characteristic that comes to mind. There are a myriad of challenges that come up with a global network of suppliers. The challenges can be viewed as a necessary evil or can be managed and mitigated to bring your company a competitive advantage.

Risky Business

“When we try to pick out anything by itself, we find it hitched to everything else in the universe”    John Muir

The Alstott family is considering a move to a new provider for phone, internet and TV. We will save some money this way and given my cheap nature this is appealing in spite of the hassle. Wow, is it a hassle. I’ve intertwined the workings of my life with my personal email address. Healthcare, airline programs, internet sites, charity organizations, friends and probably many other places that I’ve forgotten all know me by that address. When I switch I risk being cut off!  Now some of this is ok. If you are like me you are getting more junk mail than useful mail and I’m ok losing touch there!  How can I get the good without the bad?  My plan is to have an overlap and for 1 month I will monitor my email in one system and proactively change all of my information with various services and people. Brilliant, eh? An even better idea would be to switch to an email service that doesn’t depend on my internet provider. At least I am thinking about alternatives to managing my risk proactively. Now I have to execute!

In the supply chain world we are, once again, in a recovery mode due to another natural disaster. The Thailand floods have put huge parts of that country into huge disarray. People have lost homes. Businesses are literally under water. Animals are dead, crops ruined and for a while alligators were swimming around in the streets. Terrible tragedy. Supply chains around the world are now madly trying to recover supply to satisfy customers. This profession is getting good at reacting to natural disaster,  but we should take the time to proactively manage our high risk materials. The NPI process isn’t complete without an assessment of risk. Products might launch with sole or single sourced parts but companies should know what those parts are and have an action plan for each. Ideally that is baked  right into an NPI launch plan so that prior to first ship the plan is in place. The plan can include  die banks, inventory, second locations, dual sets of tools and/or other risk mitigation ideas. 

Supply management is all about risk management. As John Muir says, we are tightly hitched to everything in the universe and the hitch is tightening as we evolve into a truly global economy!

Simple Planning in a Complex World

My husband and I recently traveled to Ireland. For the first week of our journey I planned each day with food, lodging and attractions all mapped out. Then I ran out of energy and time and decided to leave the next week unplanned. We would wing it!  Both approaches were wrong. In the first week we had no latitude to adjust to the weather, our moods or even serendipity. The second week we were spending too much time figuring out how to get from point A to point B. Something in the middle would have been the best.

The same dichotomy exists in the world of manufacturing. Some companies design tightly managed and intensely collaborative forecasting and planning systems.  Their communication through the supply chain is daily or even hourly. New demand triggers new orders. Cancelled demand cancels orders. If the sales team is bullish there is a redo of the plan and the whole supply chain revs up for a higher rate of production. If the demand doesn’t materialize the orders get pushed out, inventory stockpiles, FGI gets reconfigured.

The other alternative is to design a flexible, responsive supply chain that can withstand the uncertainty and fluctuations of today’s demand profile. In this business climate it is impossible to know what a full quarter will look like. Change in market climate can take place within weeks.

Lean methodology, a highly integrated value chain and flow of information are the keys to success.

  1. Lean methodology is simply laying out manufacturing through the external and internal process such that material is pulled through. Buffers or Kanbans are used to stage material for the next process but they can not be overfilled. Thus, material isn’t shoved forward if the demand drops off. The challenge is to design the buffers so that an increase in demand can be accommodated in an acceptable amount of time. The advantages of a lean flow are numerous and include lower inventory costs, lower costs to rework should a problem come up, and more visibility to the material and therefore the risk and upside. A huge benefit comes simply from the process of setting a lean flow up in the first place. It requires that you understand demand swings, leadtimes and dependencies.
  2. A highly integrated value chain is not a reference to vertical integration. It is a reference to the communication and responsiveness of the full supply chain. It should be very clear who owns which supplier and who will evaluate performance, communicate changes in demand and handle the exception management.
  3. Information is life in a well run operations organization. Drowning in data is death. The right information that allows management to deal with exceptions and trends is the goal. Metrics should be clearly posted, regularly updated and used to run the business. Owners should be assigned to each metric. The metrics should be reviewed quarterly to make sure that they are the right ones for the control process. The information should include summarized data about real time sales pipeline and orders. Material drive through the supply chain should be adjusted but the oscillations should be dampened.

A simple planning system can be crafted with the three pillars above in place. Complexity does not add value and can mask the real issues. Don’t wing it but take care to avoid distracting complexity. Then, enjoy the trip!