Sunday, September 12, 2010

Marketing the Supply Chain

"The undirected worker spends more of his time walking about for materials and tools than he does in working; he gets small pay because pedestrianism is not a highly paid line." – Henry Ford

With regards to any discussion involving Supply Chain Management (SCM), the above quote seems appropriate to all of them. Henry Ford was a simple man, but a brilliant one. Born in what is today, Dearborn, Michigan, he spent his early years doing chores around the family farm and later aspired to the job of Chief Engineer for the Edison Illuminating Company. Soon after his marriage to Clara Bryant at the age of 25, he supported his family by running a saw mill. He was a patriotic American, a hard worker, a devoted husband, and a loving father — just like many other men of his time. But Henry Ford was different.

Ford Motor Company came into being in Detroit in 1903. While serving as Vice-President and Chief engineer, the fledgling enterprise produced only a few motorcars a day. Ford is best known for building the Model T – the flagship of the Ford Empire, initiating a new era in personal transportation. In an environment well suited for what we now call SCM, the Ford Motor Company constructed the largest complex in the world of industry on the banks of the Rouge River in Dearborn. It included a steel mill, a glass factory and an automobile assembly line. Iron ore and coal were brought in on Great Lakes' steamers and by railroad, and used to produce both iron and steel. Rolling mills, forges, and assembly shops transformed the steel into springs, axles, and car bodies. Foundries converted iron into engine blocks and cylinder heads that were assembled with other components into engines. By September 1927, all steps in the manufacturing process from refining raw materials to final assembly of the automobile took place at the vast Rouge Plant, characterizing Henry Ford's idea of mass production.

He was a man with a dynamic personality and a workaholic to boot. But what he really was, was the father of time-management. After he became proficient with the creation of automobiles, he watched his assemblymen perform their work, and a kind of madness crept over him. In his mind, he began to slice their movements into smaller and smaller pieces; he began to analyze his workers as a microbiologist might study an elephant as being a collection of electrons, revolving around protons and neutrons to form molecules, with DNA guiding the formation of cells using proteins and enzymes to construct tissue, organs, muscle, and bone. Yes, Henry Ford viewed his enterprise as a microcosm of manufacturing that he insisted on managing down to the lowest common denominator.

There is no doubt in my mind that Henry Ford could describe not only the location of each of the 5,000 parts that made up his creations, but for hours he would discuss each part's purpose in great detail. Even today, there is not one man-made creation that does not begin with a single element that is expanded upon to form the whole. Henry may have started with the idea of building a motor car, but someone, somewhere within his organization had to grasp the first piece of tangible steel and connect it to another, and then to another and another. By following a precise, step-by-step procedure, 5,000 individual parts sprang to life and became a functioning machine. If it performed without error, the plan was considered to be viable, and other machines were built in the exact same way. If a subsequent machine did not function as the others, it was a certainty that at some previous step in the production process, a deviation in the plan had taken place, and by a process of elimination the machine would be inspected through actions of mental and physical dissection until the mistake was discovered and corrected.

Later on, all products were produced in that way. From buggy-whips to televisions, you could go to Sears & Roebuck or to Montgomery Wards, purchase just about anything, and you could expect it to last a lifetime. When something broke, it could be fixed. If you wanted something new, you would just wait until the old one wore completely out before obtaining another – which might take decades.

Today, almost everything we buy is disposable… televisions, radios, CD players… even computers are considered not worth the effort of having them repaired. The boom in American manufacturing has changed our perception of 'value'. Today, we make things so quickly, before you can get a computer out of its box, it's already obsolete. Whether planned obsolescence is a purposeful action or a side effect of mass production is a moot point. It has planted itself into our culture as surely as if it were written down in a set of laws we are forced to obey. We accepted this new way of life because it's cheaper. As a result, when something breaks, we just throw it away and buy another. We have been trained and educated to overlook quality in preference of price.

Businesses are run by boards and stockholders who think only about profit. They have no understanding of the original mission or the plan that created the enterprise they serve. They may not have even been born when the enterprise started. They only care when a factory is not making a profit - close it. If a product has stopped producing cash – add the text "New and Improved", re-price it, or simply discontinue it. When an employee is not performing to expectations —fire him or her and get another one. Or better still find a machine that can do the same job cheaper. We have turned this throw-away mentality into assumptions that guide our every action.

Men and women long for change, but change terrifies them. They hunger to make things better, but are afraid they will make a mistake which will result in ridicule from their business associates. Any outrageously popular idea is adopted with no thought whatsoever as to the outcome. Do you remember the idiom? "No one ever got fired for buying IBM." They make short term investments and demand immediate results. They will never understand, as Thomas Edison did when he tested 7,000 materials before making a success of the incandescent light: We MUST fail in order to succeed. This fear of failure guides their actions more than they know. New ideas that come about are too soon flagged as 'nonsense', too hard to implement, unnecessary and unpopular. Yet, it is the pathfinders that earn the big bucks. The early adopters reap the lion's share of the rewards, and only when proven, the 'me too' crowd picks up the scraps, usually when it's about to be replaced by something entirely new.

Attempting to get companies to adapt to Supply Chain Management (SCM) is like herding cats, because it deals with the intricacies that make up an enterprise. Henry Ford understood the advantages of managing the supply chain. Sam Walton did too. Both these men grew up in a different world than those who we deal with today. They came from a world of hard times, sacrifice, struggle, overcoming resistance and chancing ridicule. Today, CEOs live by the mantra of volume instead of quality, immediate profits as opposed to longevity, and gimmicks and tricks in an effort to gain customer loyalty.

Henry Ford understood you have to get up close and personal to the basic elements of your business in order to fix things when they fall apart. Today, you have to treat every product you handle as if its importance was a life or death decision. Colleges and universities don't teach you what it's like to crawl in the dirt, sweep the floor when it needs to be swept, clean the toilets when they need to be cleaned, help an old lady carry her purchases to her car when she's too old and feeble to do it alone. Too important to get their hands dirty, today's leaders are afraid to peer into the bowels of their organizations. As a result, it is difficult for upper level management to understand SCM. Retailers in particular, have adopted a strategy of passing the buck, allowing others to tell them what products they need to stock and believe that a miracle will occur and gold will begin to pour out of their stores. Is it any wonder so many are going broke?

There are countless elements of SCM that make it difficult to view as a complete environment. A multitude of systems – mechanical, electronic, manual and philosophical must come together in order for SCM to function. Yes, manual and philosophical elements must be of concern because all parts make up the total systems solution. I like Patricia's phrase 'intensive cooperation' because it explains exactly what's wrong with the supply chain today. Sometimes we learn so much about a system we feel others should understand as easily as we do. We must never forget that our passion to further the advancement of Supply Chain Management is of no concern to the individuals we are trying to steer to our way of thinking. Their concern is to solve problems and increase profits. So when we discuss SCM with others, we need to relate it in a way that does these things specifically.

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