The Globalization era is over?

Several years ago I could not stop getting more and more amazed about how global world is getting.

I was constantly surrounded by people from all over the world, my friends and colleagues were flying forth back (I used to have 3-4 flights monthly myself), everybody seemed to know everybody, the same brands were being sold in any city I would arrive. Sometimes coming to a new city I would not notice any change: the same mix of products, languages, people, companies.

Although the virtual globalization continues to expand through networking, videoconferencing, Internet of things, "linked data" and so on, the physical world gets more and more local in the times of downturn.

Right, companies are trying to implement shorter supply chains, switch from outsourcing to insourcing (e.g., Lego moving their factories back to Denmark, Renault - back to France), companies are getting more conscious about travel budgets: they are exploring local talents instead of bringing overseas consultants, etc, etc.

What do you think? Is this Localization vs. Globalization temporary due to current economical situation? Or that is something companies will have to stick to for a longer period?

Technology will help creating Smart Supply Chains

The Smarter Supply Chain of the Future

I have come across this quite interesting IBM Global study today. And, boy, that's just the time! There has been so much already said about an urgent need to make Supply Chains responsive in these tough times we all are experiencing now, but not enough on how to proceed.

I found the article quite informative, interesting though probably exaggerating the role of technology a bit (that's right, you hear this from an IT graduate and Technology Consultant). The study focuses on using ability of Supply Chains to get Smart thanks to RFID, all kind of sensor and actuators. Exactly my piece of cake. That's why I decided to make a little reflection on a couple of interesting points I found.

The main topic of the study, to my belief, is bringing best practices from Top Supply Chains and prove their viability. Although, Lean is never mentioned in the document, many of the ideas seem quite familiar to me. And one of the brightest is, of course, need to react fast. 

Gotcha! Smart Supply Chains do not need to predict. They need to respond. Isn't that lean? Isn't than Just-In-Time? Why does everybody spend so much time learning to predict (and later suffer from inequality of demand and supply), while they can learn to be responsive?

You have all instruments for that: networks, sensors, collaborative work technologies!

Why do companies have to cut costs and regret their overestimated budgets? Well, right, they did not care much about being flexible before. Flexibility is their antidote for cost volatility.

Speaking about collaborative technologies. Enterprise 2.0 has given us tools and techniques to share the knowledge quickly and efficiently. And in my life I have seen a good number of implemented Knowledge portals, CRM, Warehouse management systems, etc. Guess what? Most of them are used internally. Executives do not believe in (or probably too afraid of) revealing information to 3rd parties. My thought: survivals will be the ones who understand that real competition in 21st century is going to happen between Supply Chains, not individual companies. Time to bring all participants together.

More than half of all supply chain executives have implemented practices

aimed at improving visibility, such as continuous replenishment and inventory

management with customers. But less than 20 percent are pursuing

these practices extensively.

And here we come to the visibility discussions. Amazingly, how much data is  being captured, stored but never used:

Visibility – Flooded with more information than ever, supply chain executives

still struggle to “see” and act on the right information.

Once I had to work on a proposal for a a new IT system. We did a good job, estimated the number of hours employees will save in waste-operations (search, movement, transportation), translated them into money and presented to the client. But at the final presentation we had to add a killer: you should hire someone to work with the application, analyse the data we are gathering and make sense of it. Not surprising, hiring that guy would cost way more than an operator looking for items in the field. (In fact the project would never work for another reason: it was not improving any Critical-To-Customer characteristic, nobody in fact cared about the time).

To be short: we should be cautious what we are trying to measure and have a clear visibility what opportunities this knowledge can bring. There's no sense storing another Gigabyte of irrelevant data on your servers.

An interesting point IBM brings to light is Internet of Things. The research promises us that Future Supply Chains are going to create global networks not only with customers and suppliers, but between items as well, give them "brains" and decision making capabilities (several weeks ago I was at a presentation of 3rd generation Active RFID technology - smart items are already reality today!). 

I had a discussion on this topic with one of my University mates. He was quite amazed by these possibilities: "Look, that's opposite from ERP monsters enterprises have created. No more huge things, which try to take control over your company. Decisions are made locally, quickly and more reliably". Is that? Wow, wow, wow. I don't think so. Aren't we creating a new distributed and therefore less maintainable monster?

Dashboards on devices perhaps not yet invented will display the realtime

status of plans, commitments, sources of supply, pipeline inventories and

consumer requirements.

That's an interesting one. Whatever decision smart items are doing humans should be aware of that. This awareness will give them ability to understand decisions and re-think them appropriately. Imagine a forklift driver locating a pallet in a wrong place. Should he receive "RELOCATE ME" message, he might probably think "Those damn things are often malfunctioning". It will be quite different if the message says "Apples are stored in this area. Take me to Oranges section!". Don't use your people as tools, give them ability to be in charge.

To end this post, I believe everything goes to quite an old good Triple-A concept: to be successful Supply Chains have to be agile, aligned and adaptive.

My concern is that RFID, sensors, actuators, GPS are extremely powerful in strengthening one of those: Agility (ability to response quickly to short-term challenges, changing situations, circumstances). And that's what I am mostly working on during last year. But the effect of these technologies to Alignment and Adaptiveness is quite questionable at least for me (not in sense that it should be eliminated, but meaning it should be much more carefully designed and limited).

Do you agree?

P.S. I guess, I am going to write a post on purely RFID and its ability to influence 7 wastes (famous Tim Wood). Stay tuned!

The Big Why: Russian Automotive example

I stumbled upon this funny pic. yesterday in Gary P. Cox's blog (he has many more of those). 

A funny story came to my mind, which, I guess, explains the whole Big Why question quite well. Interestingly enough, the story comes from Russian Automotive industry (yeah, formally it exists, although it has been dead for over 20 years now), while everybody is discussing American Big Three bailouts. Well, learning from worst cases works in a lot of cases, doesn't it? 

The story itself was told by a friend of mine who is working as an IT Consultant for a big machinery manufacturer: they produce assemblies for agriculture and construction machines industry mainly. One day the company got a perfect deal for supplying spare parts to a famous brand foreign Automotive company, who had built an assembly line in Russia and was planning to localize a part of production through Russian suppliers.

Well, being quite familiar with local specialities, the client insisted on installation of Quality Control system at the end of the line. They brought in those fancy lasers, which were checking the dimensions of the product in order to reject all defects. The count of "good" and defected items was interfaced to their ERP system for later use in order to update daily assembly line schedules.

Several weeks later the storyteller happened to be passing by the conveyor belt at the point of the Quality Control installation. He was extremely surprised to see a group of people doing strange movements and running constantly forth and back... Well, apparently factory management set a special team, whose only task was to cheat the lasers: the guys had a set of 100% confirming to standard products with which they were constantly replacing items on the conveyor belt and switching them back after the dimensions control.

Of course, wondering why he is getting such low quality product, the customer started sending Quality Control teams to the site... But local "smart" management found solution for this problem as well: a daily batch of final good quality items was always stored in a hidden place along the conveyor. As soon as customer representatives were entering the premises a special operator started replacing items on the belt with this nicely prepared inventory... The Automotive company representatives had to scratch their heads and agree with what they saw: 100% confirming products at the end of the line. 

Several months later a decision was made to introduce higher level of inspection: apply RFID tags to all items and therefore not only count but also individually identify what is passing through the dimensions control point.

Apparently, the western management hoped that the Russian manufacturer confronted with such a level of control would have to find new ways of quality improvement. You know what happened? The factory just hired 10 more guys and gave them hot steam pistols to switch RFID tags forth and back, forth and back and continued cheating their high potential purchaser.

What is the lesson in here?

I guess, it's petty clear.

No matter how obvious best practices and philosophies are. No matter what tools and techniques you are bringing in. No matter how many consultants you hire. Your results will always be unsatisfactory unless your management stops searching only short-term benefits and starts taking real responsibility.

Outsourcing vs. Lean

So, I am an LSS newbie. And my "desk book" at the moment is Pyzdek's Six Sigma Handbook

Therefore I am naturally calculating error rate in everything I see around.

Couple of days ago I heard this funny , let's say, "A". The company headquarters in Stockholm found that their British subsidiary processes are a great mess. They decided to roll out new ERP system, which would confirm to all corporate standards.

OK, here how the whole implementation worked:

• Business Analysts from A's Stockholm office prepared a concept of requirements for the new ERP system. 
• An external consultant from company B was hired for overall project and change management as well as functional design in collaboration with A's London office.
• Upon the completion of the functional design it was handed to IT consultancy company C located in London. Its analysts and consultants prepared detailed software specification. 
• Detailed specification was transferred to C's development office in Bangalore, where it was developed.

Well, back to my Six Sigma book: first thing I could remember is RTY. 

It's almost obvious that at every step of transformation there will be misreading, misunderstandings, errors, etc. Add language and cultural difference and opsss... No wonder, in this particular project deliverables were so little of what the senior management from Stockholm expected. 

Well, is there anybody who would still call Outsourcing Lean?

Aren't we making the development process too complicated, while trying to slash the costs?

Hello World!

Well, those of you who come from IT background are definitely aware what "Hello World!" is - first attempt to do something new. And that is exactly what this post is meant to be!

I am not sure there will be any visitors or readers around here and whether my reflections are of any particular interest.. But why not give it a try?

I've been blogging for years already for my friends (250 readers on my Livejournal blog) telling about my trips, studies, languages and lifetime experiences. 

Well, now time has come when I need a space to write down my ideas and thoughts about professional, not personal life. At least I need a personal "piggy box" to collect my discoveries, reflections and, of course, mistakes... At most, I want to have a place to share, discuss and learn.

Nevertheless, If you ended up here in one or another way, let me introduce myself.

My name  is Vladimir.

I am native Russian, who grew up Central Asia, studied in Russia, Czech Republic, Italy and ended up working in the Netherlands, serving clients Europe-wide.

Strictly speaking, I am an IT guy, who happened to have formal education in Professional Communication and General Management subjects as well. (You can always find more on my LinkedIn profile or personal website)

Though creation of this blog is a direct result of my professional involvement in technology driven Supply Chain and Operational Management improvements and high fresh interest in Lean Thinking, Six Sigma and TPS...

Therefore, coupling of IT vs.  Lean will probably be the main topic of  this blog. But, again, who knows, where it will bring me? :)