Many French-speaking business leaders are not seizing the opportunity to create value in their market thanks to the best practices of management of their supply chains because of... linguistic confusion.
By translating the name of this recent profession by that of its ancestor: logistics, which concerns physical flows, their companies are depriving themselves of a profession that has its rightful place in their executive committee.
Because the mission of a supply chain manager is to increase competitiveness and the return of investments in reliable deliveries in increasingly short deadlines with, at the same time, a reduced need for working capital.
In other words, to transform your company's supply chains into levers for implementing your winning strategy.
If your company culture values the performance of departments that work in silos with the symptom: too much inventory that is not needed and at the same time missed sales due to stockouts, the diagnosis is clear: you do not yet know that a business today knows how to deal with these causes.
It is referred to by an English name because it has been international since globalization, and therefore has no national translation: supply chain management.
At a time when supply difficulties are becoming a concern all over the world, not supplying the right references in quantities corresponding to real customer demand is particularly disadvantageous.
Neither “supply” nor “supply chain” but good supply chain management, This business includes “activities of design, planning, execution, execution, management, and monitoring of supply-and-demand activities to create value, develop a competitive distribution network, deploy international logistics, synchronize supply and demand, and measure overall performance” (ref APICS Dictionary).
In other words, managing a company's supply chains means coordinating the multiple collaboration networks between suppliers, subcontractors, partners, distributors, customers to ensure the synchronization of four flows: physical, information, financial and competence.
The mission is simple: protect these flows so that they are not interrupted or slowed down, in order to make the best use of resources and in particular the working capital and the skills of employees. All departments in the company stand to gain.
What slows or interrupts a physical flow and, at the same time, its associated financial flow?
When the salesperson inflates increasingly elusive forecasts in all references in order not to risk running out of products,
that the buyer and the producer increase the size of their supply and manufacturing lots to reduce the unit cost,
when productions are launched without corresponding to customer needs in order to increase productivity ratios,
and when machines are saturated to reduce unit costs, then the company mobilizes its resources to manufacture what the customer has not yet ordered and lacks the resources to deliver what he has just expressed the desire for.
This flow of distorted and irrelevant information, propagated and amplified in the ERP by the bullwhip effect, makes the calculation of requirements (MRP for Material Requirements Planning) nervous.
Invented more than 60 years ago, its algorithm aiming at 0 stock is no longer adapted to complex and increasingly interdependent schedules. The quantity of replanning recommendation messages generated has become such that it is causing business planning teams to burn out. Everywhere hidden safety stocks are becoming obsolete more and more quickly.
The cure? the buffers of stocks, capacity, time and even skills that transform rigid supply chains into flexible systems on controlled shock absorbers.
Invented by the Demand Driven Institute (DDI) in 2008, they were tested and then deployed in France in 2011 by member companies of the Francophone Supply Chain Management Association (AfrSCM), a VISCONTI partner. From the SME Emka, to the multinationals Michelin, Figeac Aero, etc...
Notably, France, thanks to a large number of qualified instructors, is in a leading position in this methodology that major software companies are adopting one after the other around the world.
These buffers are inspired by the decoupling point between downstream flows managed to order with short deadlines and upstream flows manufactured from stock, invented by Dc Eli GOLRATT.
His novel book “The Goal”, which popularized the Theory of Constraints, has sold more than 7 million copies since 1980 and has become a cult.
By extension, the Demand Driven Institute (DDI) proposes to place these buffers where the variability of the process is likely to disrupt flows.
These types of shock absorbers will thus be able to absorb internal and external variability at customer and supplier interfaces and where it is useful internally.
Thanks to their easy to understand color code, a real collective intelligence oriented towards the updating of their dimensions is then evident in the company.
Initially, the size of the buffers is aligned with strategic risks and market opportunities. It is then updated daily with real demand thanks to systemic feedback loops around a new tactical process called Demand Driven S&OP (DDS&OP).
This is the end of the false forecasts that sowed discord between functions. It is the start of realistic strategic decisions in line with operations.
This new tactical process complements the strategic Sales & Operations Planning process invented in 1980 by Dick LING who revised it with DDI co-founders Carol PTAK and Chad SMITH in the book “Adaptive S&OP”.
It was at VISCONTI Partners that this book was launched in Paris in January 2022 with professionals representing more than 20 countries.
These two strategic and tactical processes, Adaptive S&OP and DDS&OP, coupled with a Demand Driven Operating Model (DDOM) composed of the different types of buffers, make it possible to expect, on average, across all industries, a service rate of 99% with inventory reductions of 30% and lead times of 20%.
If short courses start with the executive committee, a first pilot with stock buffers, called Demand Driven MRP (DDMRP), can then be launched on a complex business line and achieve these performances in less than a year, while the project is multiplied across all of the company's supply chains.
If you do not yet have a supply chain department on your executive committee, it is time to recruit one before your competitors, preferably a professional who stays up to date with innovations.
And if you have trouble finding one, because since COVID experienced supply chain managers are no longer looking for work, recruit a young graduate from one of AfrSCM's partner schools.
His understanding of the vocabulary and systemic concepts of the profession, acquired by obtaining his international certification, will make him an active agent in changing the culture of his colleagues.
At Visconti, we support the development of management teams in this exciting job that is intended to serve as a lever for the transformation of your company.
If you too want to, be accompanied by one of our VISCONTI coaches, we will be happy to discuss and discuss your needs and questions with you.
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