Case Study: Improving Supply Chain Reporting with a Systems View
How a Small Reporting Department in a Large Organization Achieved Outsized Success
THE AIM for this post is to share a brief case study I came across on LinkedIn by a well-known member of the Deming diaspora, Dave Nave. It describes a lean process improvement effort he led to help a new department in a large organization change how they generated supplier delivery requirement reports as part of an overall shift they were undertaking away from batching inventory to direct routing where needed.
While reading it through, I realized it was an excellent example of a change implemented with a systems view and fit well with our mission here at Digestible Deming Industries to help teach the philosophy. So, I reached out to Dave to ask if he had ever examined his case study through a Deming lens—and if I might share it with subscribers. He agreed immediately, even though he hadn’t previously thought about it from this angle, and he was eager to share some notes based on his recollections.
What follows is a synthesis of the original case study and his reflections through each of the four domains of Deming’s System of Profound Knowldege.
The Challenge: On-Time Supplier Delivery Requirement Reports
Dave was asked to help a new team in a large corporation solve a problem. They were moving away from a traditional batch-and-hold inventory system to a just-in-time routing to get the right materials to the right place at the right time. This is a classic lean improvement change that needs to ensure the right information gets to the right people to work, in this case the suppliers need to know what to deliver and in what quantities on what days.
Several months into the implementation, however, only 15% of manually-generated supplier reports were being delivered on time, which was crippling the efficiency of the system and straining relationships with suppliers who were frustrated by missing their deliveries. Compounding this problem was an expectation that the number of suppliers was going to quadruple in six months which would require an 8x increase in reports.
Rx? Standardized Procedures, Cross-Training, Visual Control
Dave worked with the team to shift their performance toward working in a more lean fashion to better support getting suppliers what they needed to fulfill their deliveries on a just-in-time basis. This involved standardizing the way the reports were designed, including the wording and terminology, along with how they would be generated, and careful documentation which enabled cross-training of employees in all report types, decoupling a previous dependency.
Reports were then kitted according to supplier and production model, and visual control system installed to manage load and throughput.
Results
Within 10 months the operational efficiency of the supplier delivery requirement reporting system had improved from a fulfillment rate of 15% (complete and accurate?) to 98% with individual productivity increasing 11x notwithstanding the 8x growth in report volume.
Staffing levels were managed at 45% of the initially-projected ramp-up with a direct savings of $1.5M and a cost avoidance of $5.3M.
Deming Analysis: Appreciation for a System
Every organization is a system comprised of many interrelated sub-systems that are aligned toward an aim or unifying purpose — though they may be managed otherwise.
The new reporting department operates as a system whose purpose is to ensure that the company gets the right materials from the right suppliers to the right point of use at the right time. This meant refocusing individuals from volumes of reports created and towards supplier need based on deep understanding of how those reports would be used by them to meet the material requirements of the company.
Deming Analysis: Psychology
Working together as a system requires seeing people as more than a pair of hands. Each individual in the new department brings different contributions to the team, eg. institutional and industry knowledge, skills, perspectives, methods. Successful management requires respecting and leveraging these differences for the benefit of the whole.
By working more closely together and in partnership with their suppliers, the team discovered they could overcome unexpected roadblocks and setbacks more rapidly. By instituting short weekly huddles, information was shared and solutions developed that could be quickly tested in a PDSA cycle.
Over time, as the team began to see how the changes were accruing benefits to them, their attitude shifted and they became increasingly engaged in not only doing the work, but improving how it was done.
Deming Analysis: Understanding Variation
By standardizing the reports and how they were generated, the team dramatically reduced a source of variation that was a direct contributor to their inability to deliver them to suppliers on-time and with the required information to meet production. This was further enhanced through cross-training team members how to produce different reports, addressing another source of variation by decoupling the person making the report from the individual reports themselves.
Statistical Process Control was suggested, but the company had a bad prior experience and claimed they had disproven the utility of the charts in their system. Instead, they monitored variation in throughput by visually tracking how many suppliers got the right report packages at the right time. While technically not the right tool for the job, it was a solution they developed themselves and met their needs, which is important to building their sense of ownership and pride in work.
Deming Analysis: Theory of Knowledge
As mentioned above, PDSA cycles were used to test and revise improvements, which helped to build knowledge within the department. This had the commensurate effect of shifting communication patterns from everyone expressing an opinion on how to do things right toward more rational thinking as a team who grew less afraid to change course based on what was learned through each loop of the cycle.
My Take
What impressed me about this case study was not only the benefits Dave helped this department to realize, but how it was accomplished. In his LinkedIn post, he credits transactional lean techniques targeted on current team needs, a focus on professionalism, close attention to team dynamics, all aligned toward a shared vision of success and concentration on outcomes.
This is all fine and well, however, I think it is because he brought an innate sense of leading with a systems view that helped the department learn how to continually (not contiuously!) improve over ten months with only modest increases in staffing. In other words, “transactional lean” was the “how” that was enabled by shifting away from thinking in parts to thinking in interactions between people and how one’s work will be used by others in the service of the whole.
Dave’s summary makes this sound very easy, but it comes from years of deliberate practice and appreciation of the Deming management philosophy that enabled him to effortlessly use this knowledge as a lens to guide his recommendations. He was able to intuit, for example, that the performance problems the department had with poor on-time delivery were attributable to how the system was organized, not the people. At the same time, he recognized how that same system caused people’s behaviours to turn inward and be less cooperative, and how, if engaged in a purposeful way to improve the work they would become more cooperative and intrinsically-motivated.
I also appreciated his skill in accommodating the adverse reaction people in the company had to SPC and pivot to other techniques to accomplish the same goal, ie. monitor delivery for special causes. I encounter similar situations in my work where teams or leaders have had bad experiences with “agile” or “Scrum” and you can’t even say the words without risking curt dismissal!
In sum, I found the case study inspiring and an example of what can be accomplished with good guidance provided by an expert guide who has a solid understanding of Deming combined with professional skills and intuitions.
I am grateful and appreciative that Dave Nave agreed to share his case study and Deming analysis with me for the benefit of readers and subscribers of this newsletter, and also for indulging me with my questions and reviewing the draft before I pressed “publish”. Thanks, Dave!
What Do You Think?
Have you had a similar experience to Dave’s in introducing changes to an organization using lean or agile techniques, or did you see or experience the polar opposite? To what do you attribute the success or failure? What could a systems view bring to bear? How might this have changed outcomes?
Let me know your thoughts below, and feel free to share your own case study.
PS: Dave contributes to a YouTube channel called The Deming Cooperative with scores of archival footage of Deming and his colleagues and contemporaries at various seminars and workshops back in the day. They are a treasure trove of valuable insights well worth checking out.
