Try as we might to create the perfect system, all are subject to failure. Hardware may crash, software can fall short of expectations, and human error is an ever-present risk. For any supply chain executive, identifying and addressing a system's potential failure points is a key responsibility. So how do most companies perform in this regard? Actually, not that well.
Most of us have been taught that when we have a systems problem or are concerned about the possibility of one, we react by establishing a monitoring and feedback mechanism to prevent the problem's occurrence or recurrence. That is, we establish a control system. But, most control systems are the enemy of supply chain performance because they create additional work and slow processes instead of identifying and addressing the root causes of the issue.
Are all control systems unnecessary? Absolutely not, including instances where they are required by government regulations or for ISO compliance, and in cases where they are needed to monitor the performance of a new or redesigned process. But can many control systems be eliminated to revitalize a supply chain? The answer is yes. The key is identifying which ones, and transitioning away from them to create a trust-based model that focuses on the customer through employee empowerment, measurement, and information sharing.
The point of control systems
While the intent of control systems is to improve processes, in practice they can have the opposite effect. In our experience, four basic principles apply—principals you may not have considered:
- A control system never solves a problem—it just moves it
- The installation of a control system increases lead time
- A control system creates additional steps in a supply chain, thereby increasing the potential for failure
- Like government bureaucracies, control systems are only added, never removed
Let’s face it, control systems tend to stem from a lack of trust—something pervasive in much of what goes on in any given business, both throughout the enterprise and between the enterprise and its customers and vendors. While these costly, protective systems are established to prevent errors and create value, in fact, they often don’t.
For example, many companies use timesheets as a control over when and for how long their employees work. But there is little evidence that the value of timesheets is greater than the value of the time needed for employees to complete them and supervisors to review them. In manufacturing, many companies have elaborate control systems in their production process, from computer data collection to control charts. Yet they may have inventory turns as low as 10 or fewer per year.
Moving from controls to efficiency
Controlling the number of control systems in your business starts by evaluating the value they add. If a control system does not directly improve the product, is not required by government regulations, or fails to increase customer satisfaction, it probably can be eliminated.
Consider the example of a high-tech manufacturer that decided to scrap its authoritarian, volume-based, and efficiency-focused measurement control system to create a system focused solely on quality. They recognized that their current methods weren’t generating the performance improvements they needed to remain competitive, even though employees were monitored and measured in every conceivable way, including against each other.
To transition to a trust-based environment with reduced controls, the company restructured the processes underlying the unit's key performance indicators. A series of training programs was held on production management, quality systems, control tools, and methods for performance improvement, and the evaluation of individual performance was de-emphasized in favor of team-based metrics.
Employees were encouraged to take ownership of their equipment and recommend performance improvements, and a "quality week" was held during which non value-adding controls were eliminated. Processes on the factory floor and throughout the back office were evaluated and reconsidered, and Lean tools, which focus on process optimization, were utilized as relevant. In the end, extensive “waste” control systems were eliminated, throughput was increased, and customer and employee satisfaction both jumped dramatically.
Most companies are hampered by excessive control systems without even realizing it. So where can you start the process of assessing how to reduce or eliminate the ones that are sabotaging your supply chain? Here are four key areas to focus your thinking:
- Trust. Establishing an environment of trust with your employees starts with thinking about your employees as if they were customers.
- Empowerment. Your employees are on the front line of your business. Solicit their opinions and empower them to make decisions, especially when it comes to customer and vendor relationships.
- Measurement. The responsiveness of your overall network is a key metric. Measures like cycle time performance and customer on-time deliveries are ultimately better measures of success than how one employee performs relative to another employee.
- Information. Become information-integrated with all members of the supply chain, right down to your suppliers' suppliers.
Remember: most control systems don’t eliminate problems, they just move them. Control systems are not the root of all evil, but sometimes they come pretty close. A more positive approach—a trust-based model with a customer-focused purpose—will increase efficiency as well as customer and employee satisfaction.
Brian Nolf is global supply chain management practice head for Wipro Consulting Services. He is based in London. Gerhard Plenert has written extensively about supply chain strategy, most recently as co-author of Driving Strategy to Execution Using Lean Six Sigma (CRC Press, 2012). He is based in Sacramento, Calif.