Conventional wisdom is that the concept of a demand-driven supply chain is relatively modern. The article " Winston Churchill's Supply Chain (Part 1)" looked at how in May 1940 the concepts of supply chain agility, just-in-time manufacturing and zero inventories were introduced to offset a pending disaster. And it was done within an incredibly short time frame to respond to the demands of a nation in crisis. This second lesson-from-history article looks in more detail at how this was done and the key leaders involved, namely Lord Beaverbrook.
Today's organizations are striving to move to a more effective demand-driven supply chain. Not only must it be more resilient and cost-effective but also be able to respond directly to continually shifting customer needs and reduce lead times. Computer giant HP took steps toward this by moving from a vertical manufacturing model to an outsourced manufacturing model. This created the world's largest IT Supply Chain that in 2005 consisted of 32 manufacturing plants, 88 distribution hubs, 700 suppliers and 19 logistic partners. That year, HP shipped over 50 million printers, 30 million PCs, 30 million servers and 300 million cartridges.
In May 1940, as the British army was evacuated from Dunkirk, France, Prime Minister Winston Churchill was faced with a disaster and asked his Chiefs of Staff to report on the problem of the defense of the U.K. The report stressed the overwhelming superiority of the enemy on land and in the air. The U.K. was forced into a defensive strategy until the deficits in man power and equipment could be made up. This would mean a relatively long wait of two or three years.
Changes in the Governance Framework
One of the earliest and most important decisions by Churchill in the running of war production was the formation of a new Ministry — the Ministry of Aircraft Production. Churchill believed the Air Ministry had failed to meet its fighter production targets and had to be replaced. The dramatic move was in itself an indication of the commitment now set to fighter aircraft and the urgency that was now attached to it.
Churchill needed a strong leader that could turn around fighter production. Churchill appointed Canadian Lord Beaverbrook as its minister, a close confident he had known since they both served in the First World War cabinet of Lloyd George. Churchill could trust him and gave him a clear mandate to transform fighter production. Beaverbrook, a newspaper magnate, was a no-nonsense man who could cut through the red tape of government bureaucracy. He was an outsider who would take a very different approach to accelerate production, lock-stepping the supply chain to the daily demands of the Royal Air Force (RAF) Fighter Command.
Beaverbrook thought that the Air Ministry was not well suited to running aircraft production, and that people he described as "air marshals" were not appropriate by character or training. He envisioned making his ministry into a fast-growing enterprise run by business people who knew what they were doing. They had the business background and administrative approach that was more spontaneous and informal than the established practices of government departments. The latter was grounded in red tape, routine and paper work, or, as Beaverbrook put it, "organization was the enemy of improvisation." Beaverbrook reasoned that even if this existed at the lower levels of the Ministry pyramid, the top levels would be run by an informal group of his personal advisers drawn from business and industry, with Mr. Hennessy of Ford Motor Co. at its head. This reflected how best practices were brought in from the automobile manufacturing industry to speed up fighter production. In a short time the ministry closely reflected the personality of Beaverbrook and the critical urgency of the tasks he had to face.