Industryweek 1900 Iwsmart06 1

New Perspective On Supply Chain Performance

March 22, 2006
The difference people make to supply chain performance.

Two years ago at a conference, I completed my presentation on lean operations and slipped into the back of a standing room only session on supply-chain strategy. The presenter was advocating a total systems approach to managing information, materials and services . . . a well-received refrain. After 20 minutes or so, I realized that nowhere in his "total system" was there any mention of the role of people in designing and executing supply-chain strategy. Since my work is the human side of operations, his oversight caught my attention.

Nowhere in the presentation was there mention of the challenges involved in designing the supply-chain network, adapting to foreign cultures, establishing relationships, negotiating agreements, executing new product initiatives, or managing it all. As though he represented Nike, the message was Do it!, without apparent consideration for the important role of human performance in supply chain strategy and execution.

Following the presentation, I was further surprised when none of the questions from audience members explored the importance of the human contribution to supply-chain performance. I waited after the session to talk with the presenter. In response to my direct questions on human contributions, the only answer I received was a general sure you need an organization of good people, but that should do it.

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This experience caused me to wonder if supply-chain executives were focusing on the human side of the supply chain. Sure they get that both people and machines are involved, but are they clear about how to bring their supply chain's human systems up to peak performance? No serious supply chain strategy can afford to miss this.

Skipping over an explanation of systems theory, let me simply ask what you imagine to be the difference between human systems and machine systems? Perhaps the outputs of each make this most clear.

Human systems produce some physical affects like movement, coordination, assembly, dexterity, lifting, and so on, but are more important for their uniquely human affects like empathy, concern, understanding, design, leadership, learning, vision, strategy, initiative, responsiveness, innovation, judgment, solutions, diplomacy and others. These human effects are well understood today to be the valuable output of applied human capital and the only source of sustainable competitive advantage in business.

Machine systems are created by human systems, primarily to extend the capability of human systems by assembling information, supporting communication, providing mobility and by enhancing human-designed physical processes with precision, speed and scale. Since the dawn of the Industrial Revolution, machine systems have provided tremendous improvement to the output of human systems. Together, these systems are a powerful combination.

Consider briefly that one of these types of system is more important to your supply-chain. Which one? Your supply chain's human systems or its machine systems? The answer has to be your human systems, because it is your supply chain's human systems that conceive, design, develop and operate its supporting machine systems.

Then doesn't it follow that optimizing your human systems is the sure path to achieving a peak-performing supply chain network. So, what part of your day is spent developing your supply chain's human systems?

In his breakout presentation at IW's SMART/mfg conference to be held June 14-16, in Las Vegas, Pepitone will address how companies can develop-peak performing supply chains.

To learn more about the conference click here.

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