DNA Therapy for Strategic Cost Reduction in Supply Chains
My recent hunt for stem cell banking information in South India got me excited on a subject of high interest in the biomedical world. Stem cell therapy is the latest medical wonder discovery and supposed to be a cure for 70 odd complex maladies of humans, especially interesting because till late these ill’s were supposed be hard to win over with the conventional medical treatment methods - treatments which were more focused on treatment of the symptom or providing a patch solution for the life threatening diseases, not usually a permanent cure.
DNA is the building block of all life and living on this planet. They are the smallest finite elements which determine the characteristic and personality of any individual. DNA or gene therapy gets to the root cause of the problem. They provided the paradigm shift in medical treatment from the symptomatic treatment of the yesteryears to treating or correcting the diseases cells at source.
What has DNA therapy got to do with Supply Chain Management?
The market conditions are really harsh and organizations having to work really hard to stay fit and survive. Just coming out of a good market situation not so long age, never having anticipated a sudden exposure to such conditions and caught off guard, most organizations are working to shed of the extra flab of complacency in terms of supply chain inefficiencies, inventories and costs. Most resorting to crash diets by tactically cutting on costs heads like head count reduction, process improvements, asset rationalization etc. Often some of the tactical decisions are in conflict with the overall objectives like reducing people while needing to increase overall competencies, reducing inventory while needing to improve service levels. The KPI is to reduce cost (at whatever cost) for every individual, there is no one view to how this is impacting the entire supply chain and the organization for the future.(At 40 pounds overweight myself and having been through crash programs, I have personally felt how hard it is for a successful long term solution to trimming)
So the question is - Is there a one view holistic approach which gets to the fundamental building blocks of the organization’s supply chain and works of those elements to shed the extra fats “at source”. Can organization supply chains have a DNA which is very characteristic to the individual company's personality and the industry which determine how the supply chain operates? We are looking for a “Strategic Cost Reduction” approach to supply chain to treat the root cause of supply chain obesity. I have come across various models of cost reduction and personally feel a one axis view would always by tactical and for a strategic approach one needs to look at a multitude of factors
Figure 1: Sample illustration of a possible supply chain DNA model for cost reduction
(Cannot profess to have a good understanding of DNA structures (not yet), the above diagram is not possibly a technical representation of the actual DNA helix but an attempt to explain the complexities & the solution approach conceptually).
As with human DNA’s (AGCT for Adenine, Guanine, Cytosine & Thymine), the supply chain DNA have 4 building blocks as indicated in the table below. Call this the MOCI framework, Model, Operations, Costs and Integration.
Figure 2 : Building blocks of supply chain DNA
These building blocks can be visualized across the functional components of supply chain, namely – Design, Plan, Source, Make, Deliver, and Service. While the first 3 (MOC) could be viewed as independent blocks, that last (I) – Integration visualizes on how the others effective synchronize to work in unison. The gaps in integration, if any, are pores where cost losses could be avoided, distances reduced between decisions and results and enhance accuracy.
The target is to get to a lean and mean supply chain machine which runs through the extended ecosystem to build and deliver value at the “Optimal Total Lifecycle Cost”. One size does not fit all, Meyer Briggs type indicator tells us that there are broadly 16 types of personalities who react differently to situations and stimulus. A holistic approach to strategic cost reduction can be built once we are able to perceive the pulse and personality of the supply chain.
The important question then is – How do we create a scan imprint (w/o the microscope’s, CT’s and MRI’s) of the organizational supply chain DNA??
Will be glad to hear experiences on Supply Chain DNA and your thoughts on its relevance to current challenges & cost reduction approaches.