About 2,000 years ago, a young carpenter from Nazareth cured a blind man, allowing him to see for the first time in his life. By all rights, this feat should have made Him a hero in the eyes of any who had witnessed or heard about it.

One problem: He decided to perform this miracle on the Sabbath, a day of rest according to church law. As a result, He was vilified as a sinner by church leaders for performing work on the Sabbath day. But shouldn’t He have been praised for restoring the man’s sight?

Throughout the ages, people have spent a lot of time trying to formulate rules. Rules of behaviour, rules of government, rules of business, etc. And the reason behind the effort is noble enough: to try to make things clearer and simpler to understand.

However, the problem with rules is that they don’t always stand the test of time and they can be construed in many ways to serve different purposes. And when two people disagree on the interpretation of a rule, the inevitable result is more rules to clear up the situation.

So is life really simpler with more rules?

Consider the Pharisees mentioned earlier. According to the rules at the time, their actions were totally justified. But even though the rules of the church have changed over time, the principle used by Jesus (always try to help those in need) is as relevant and easy to interpret today as it was two millennia ago.

And that’s the real difference between rules and principles. Rules are designed to give specific answers to specific questions. When new situations arise that don’t fall into the current set of rules, the only choice is to create more rules.

Principles, on the other hand, give people general guidance on how to think about problems. They can even be applied to new scenarios that haven’t yet arisen.

From a business point of view, the inherent flexibility in being principles-based can be a huge advantage over rules-based competitors. And nowhere is that more true than in the supply chain area of the organization.

So, what are the characteristics of principles-based organizations?

From a People point of view, principles-based organizations spend far more time educating than training. Training is about showing people how to perform specific tasks. Education is about giving people a general frame of reference to solve problems themselves. Over time, a well educated person will significantly outperform a well trained person in virtually any discipline – including supply chain management.

From a Process point of view, principles-based organizations don’t analyze things to death or count on “the facts” to tell them how to make decisions. Did you need analysis or facts to determine that Jesus’ decision to cure the blind man was the right one, regardless of the rules? Business decisions are no different. More often than not, the right thing to do is obvious – so do it.

From a System point of view, principles-based organizations take a simpler approach. Systems are designed and built to aid people’s thinking, not replace it. A highly complex system with a trillion lines of code to manage the supply chain is a sure sign that an organization is putting its faith in rules, not principles.

Remember, rules are meant to be broken, but principles last forever.

Posted by Jeff Harrop at 08:17 PM | Permalink | Comments (0) | TrackBacks (0)

"We don’t make the snowboard. We make it stronger. We don’t make the clothing. We make it brighter. We don’t make the helmet. We make it tougher.

At BASF, we don’t make a lot of the products you buy. We make a lot of the products you buy better. ®"

It is one of the most recognizable advertising campaigns in the world. BASF, the German chemical company, makes over 6,000 products that we all use on a daily basis – and most of us probably couldn’t name a single one of them.

The point they are trying to make is that they provide the basic elements, without which a large number of the products we use today would be inferior. The value they bring is interwoven (sometimes literally!) in the finished goods that are made by other companies.

Flowcasting is a lot like that.

At first blush, people tend to want to pigeonhole a concept like Flowcasting into their current notions about how the supply chain operates. “It’s basically a different flavour of computer assisted ordering, right?” people will often ask us.

Just like there’s a lot more to BASF than chemicals, there’s a lot more to Flowcasting than replenishment.

Flowcasting doesn’t plan your promotions. It makes the execution of your promotions more successful.

No more separate sales planning, shipment planning and purchase planning. No more committing quantities and dates weeks in advance, then hoping for the best. With Flowcasting, you plan your sales uplift and additional merchandising requirements once at store level and let the supply chain plan (and replan) itself right through until the promotion is closed. Don’t believe us? Read Chapter 6.

Flowcasting doesn’t rebalance your categories. It makes category management, product transitions and planogram execution seamless.

No more cramming the DC with pipeline filling quantities that will hopefully make it to the stores over several weeks. No more guessing the impact of planogram resets and pushing stock to the stores. No more trapped inventory or massive markdowns because of bad transition timing.

Flowcasting is a forward looking planning process. It always has an up-to-date view of where your inventory is -and where it’s going to be - several months into the future. If a planogram is changing in 2 months, plug it in and let the calculation deliver the exact quantity required to support it to the exact stores that are affected at the exact time the planogram needs to be set up. If you’re transitioning a line, look in the planning system to see when store level inventories will be dropping to zero with no pricing changes. Don’t believe it’s possible? Read Chapters 7 & 8.

Flowcasting doesn’t manage your capacity. It makes your capacity constraints highly visible before they become a problem.

No more using last year’s receipt, shipment and inventory data to try to predict your upcoming capacity needs. Have any products been added or removed since last year? Have any new stores opened or closed since last year? Are this year’s planned promotions identical to last year’s?

The Flowcasting process produces up-to-date projections of demand, supply and inventory at the most granular level (by item by day in units) for every location in the supply chain. Those projections include not just baseline increases, all known demand and supply influencers at the same level of granularity. Capacity planning is as simple as converting the units to cubic feet, pounds, pallets, picks, trailers labour hours, etc. and aggregating by facility, facility area or lane. Sound too good to be true? Read Chapter 10.

Flowcasting doesn’t solve all your supply chain problems. It makes solving your supply chain problems easier.

Posted by Jeff Harrop at 01:00 AM | Permalink | Comments (0) | TrackBacks (0)