Don't Use Old Logistics Tools to Build an Advanced Supply Chain

Author:Mr Wally Klatch
Profession:Olami Inc

You may think you're using the right tool for the job when the tool is actually preventing you from doing the job right. Look at American car manufacturers - they used standard slotted screws in all their assembly lines until 1936, when Henry Phillips got Cadillac to use his cross-grooved screw and power screwdriver. Phillips screws and drivers worked better than slotted screws on automated lines - the driver seated better in the groove during screwing and "jumped out" of the groove when the screw was fully embedded - and by 1940 virtually all car manufacturers were using Phillips-head screws and drivers. Slotted screws had worked well in a manual production environment, but caused inefficiencies in an automated environment that the Phillips screw eliminated.

Supply Chain thinking often suffers from what could be called a "slotted screw approach" - applying traditional logistics methods to an advanced Supply Chain environment without adjusting those methods to meet updated demands. Just as a slotted screw can work on an automated production line, traditional logistics can work in an advanced environment but it is not always the best tool for the job. Like the Phillips screw, a modified approach to standard Supply Chain can truly bring innovation to a company's operations. The first step toward forward-looking Supply Chain is to take a close look at your current logistics situation from an angle that is often overlooked: the logistics characteristics of the products.

The Classic Logistics Confusion: Product Versus Package

Every company knows what products it uses in its own operations and what products it offers to its customers - or does it? In fact there are many companies that, from a supply chain perspective, have lost sight of what their products are, and have built entire supply chains that are not appropriate to their true products.

How can a company lose touch with its products, either those that it uses in its own processes or those that it sells to customers? There are several ways in which this happens. A common error is to confuse the packaging with the product itself. For example, when a liquid handsoap company offers its customers several options ranging from a 500 ml bottle to a five-gallon pail it is logistically offering the package, not the product. The entire supply chain is built around the package - discrete bottles or pails - rather than being built around the product - a liquid. This is the "slotted screw" approach, using the traditional...

To continue reading