The Bee Hive

Enterprise Sales & Operations Panning: Synchronizing Demand,  Supply,  and  Resources for Peak Performance

By George E Palmatier with Colleen Crum

J.Ross Publishing

In their book Enterprise Sales and Operations Planning: Synchronizing Demand, Supply, and Resources for Peak Performance, George Palmatier and Colleen Crum invite the reader into the inner workings of Universal Products Company, a division of Global Products and Services, Inc. The reader gets to spy on a company, discover how it operates and learn abouot senior staff, and see how a company can be turned around. The story is not all rosy. A number of major internal problems surface early on and the book follows the hero, Mark Ryan, as he meets key individuals and faces major issues in his effort to fix those problems.

The crux of managing inventory effectively is to ensure that our distributor will be able to at least meet or exceed his customers' expectations in order to maximize his profits. Customers' expectations differ - some will demand immediate delivery of an ordered item but some are prepared to wait longer. But what is relevant is to examine if customers are always this demanding. Surely there must be some items demanded that can be delivered in a certain time without negatively jeopardizing the customer service levels?

System complexity, an inherent element of most modern production and inventory control systems, creates a plethora of direct and indirect costs. To attack complexity, the manager must attack its effects and then identify and address root causes.

Complexity shows up in excess inventory, increased lead times, and falling quality levels (yields). Lets be clear, though, about one thing. There is nothing wrong with complexity if that's what the customer - especially the critical customer - wants and is willing to pay for. But complexity is wrong if it results from our attempts to satisfy customer demand at all costs or from our tendency to view and attack problems in isolation without drawing on past solutions.

I once read the following quote from Eli Goldratt, the author of The Goal:

"Tell me how you will measure me and I will tell you how I will behave. If you measure me in an illogical manner, do not complain about illogical behavior" 

Nothing drives change like a well-designed set of performance measures. And as business guru, Dr Michael Hammer observed, "There will be more change in the supply chain field in the next 5 years than in the preceding 15."  Clearly, few activities are more important to implementing supply chain strategy than the design of new performance metrics that promote process-oriented behavior. A supply chain should satisfy 10 performance measures.