TOCICO

This second 90-minute session will build on the keynote theme and take participants through the 5 steps, as detailed in our new book with the same title as the session. These steps are what we use to help organizations change from a “push and promote cost centric strategy” to a “position and pull flow centric strategy”: 1. Explain the “New Normal” – Today’s supply chains are complex adaptive systems (CAS) and require “new rules” centered on maintaining system coherence; 2. Understand and embrace flow and its implications for Return on Investment (ROI) and the importance of defining relevant information that ties flow to ROI. This requires understanding and using relevant ranges of time to determine when non-financial measures are appropriate and when financial measures are appropriate. This is a fundamental building block of good management accounting and economic principles but has even greater importance due to the nature of instability inherent in CAS and demonstrated by the bullwhip effect in supply chains. 3. Design an operational model for flow. This requires the organization to understand itself as a system and the connections and interconnections of the flow of materials and information. I will explain the different role of decoupling points and control points to create short stable windows for planning and execution from quote to cash. I will include how to choose them and protect them with dynamic and variable time, stock and capacity buffers; The vital role of real time visibility of these buffers in both planning and scheduling as well as execution and their relationship to smart metrics. 4. Bring the model to the organization – Implement the model. 5. Use smart metric to operate, sustain and improve the Demand Driven operating model. Smart metrics use dynamic, visible buffer management to define the edge chaos and provide a safe zone for organizations to learn, adapt and improve. There are 6 Smart Metric objectives. Three non-financial, system reliability, system stability and system speed/velocity. The fourth is quantifying system waste and the dollar opportunity and it is a mix of both financial and nonfinancial measures. The remaining two, local operating expense and strategic contribution are both financial. The session will explain the fundamental building blocks of a Demand Driven Smart Metrics information system. We will use a practical example of how to design and then use the model to plan, schedule, execute and focus/prioritize improvement. We will explain the relationship of the use of visible a real time feedback loop focused on the flow to and through strategic control and decoupling points.