Systemic Supply Chain Management

Consultants are offering a host of "Supply Chain Management" servcies aimed at a numerous industries. Healthcare seems to be the primary target given that 20 - 30 percent of Healthcare System expenses are centered around "materials acquisition". Much is being written about "Healthcare Supply Chain Management. Numerous companies have introduced technology to enable ecommerce assessment, procurement, Enterprise Resource Planning, Enterprise Risk Management and Logistics Management to name a few.

Companies like UPS, Federal Express, Yellow Frieght and DHL to name a few have established entire Supply Chain Management practices. The big six consulting firms have established entire divisions centered around providing "Supply Chain Management" practices and services. Billions are being spent in the pursuit of optimizing "Supply Chain Management" as a process to reduce expenses and maximize inventory control. Several market leaders are positioning themselves as "Supply Chain Management Guru's" and there has been several associations established to facilitate learning and cooperation around "Supply Chain Management". So is Supply Chain Management a new process given all the attention and discovery being proclaimed? No, it is not rather it is nothing more than the labeling of Profound Knowledge as a new discovery as it applies to Logisitics Management and Supplies acquisition interaction with the end customer, the buyer.

Pround Knowledge was first introduced in the early 40's by a consultant named W. Edwards Deming. Demings premise was based on four elements of Profound Knowledge which included:

1) Appreciation for a system
2) Knowledge about variation
3) Theory of knowledge
4) Psychology

The four elements of Profound Knowledge are all interrelated and cannot be separated without suboptimization of the total impact of making changes either to a single process or and entire industry. Much of what is being written and pursued as it relates to Supply Chain Management is not being done "systemically" rather it is being approached in "silos" of improvement.

An example would be while using technology to procure materials. This process surely provides benefits to the end user however unless it is connected with a "delivery" mechanism" the opportunity for improvement and cost reduction is sub-optimized.

Another example is lets say one supplier uses a "Transportation Management Solution" while another supplier does not. Would the end customer gain optimal benefit from the mechanics of "Supply Chain Management"?

When one examines the 'System" of Supply Chain Management one can see numerous interactive components including:

Materials procurement
Material Delivery
Inventory Controls
Distribution
Technology
Database Management
System Assessment
Score Carding
Planning
etc. etc

The list of interactive processes and related systems goes on and on yet connecting all together for the improvement benefit of all parties seems to be the missing criteria for todays "Supply Chain Management" practioners. Systemic improvement requires cooperation and profound knowledge. Two elements that should be driving entire Supply Chain Management efforts.

Next we will examine the "Theory of Constraints" as it applies to todays "Supply Chain Management" practices.