8 TECH OUTLOOKOctober - 2020IN MY OPINIONBy Stijn Sweere, Supply Chain Entrepreneur; former Global Supply Chain Director at International Flavors & FragrancesOne could argue, that from a cost perspective roles like Production, Transportation, Ingredients planners, Customer service representatives and so on make up less than 1% of sales, so efforts to reduce non-value added activities should be focused elsewhere. While I disagree with this statement, there is also something larger at play. When I started my career many years ago, my manager told me that to be considered world class in manufacturing, at least 20% of the activities should be value adding from the perspective of the customer. When looking at actual manufacturing organisations, the reality is that only 1-5% of activities can be considered as value adding. It requires significant effort to increase this to the level of 20%.Today Lean manufacturing techniques that drive out waste have become commonplace in most manufacturing environments. In this article, the focus will shift to value adding and non-value adding activities in the administrative functions that typically support a manufacturing/ distribution environment. A straightforward method can be used to determine the time required for these administrative functions:· What are the typical steps that are executed on a daily basis? (from the process flow)· How much time is needed on average per step?· How many times does this process repeat itself (# of orders / transactions)?The outcome of this exercise will likely account for <20% of the time actually spend in a day.When the day-to-day reality is reviewed more carefully, it appears that most time is spent on activities that are not mapped on the process flowchart. What is the other 80+% of time spent on?A parallel could be drawn with the 7 wastes (Muda) from the Lean Manufacturing methodology. However, these 7 wastes do not seem to be directly applicable to an administrative process like for instance planning. Non-value adding activities in administrative roles have some of the following root causes:· Inconsistent, scattered or incomplete information for decision making.· Irrelevant Information flows (E-mail overload, false positives from ERP systems). · Reprocessing information (from systems or previous E-mails).· Unclarity in roles and responsibility. (double handling or ignoring issues)So what is constituted as value adding then?They fall apart in 3 key activities:· Process information for decision making (Input).· Make the actual decision itself (Action).· Communicate the decision (Output).The Hidden Gem in Supply Chain PlanningStijn Sweere
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