step in a process is the one that constrains the entire system. TOC helps you focus improvement efforts on the constraints because that is where you can have the greatest effect on the supply chain.
After you find the constraint, you have two choices:
Slow all the other steps so that they run at the same speed as the constraining step. This option prevents the buildup of inventory between the steps in your process.
Improve the constraint so that the entire system moves faster. As you continue to improve the constraint (perhaps by using Six Sigma), eventually, the constraint is no longer the slowest step in your process and stops being a constraint. Some other step becomes the constraint that’s limiting your process, and the cycle starts again.
Suppose that you have a supply chain that involves several steps. Your customers, at the end of the supply chain, want to buy 1,000 widgets each month. But you can deliver only 750. How do you find the problems and fix them so that you can increase the capacity of your supply chain and sell your customers the products they want?
Because of TOC, you know that the entire process is limited by a single constraint — in this case, the slowest step in the process. Instead of trying to fix everything, you need to start by figuring out which step is slowing the rest of the system.
After you find the constraint, you can slow all the other steps so that the entire system is running at the same speed — in this case, tuning each step to produce only 750 widgets per month. That way, you won’t have inventory building up in between the steps of your process. But you also won’t be meeting all of your customer’s needs.
Alternatively, you can improve the constraint, allowing the entire supply chain to move faster. As you continue to make improvements, the constraint no longer limits the process. At that point, some other step has become the constraint. Then you need to shift your focus to the new constraint.
Structuring Supply Chain Projects
Projects are the way that companies make changes. Because supply chains need to adapt to changes all the time, project management has become an important part of supply chain management. One common characteristic of supply chain projects is that they tend to be cross-functional. You may need to have logisticians and operations managers, human resources professionals, information technology experts, and accountants working together, which can create challenges in terms of communication and workload. First, you need to look at the unique characteristics of supply chain projects and how they can create management challenges. Then you need to have a set of principles that help you lead cross-functional projects and navigate these challenges effectively.
Managing cross-functional project teams
Supply chains connect companies and cut across the silos within a company. As a result, supply chain projects commonly involve team members from many functions. A supply chain project team might include people from business development, customer services, shipping, receiving, manufacturing, information technology, accounting, and human resources. Managing cross-functional supply chain projects is a great way to develop a broad network and a deep understanding of the complexity of supply chains. The project manager must master the use of influence, pay careful attention to communications, and help team members manage their priorities for the benefit of the team.
Bringing people with diverse skill sets together as a project team can be a great way to stimulate innovation and accelerate change.
Cross-functional project teams have some major challenges too. Three of the most common challenges for cross-functional project managers are authority and influence, communication, and prioritization.
Authority and Influence
Authority means that you have the ability to hire, fire, reward, and correct someone. Often, key team members report to managers in another division in the company and are only loaned to the project. This is an example of a matrix organization. In matrix organizations, it can be difficult for the project manager to address performance issues directly because they do not have the authority to do so. If the project manager doesn’t have the authority to manage the team members, they will need to rely on influence to keep all the team members pulling in the same direction.
Communication
Experts in any field have their own tools, rules, and language. In supply chain management, the same word can mean something different things depending on the context. Transportation companies (such as steamship lines and trucking companies) refer to their customer as the shipper, whereas their customers often use the term shipper to describe the transportation company. The project manager needs to be able to translate among functions and encourage people to explain what they’re trying to say without using jargon.
Prioritization
When someone is asked to work on a project, that person may not get to stop working on other things; they may be working on several projects. If one of the other projects requires more time and attention, you must make sure that your project gets enough support to avoid getting into trouble. Anticipate potential problems so that you can make formal arrangements. You might make an agreement with the team member’s boss to ensure that your project has priority, for example. Or perhaps the team member’s boss may commit a certain number of hours each week to your project.
Creating cross-functional project plans
One of the best ways to deal with the challenge of leading a cross-functional project is to have a solid project plan. Building the plan gives everyone a chance to provide input and catch interdependencies. Human resources, for example, may not be able to start training employees in a new process until the necessary equipment has been delivered and installed. An integrated, cross-functional project plan makes it easy to see these connections and provides a clearer picture of the time required to complete a project. Creating an integrated plan also provides a natural opportunity for anyone on the team to ask for clarification on unusual words or jargon.
You can use many approaches to build an integrated project plan, but the following system works best for me:
1 Bring representatives from all the necessary functions together for a planning meeting.Representatives may include people from logistics, operations, information technology, human resources, and accounting.
2 Ask the team to come up with a list of deliverables.Deliverables are clearly defined results that the project must produce. To tell whether a deliverable is a good one, use the Done/Not Done test. You should be able to ask whether
