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How insightful is your Root Cause Analysis of the performance gaps in Supply Chain?
If the Supply Chain performance falls short of the ambitions or expectations, most companies carry out some sort of a Root Cause Analysis to understand the various causes of underperformance.
Does RCA really improve the performance going forward? In most cases, the performance improves only marginally, leaving a large gap still. Why is it so?
I have seen umpteen cases of RCA and talked to people who carry them out as well as the people who act on them. My observation is that the fundamental root causes rarely come out in such an analysis. People stop at just 1 or 2 levels of Whys instead of going all the way to the 5 Whys. As a result, the entire framework revolves around the current processes and the current capabilities as given.
For example, people rarely question why we plan and review at a monthly frequency, why plants have a frozen production schedule, why we have high MOQ for certain input materials, why the production batch size is so high, why the finished goods must wait so long for SQC, etc.
The real benefit of RCA comes when we question the status quo to understand why the current processes and capabilities lead to underperformance. If the current RCA doesn’t expose the holy cows, real performance jumps are difficult to achieve.