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Improving efficiency of Supply Chain processes? Be careful…
Most supply chain teams seem to be working on efficiency improvement projects, hoping to get net cost savings as a result. However, the results are far from convincing. Most such projects don’t improve company’s profits. Why is that?
There is an essential pre-requisite to such improvement projects, which is often overlooked. Is the process being improved designed properly? If the design itself is ineffective, all our efforts to improve its efficiency will make it even more ineffective! For example, if the process calls for pushing finished goods closer to customers, doing it more efficiently will push even more material to the last buffer.
If the efficiency improvement project is in the factory, is it for the bottleneck resource? Making non-bottlenecks more efficient is unlikely to result in cost savings… it may even jeopardise efficiency of the bottleneck itself!
We must choose our ‘efficiency improvement’ battles carefully.