Logistics is a critical component of effective supply chain management, as it covers the procurement and movement of materials, scheduling of people, organization of manufacturing processes to convert inputs into finished goods that customers are willing to pay for. Logistics, procurement and supply chain professionals must assure that all logistics and supply chain activities add value to customer and stakeholder portfolios:
The value must be the driving force of all activities an organization undertakes. According to various experts, value has three characteristics.
- A physical transformation takes place, such as the conversion of raw materials to finished goods
- All logistics and supply chain activities are done right the first time
- The end user or customer is willing to pay for these goods or services.
A careful reflection of the value creating and value enabling activities of an organization may reveal various problems, defects, inventory build ups, customer dissatisfaction, errors, cost overrun, process waste and the list goes on.
Logistics and Supply Chain Professionals must be proficient in Business Problem Solving. Two very powerful problem-solving methodologies are the DMAIC (Define, Measure, Analyze, Improve and Control) and PDCA (Plan, Do, Check, Act) Models.
The Define Phase of the DMAIC process can be described in simple terms as such: “To have the team and its sponsor reach agreement on the scope, goals, and financial and performance targets for the project” (George, Maxey, Price, & Rowlands, 2005, p. 4).
The Measure Phase of the DMAIC Model establishes the current state performance of a process and verifies it through the process, value stream mapping and capability measures. Key Performance Indicators (KPIs) and current process capabilities are identified and measured to depict the current state of performance.
The Analyze Phase of problem-solving is leveraged to understand the root causes of deviation from customer requirements and specifications.
In the Improve phase of the DMAIC problem-solving model, critical outputs are verified, process improvements are designed, and new processes are piloted. Resulting outputs include newly defined KPIs, action plans for improvement, future state process map, control plans, and associated new documentation. (Goetsch, 2013). The PDCA model can be leveraged in the Improve phase, where effective solutions are the plan, deployed, checked or verify and
The Control Phase focuses on ensuring that the improved processes continue to work well, produce desired outcomes, and maintain agreed-upon quality levels. Standardization, Change Management, Response, and Counter Measure Management are crucial to this phase
Effective problem solving is a mindset, a philosophy, a powerful assembly of tools and know-how that no supply chain or logistics professional can function and lead without.