The Great Convergence

I spoke at a conference last November in San Diego, about different supply chain management techniques and how the “compete” with each other. What impressed me at the conference was that after years of discussion around Six-Sigma, SCOR, LEAN and other approaches, people are now completely accepting true ‘convergence’ and ‘condensation’ around supply chain process work, and understanding the proper place of different methodologies within overall change management.

My speech started off with a basic ground-laying discussion of how we make supply chain process change in organizations, and the different levels of change. At the highest level, we’re really looking at introducing significant new strategies, lines of business, and so on, and the level of change affects hundreds of millions if not billions of dollars worth of cost and effort. At the next level down, we’re usually looking at changing a strategy in a current line of business – perhaps changing planning models, or strategy for execution insourcing/outsourcing, or consolidating process models across different business divisions.   Change at that level really involves costs and outcomes in the tens to hundreds of millions of dollars. Further down, we’re really looking at changing how we perform detail processes within an organization, maybe millions of dollars of value, then down to workflow tasks, then to transactions. Those who are familiar with the Zachman framework can recognize these levels, as well as the similar levels in the SCOR framework. Where did these numbers come from (from Billions to Millions and down)? Case Studies, experience with these types of programs, and anecdotal evidence (GE: the average Six-Sigma program produces $50.000 benefit).

Fig. 1: Decades of Change

Fig. 1: Decades of Change

You can see from the illustration a nice easy order of magnitude progression across the framework, and how it maps to (in this case) SCOR levels and components on the left half, and traditional process work on the right half of the diagram.

For most people in the audience, understanding the levels of change was intuitive. Likewise, in many other forums with Supply Chain Council, talking about supply chain process levels of change was easily accepted because everyone had experienced it. The remaining question for the audience then was: What skills were necessary for supply chain changes at the different levels? Level 1 Changes had impact on Levels 2, 3, 4, 5 clearly- you can’t, for instance, merge two lines of business at Level 1 without merging Level 2, 3 and so on. You would need skills at all levels to accomplish such a high level change. SCOR skills easily addresses Level 1, 2, 3 type changes, but even with SCOR, Level 4, 5 type changes are still required. Six-sigma addresses the Process Improvement changes (Level 4), Lean tends to address the Process Network changes (Level 3). So, when I do any kind of SCOR program change, I also need Six-Sigma and Lean skills in my team. I can’t function without them!

After years of discussing convergence, it was heartening to see most people react positively, and in fact accept my discussion (and the discussions of 15 other presenters) about the convergence, or interdependency of SCOR, Lean, and Six-Sigma. SCOR does an excellent job of defining the Scope and detail context of performing Lean or Six-Sigma programs. Six-Sigma does an excellent job of identifying detail process improvement changes leading to desired performance. It’s very easy to see that, in fact, with the above framework, you can start to converge many methodologies. If you’re working with Baldridge, it tends to span Levels 1 and 2 in terms of concern (company-wide). If you work with ISO, it tends to span Levels 3 and 4 (process detail). This I would look at in terms of industry-neutral convergence of methodology.

There are similar levels of convergence within each “slice”. SCOR has a process framework for Supply-Chain – but lacks detail in Level 4 process components. However, APICS, ISM, CSCMP, and others have detailed “practice” components and configurations for Level 4. It’s easy to look at how to exploit the practices and workflow from these databases in an integrated, Converged fashion also.

You can imagine that now we can look at mapping all of these methodologies and component information systems together to see how they will converge. But they all focus on different things.  SCOR focuses on process and practice and metrics across all its levels. Baldrige has seven components but focuses more on process. Six-Sigma focuses on process and metrics. Lean focuses on process and practice. ISM focuses on Practices, along with APICS and the others.

Fig. 2: Overlap and Organization of Supply Chain Transformation Approaches

Fig. 2: Overlap and Organization of Supply Chain Transformation Approaches

 

Is this enough? No. In practice when I had a supply chain center of excellence group the last critical competency was Program Management. I preferred PMI certified people on the program to run the changes from beginning to end to make the capture, analysis, and design of processes effective. At first, I underestimated the skills related to this, but that always caused trouble. Either you had a good program/project manager in place that facilitated process changes at all levels or you didn’t. Program Management methodology is a critical competency in the team and becomes part of the basic toolkit.

So I described to the audience how to build the supply chain center of excellence team using SCOR, Six-Sigma, Program Management skill sets and how to source or identify specialized expertise (APICS, ISM) when you hit specialized level-4 process areas of concern. So when I did major transformation programs, I already had a “converged” methodology which combined key skills and features of different methods and applied at the appropriate times – SCOR, Six-Sigma, and Lean techniques looking at process, metrics, and analysis. ISO for process descriptions.  APICS and ISM when we had to look at practice and workflow redesign, and so on. Program Management skills from beginning to end in a program. It really helped us orchestrate beautifully programmed change, and helped us to understand how to create high-performance teams.

What’s the takeaway: Look at your supply chain improvement teams. Do you have single-purpose teams (Six-Sigma) who lack skillsets to address top-down process change? Do you have broadly-organized process teams (SCOR) who lack critical skills to drive change at all levels? You should consider how to combine teams, and technologies to create integrated, Converged, organizations which exploit the best skills of all members to create the best outcomes for process change at all levels of a company.