Don’t Let the Process Become the Project

The impacts of supply chain vendor compliance must be built into the business processes

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Editor’s Note: Norman Katz, president of supply chain consultancy Katzscan Inc., writes a monthly column for Supply Chain Management Review. Katz’s column appears on the third Monday of each month.

Anything done to the point of overdone isn’t good and is likely counter-productive to the purpose. The supply chain predicaments that companies are still reeling from were not caused by the use of methodologies such as lean or JIT (just-in-time) as some articles purport. The supply chain disruptions suffered were more likely due to the abuse of these methodologies, compounded by the seemingly carefree attitude to outsource darn near everything. As I have stated in my other writings and in my presentations: You can outsource an operation, but you cannot outsource your responsibility.

When the process becomes the project, the priorities have become inverted. Projects are intended to produce something, an item or some software. If the project team is simply patting themselves on the back for process tasks done by project deadline dates, but the stuff they are getting done isn’t satisfying the user requirements or developing anything tangible or meaningful, I’m not certain that there is much actually being produced. A methodology is a plan, a roadmap, not the ultimate purpose.

On one consulting assignment where I was helping a consumer product company with EDI (electronic data interchange) and supply chain vendor compliance, the company was in the process of building out a new manufacturing and distribution facility, and they hired a lean engineer to help them with the design.

From one side of the building, where the raw materials would be received and the manufacturing took place, to the other side of the building where the finished goods would be stored and the orders fulfilled and shipped, the entire design was impressive, and the overall supply chain flow smooth.

I was asked to jump in toward the end of the design, close to the implementation, because there was some thought by the executive team that the vendor compliance I was working on might be a factor somewhere in all of this, probably relating to the fulfillment side. In examining the availability of goods in inventory between manufacturing and fulfillment, and how little time there was between delivery from manufacturing and the customer ship dates, I expressed my concerns that vendor compliance requirements would necessitate some changes.

These were some of the areas where I believed that supply chain vendor compliance would have process impacts:

Shipment scheduling: Small package (parcel) shipments usually don’t have to be scheduled because these carrier runs tend to be on daily, routine rounds like our postal mail. But LTL (less-than-truckload) and TL (truckload) shipments must be scheduled with the retailer’s carrier of choice, either via a portal or using the EDI753 (routing request) and receiving the EDI754 (routing instructions). Not only does routing scheduling take time, especially if done manually, but the return of the instructions (schedule) can take several hours.

Compliance label print and apply: If the carrier information is required on the compliance label, then the compliance label (also known as the “UCC-128 barcode label” or “ASN label”) cannot be printed until the shipment scheduling has been completed and the carrier information acquired. Label printing takes time, as does applying labels to each carton. If the pallets need a label, there’s that process too.

Palletize or floor-load: If the cartons are to be palletized, all cartons will have to be faced in one direction: the compliance labels of all cartons will have to face in the same direction before the pallet is shrink-wrapped. As such, carton stacking to create the pallet will take a bit longer. If the cartons are floor-loaded, that’s a more time-consuming process to load a truck rather than by pallet.

No backorders: As the client company was gearing up for national retail distribution, I emphasized that only 100% complete orders would be acceptable. (I made this point loud and clear by reviewing the retailer chargebacks—financial penalties for non-compliance—with them.) Everyone agreed that the safety stock of finished goods should be increased to cover for potential raw material shortages and possible manufacturing delays to ensure that national retailer orders could be fulfilled on-time and complete.

After my input, the lean engineer made adjustments to the supply of raw materials and finished goods and allocated additional time in the process to accommodate for the vendor compliance requirements in the distribution area. The result: the national retail rollouts were a complete success. And that lean engineer? We became friends and worked on other projects together.

Processes help to get us where we want to be, but they are not the projects: what we want to get done are the projects, with the processes there to help guide us along a path. The lean engineer here knew this and was amenable to adjust from his plan when presented with the reality of the new business model the company was moving into.

Make certain that you factor in the impacts of supply chain vendor compliance into your business processes, especially if you are growing into selling to regional and national retailers.

About the author:

Norman Katz is president of Katzscan Inc. a supply chain technology and operations consultancy that specializes in vendor compliance, ERP, EDI, and barcode applications. Norman is the author of “Detecting and Reducing Supply Chain Fraud” (Gower/Routledge, 2012), “Successful Supply Chain Vendor Compliance” (Gower/Routledge, 2016), and “Attack, Parry, Riposte: A Fencer’s Guide To Better Business Execution” (Austin Macauley, 2020). Norman is a U.S. national and international speaker and article writer, and a foil and saber fencer and fencing instructor.

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