Design for the Supply Chain Pt 2: Innovative

JonathanLofton

A look at kanban from an innovative viewpointI recently began reflecting on if the “10 Principles of Good Design” applied to supply chain and how we design for it. In this blog I will explore the first of Dieter Rams’ ten principles for good design to see how it applies to the supply chain and what practices are emerging as we transition to Industry 4.0.

Principle #1: Good design “Is innovative” – The possibilities for progression are not, by any means, exhausted. Technological development is always offering new opportunities for original designs. But imaginative design always develops in tandem with improving technology, and can never be an end in itself.

Let me start by how I personally interpret these individual statements:

  • The possibilities for progression are not, by any means, exhausted.
    • I take this to mean that even with a new ‘twist’ added to it, the designed solution should be sound and adaptable enough to stand the test of time … to evolve. At the end of the day, it can’t be a fad.
  • Technological development is always offering new opportunities for original designs.
    • As technology evolves, the designed solution will not get thrown out but be further enabled to provide even more productivity, efficiency, etc.
  • But imaginative design always develops in tandem with improving technology, and can never be an end in itself.
    • The designed solution should have an eye towards what’s coming next. I believe this statement is what makes the previous two achievable even though I’m not sure anyone could have seen all that’s been enabled through technological advances in the past 10-15 years.

For me, kanban is an example of an innovative design for managing inventory in the supply chain. We can consider its predecessor minimum and multiple lot sizing in the sense of establishing inventory sizing to minimize cost while optimizing service levels. Kanban introduced rules of production which increased the level of control from simple min/mult lot sizing (an innovative and evolutionary step). As more companies implemented kanban, there were progressive improvements in how it was implemented. For example, I worked in a product realization center where the packaging itself was designed to be the kanban signal. The container held a number of filters and we held a limited supply in the warehouse. When filters were required (signaled from the production floor), these containers were pulled onto the line, which triggered a signal at the container level. Once the container was empty, it was sent back to the supplier on their ‘milk run’ when they delivered a newly stocked container. This allowed us to re-use the packaging, utilize the container as a kanban signal, and incorporate line-side storage, which collectively improved efficiency, cut costs, and increased visibility.

As technology continued to develop, B2B enabled improved ERP exchange of information across the supply chain and we saw the emergence of e-Kanban and e-VMI as well as changes in purchasing arrangements that further extended the life and opportunities for kanban. Fast forward to more recent times and we see technology that enables extended supply chain modeling and single & multi-echelon inventory optimization. We can creatively use these technologies to determine optimal inventory points and levels in the supply chain and then apply kanban as desired to further control flow.

And what of the future; what of Industry 4.0? Using my previous experience as an example, I’m wondering if the emphasis on sustainability will drive more re-usable packaging coupled with the “Industrial Internet of Things” to enable an even more integrated level of kanban sizing and optimization. What if the packaging itself communicates the product flow status and this is integrated with forecasting, demand and supply variability/error, which is then integrated into the modeling and echelon inventory optimization to support ‘what-if’ analysis and supply chain collaboration?

I believe kanban is a great example of the “Innovative” principle of ‘good’ design for the supply chain as it meets all the criteria. What do you think? Are there other examples of this principle that you have seen put in practice and how do you envision it progressing with Industry 4.0? Let me know, I’m eager to learn more!

Want to learn more about Design for the Supply Chain? Check out the rest of the series:

JonathanLofton

Jonathan joined Kinaxis in early 2014 after many years of supply chain strategy and management experience in the telecommunications industry. He now works with customers and provides expert guidance in leveraging Kinaxis’ product offerings to solve complex business performance challenges in their distributed value chain. Jonathan holds a Master of Science in Mechanical Engineering with Certificate in Computer Integrated Manufacturing Systems from the Georgia Institute of Technology (GaTech).

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Discussions

  1. Excellent thoughts. My perception of this essay is that it relates much better to:
    “Made to Stock”

    Not sure if the attributes can be adopted so readily for:
    “Made to Order”

    In the latter case, it may be argued that proper scheduling has a much greater impact on Supply Chain.

  2. Ted,
    Thanx for the feedback. I sometimes forget about MTO because I think as we add more concepts like commonality and postponement to ‘make to stock’ we move more towards “configure/assemble to order” which can come very close to “make to order”. I say this because a lot of the MTO examples that come quickly to mind (home or office building, tailor made suit, airplane, etc.) have some pre-stocked inventory somewhere in the supply chain. But to your great point, that wouldn’t hold for something “truly” MTO like a space suit.

    Thanx again and if you have time, please review and provide feedback on the upcoming posts in this series. I’d really appreciate your insight.

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  7. I am thinking about S&OP process. Innovation started with an idea that we should look at the value chain holistically and stop pursuing strictly functional goals. With time it grew, first to include more parts of the company, and later (in rare happy instances) to include partners in supply chain. As it grew there were new technologies that enabled this growth, both in scope and volume of data. And this process also holds for MTO business.
    As for Industry 4.0, I see the biggest space for improvement in collaboration with supply chain partners and including the whole chain in S&OP scenarios. However, there is a drop in collaborative win-win practices since 2008, so we’ll wait some more for this to happen. (I see this drop in my work, but I also run into this article by Adrian Gonzalez – the middle part: http://talkinglogistics.com/2016/02/22/ripped-from-the-headlines-supply-chain-trends-in-the-news/. If any of you think that this drop in win-win collaboration is not happening, please say so and make my day. It’s depressing to destroy value in this way.)

  8. Branka,
    Thank you for such a thought provoking reply and the post to the article (I enjoyed the Naval Academy story in addition to the Woolworth example you mentioned). I think there may have been a drop over the years but I’m expecting to see a reversal as “big data” becomes more mainstream and companies determine that the insight that can be gained is enabled and enhanced with tighter “win-win” relationships. It certainly won’t be achieved by simply dumping data … and definitely not fully optimized with bullying. Stay optimistic, there are sunnier days ahead!

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