A group of undergraduate operations students at the Fisher College Business bear the distinction of being the first in the world to earn a new professional certification seen as a stepping stone another key resume-booster.
A total of 15 Fisher students recently passed a version of a new exam through the American Production and Inventory Control Society (APICS) to earn the “Global Supply Chain Associate” (GSCA) designation. This brand-new designation is the culmination of a year’s work among faculty at several universities nationwide, including Andrea Prud’homme, a clinical faculty member at Fisher who also serves as an associate director for the Center for Operational Excellence. The Fisher students took part in a test launch of the program, which is set to roll out internationally this fall .
Prud’homme said a key motivation in creating the GSCA designation was the fact that undergraduates often don’t have the time or money to pursue the well-known Certified Production and Inventory Management (CPIM) designation.
“This gets them started should they wish to pursue CPIM certification,” Prud’homme said. “Additionally, many of the companies that hire our undergraduates provide incentives and support for new hires to become CPIM-certified.”
The Center for Operational Excellence’s flagship annual event has more than a few things in common with the fast-paced racing world featured in the kickoff to the fourth-annual Leading Through Excellence summit.
In the span of three years, COE’s April Leading Through Excellence summit has grown to a gathering of nearly 400 process excellence leaders from around the world: 50 companies, a dozen workshops and tours, 20 breakout sessions, four dynamic keynote addresses, and countless insights across three days aimed at helping organizations harness the power of process improvement.
Here’s a look back at the event:
Leading Through Excellence began with a bang as nearly 100 attendees plunged into the high-paced world of pit crew racing, guided by Mooresville, N.C.-based training ground Performance Instruction & Training (PIT). The session’s focus on handoffs, coordination and standard work drove home the importance of having a high-functioning team for Cheryl Cole of KeyBank, which sent 17 employees to the conference. “We can all benefit from what we experienced from PIT,” she said. “Teams tend not to be aware of the significance of being in sync.”
Team-building emerged as the heart of Leading Through Excellence, where a number of companies brought upwards of 15 employees. “Getting a team together, you start bouncing ideas off each other,” said attendee Linda Schaefer of COE member Clopay. “You get more people involved, the excitement builds, and great things always come of that.”
Operational excellence isn’t bound by the Japanese words that make the foundations of lean. Author Dan Markovitz (A Factory of One, Building the Fit Organization) in his workshop offered a jargon-free look at continuous improvement that’s at the heart of his own passion to break down barriers to understanding. “If we could speak to them using analogies and metaphors that make sense to them, all the sudden we don’t have to go uphill,” Markovitz told COE in a pre-summit interview.
Longtime COE member Cardinal Health Inc. hosted a “train the trainer” workshop hosted by Luis Loya (pictured, middle) that modeled the health-care company’s own best practices in teaching lean practices.
Off-site tours during Leading Through Excellence ranged from a trip to Anheuser-Busch InBev’s massive Columbus brewing facility to a trip through the production line at COE member Abbott Nutrition. Here, Ohio State’s own Spine Research Institute demonstrates its trailblazing work in studying back problems, a hugely costly yet widely misunderstood workplace ailment.
After hosting two high-paced rounds of pit crew training simulations on the first day of Leading Through Excellence, Performance Instruction & Training’s Ben Cook took to the stage to kick off a full day of breakout sessions. Before a crowd of nearly 400 people from 50 companies, Cook illustrated PIT’s “think inside the box” philosophy, that’s hinged on driving precision from a highly functioning team and reducing human error as much as possible. “The problem is the human element – that’s what happened with us as pit crew members. If we break down, then we lose the race; the car’s not gonna lose the race for us anymore.”
True leaders don’t bark answers – they ask questions that help dig to the root of the problem. Attendees practiced asking effective questions in a packed session hosted by lean expert Margie Hagene.
More than half of all breakout sessions at Leading Through Excellence are hosted by industry leaders, sharing stories of what worked, what didn’t – and how we can all learn from it. Pictured is Guru Vasudeva, SVP and Enterprise CTO at COE member and summit sponsor Nationwide, who shared his own “day in the life of a lean leader.”
The balance of the breakout sessions at Leading Through Excellence are hosted by Fisher College of Business faculty members sharing their own research. Pictured is Prof. Aravind Chandrasekaran, who offered insights he gleaned from working with high-tech manufacturers facing sudden – and potentially cataclysmic – shifts in project scope.
Matt Dumas (pictured, above) of COE member Honda R&D said the summit is “a great event for a team. To have more of the organization thinking about lean and understanding these principles makes it that much easier to take it back and work together to apply it.”
Lead summit sponsor MoreSteam.com gave attendees a hands-on taste of process design principles with a catapult workshop that had participants taking a “MacGuyver” approach and facing off in friendly competition.
Longtime lean leader Joe Murli in his keynote address offered his decades-in-the-making perspective on the lean management system. Of the summit, he said “this isn’t just leading-edge thought, but edge of the envelope thinking here. It’s little things that we can pluck off the tree and bring back to put into what we’re already doing. That makes it much more powerful.”
Connecting an organization’s purpose and mission down to day-to-day work can be a formidable challenge for any company. David Kalman of Root Inc. in his popular breakout session showed attendees how visuals can help close that gap.
Harvard Business School researcher and professor Francesca Gino, author of the book Sidetracked, guided attendees through the wild world of decision making, where our hard-wired instincts often stand in the way of the right calls. “We are human beings,” Gino said. “Often we start with a plan, a clear goal, and we take the time to come up with a clear action plan. When we look at the outcome, we’re often a little bit off target.” Knowing how to counteract the unconscious biases and instincts we possess, Gino said, can lead us to better decision making, she said.
The behind-the-scenes action at Leading Through Excellence was fueled by more than three-dozen Fisher College of Business undergraduate students, graduate students and staff members, who served as volunteers and introduced speakers throughout the event.
Accidental Creative founder and acclaimed author Todd Henry closed out Leading Through Excellence, urging the audience to ask: “How are you bringing yourself to the table every day as a leader? A brilliant idea is not enough – in order to succeed, you have to develop your voice as a leader and you have to help your team develop its voice.”
by special contributor Nathan Craig, asst. prof. management sciences, Fisher College of Business
The retail shopping experience today is one of incredible convenience for customers and extraordinary complexity behind the scenes.
Customers have grown accustomed to the seemingly sleight-of-hand ease with which many retailers stock shelves and fill online orders, while their supply chains are under increasing pressure to keep up. For suppliers and retailers alike, a blip that keeps a shelf empty or stalls a shipping date is an invitation for competitors to creep in—or for customers to take aim on social media.
Retail, in short, has never been better positioned to deliver the multi-channel experience customers crave. But the stakes have never been higher. One slip in the journey from factory floor to customers’ hands costs time, money and brand loyalty.
Major supply chain disruptions—natural disasters and strikes, to name a few—might catch headlines, but they’re rarely the culprit behind empty shelves. The kinds of problems that wreak the most havoc, we’ve found, might surprise you.
Correctable and costly
Our research, published in the Journal of Operations Management, comes after years of examining how retailers can better leverage their vast supplier networks to improve the end consumer experience. These opportunities are exciting and lucrative. An earlier collaboration that examined supplier management practices at Hugo Boss found that increased supplier reliability can increase both demand for a brand and the supplier’s profit, even in the face of expense-adding measures that strengthen the supply chain.
Modern retail techniques such as online ordering, in-store pick-up, and pack-by-store distribution pay dividends in a fast-paced industry with razor-thin margins. But executing these practices is challenging, creating chances for suppliers to miss the mark. Even if the retailer properly forecasts demand, products can get stuck in supply chains.
We spent months scouring data on supplier errors at a major distribution center (DC) for a 700-store retailer—for anonymity’s sake, we’ll call this big-box chain Omega. Examining a full year of Omega’s orders from its suppliers, we found about 7 percent of all orders suppliers delivered deviated from Omega’s specifications. Less than half of these, however, were “classical” errors such as late delivery and short quantities. The majority of the errors involved the complex labeling, packaging, and information exchange requirements that support modern retail supply chains.
These errors are correctable, but doing so costs time and money. If a supplier doesn’t properly document an inbound shipment, it can’t run through the retailer’s automated receiving system. Instead, the retailer’s employees must manually inspect and identify the shipment. Products with incorrect price tags, packaging, or display elements (like hangers) must be adjusted by the retailer’s employees before hitting the selling floor.
Research in the retail arena has paid little attention to these correctable errors, which we’ve found are more frequent than others and come with substantial costs. Rework time and labor hours for correctable errors alone, we calculated, could cost around 5 percent of the Omega DC’s annual operating budget. That’s close to $25 per product per year on average across hundreds of thousands of items. Extrapolating from Omega to the retail industry suggests that these errors cost retail supply chains billions of dollars annually.
Chargeback, move forward
If retailers have had difficulty determining the financial impact of these frequent, correctable errors, they’ve had even more when it comes to properly recouping costs from errant suppliers.
Retailers’ chief weapon in reducing the immediate cost of supplier errors is the so-called chargeback, which docks supplier revenue after errors and can shave up to 10 percent off the supplier’s top line. Our research found the Omega DC’s supplier chargebacks often under- or overestimated the cost of rework, even when doling out millions of dollars in penalties per year.
Hitting the mark on chargebacks not only could stabilize retailer revenue but avoid the contract disputes endemic in these arrangements. To help retailers get there, we’ve analyzed the kinds of products most harmed by fulfillment errors and found a way forward for retailers working to balance fluctuations in supplier performance with their own inventory holding policies.
The answer for each product is far from clear-cut and entails a number of factors, all of which have a complex interplay. How much does it cost to hold the product? How tight is the margin? How damaging to the retailer is it to have pent-up, unsatisfied demand?
Understanding how all these factors interact lets the retailer maximize its improvement efforts and helps prevent knee-jerk reactions to improving supplier performance. Depending on the product and supplier, a retailer might benefit more from simply padding inventory than burning time and money on boosting reliability.
With a global network of hundreds of thousands of suppliers making the modern retail machine run, it pays dividends for retailers to be efficient and effective as they keep apace with customer demand. Especially when one wrong bar code can do so much damage.
In managing the business relationships that flow downstream to the customer, companies are honing their risk management practices to reduce vulnerability and bolster continuity. Battling risk, however, often leads to built-in redundancies and other measures that run counter to lean principles. How, then, can an organization with a legacy of lean, robust processes reduce its risk profile without turning back the clock on progress?
Join the Center for Operational Excellence next Thursday, March 12, in Pfahl Hall for an all-day forum, Running the Risk: The Future of Supply Chain Excellence, that features leaders from two global organizations. Kicking off the event is Patrick Sample (pictured, right), manager of SCD planning, supply chain – materials, at GE Aviation. Sample will be co-presenting with award-winning supply chain researcher and professor Tom Goldsby on their progress in balancing these two crucial priorities at the $22 billion-a-year company.
GE Aviation is the second-largest subsidiary of conglomerate General Electric, a $22 billion-a-year business that is one of the world’s leading makers of jet engines and related services. The company has operations on four continents around the world, which link to a massive supply chain network.
GE Aviation has proven progressive in tracing its supply chains all the way back to raw material extraction. In doing so, it uncovered a dependency on rare-earth minerals sourced almost entirely in China and has since sought to “engineer out” these materials in their engine components. The division also leads the way in the adoption of additive manufacturing techniques using 3-D printers for critical engine parts. By the year 2020, GE Aviation expects to produce more than 100,000 parts through these innovative manufacturing techniques. The company has taken these measures against the backdrop of their operational excellence heritage, rich in lean and six sigma practices.
Also featured is Elizabeth VanBodegraven, director of global procurement for the Logistics North America organization of chemical maker Momentive. VanBodegraven, drawing upon her two decades in procurement and supply chain roles, will be examining a crucial question companies face today: Whether the cost of risk management truly exceeds running the risk.
In addition to the dual keynotes, Running the Risk will feature a networking lunch; an interactive, group-based scenario that explores balancing risk management in operations; and a wrap-up panel discussion.
This members-only event, registration for which is available now, is a “must” for any individual or team interested in what place risk management has in the future of operational excellence.
8:30 a.m. – Registration opens
9 a.m. – Presentation: Patrick Sample, GE Aviation; and Tom Goldsby, Fisher College of Business
10:15 a.m. – Networking break
10:30 a.m. – Presentation: Risk Management’s Cost: More Than Running the Risk?, Elizabeth VanBodegraven, Momentive
The United States’ supply chain network is trailing other countries in tracking its environmental impact and readying for the risks posed by climate change, according to a new report.
London, England-based nonprofit CDP this week released its annual supply chain sustainability report, which surveyed more than 3,000 suppliers around the globe on a number of measures, including whether they track carbon emissions and set targets and whether they have a formal climate change-focused risk management program in place. It’s billed as the most comprehensive look at climate risks and opportunities for the global supply chain.
Viewed broadly, CDP found supply chains in the 11 countries examined made little to no aggregate improvement in developing sustainable supply chains – but results from country to country varied widely. Japan – site of the cataclysmic 2011 earthquake and tsunami that pummeled supply chains around the globe – was found most ready to respond to the attendant risks of climate change. Supply chains in the U.S., China and Italy, by comparison were considered vulnerable.
In its look at the U.S. supply chain network, CDP found barely half of the suppliers surveyed have formal climate management processes in place, compared with nearly two-thirds globally. On the upside, CDP found more U.S. suppliers are setting emissions targets, but that 37 percent share still lagged the global average of 48 percent. CDP goes as far as to state climate risk is “building up” in the U.S., due in no small part to highly divergent political views on how to address the issue.
The effects of climate change remain a major factor companies will be facing in the coming years – but far from the only one. Tom Goldsby, a professor of logistics at The Ohio State Fisher College of Business, names climate change just one of a handful of “macrotrends” on the horizon in his new book, Global Macrotrends and Their Impact on Supply Chain Management. Others include explosive population growth in as-yet underdeveloped countries, a rising global middle class and the scarcity of natural resources.
Both Goldsby, a Center for Operational Excellence associate director, and CDP also see the same benefit for companies that take a proactive role in tackling this and other challenges: Competitive advantage.
“A greater awareness of sustainability and its implications for managing supply chains is not only prudent from a risk standpoint, but wise from a growth perspective.,” Goldsby said. “Companies that innovate through supply chain sustainability are not only admirable, but prove more productive and agile. Their inspiration also helps to attract and retain talent while garnering interest from progressive customers and suppliers.”
A new healthcare-efficiency collaboration between The Ohio State University Fisher College of Business and Cardinal Health Inc. is driving results for participating hospitals just months into its launch.
The Academy for Excellence in Healthcare recently released two “white paper” reports from hospital systems that have participated in the program, which started early this year and offers a “boot camp” of sorts for cross-functional teams at hospitals nationwide seeking to implement operational excellence principles. The reports show major improvements under way for Zanesville, Ohio-based Genesis Healthcare System and the Harvard University-affiliated Beth Israel Deaconess Medical Center as a result of the program, now heading into its fourth cohort.
Building off of Fisher’s reputation as a key thought leader in operational excellence and COE member Cardinal Health’s remarkable track record as a lean organization, the Academy helps organizations identify and solve their greatest operating challenges, ultimately driving results that can significantly reduce costs and improve patient outcomes.
It’s a major challenge for an industry undergoing historic change, but one many hospitals already have committed to tackling through the Academy. Here’s a look at the two projects highlighted recently:
A new patient model
A cross-functional team from Beth Israel attended the Academy in the spring in an attempt to solve a problem that plagues many hospitals: Disconnected round schedules between doctors and nurses that resulted in redundant work and, worst of all, repetitive and even conflicting information for patients and their families.
When the team at Beth Israel committed to driving a more patient-centered model for physician and nurse rounds, they found doctors and nurses in a 24-bed general medicine unit were together in a patient room less than 1 percent of the time, while the in-room whiteboards – a crucial element of visual management for the hospital and patient families – seldom were updated.
Working with faculty at Fisher and leaders from Cardinal Health, the Beth Israel team devised what they called a Team-Patient Model that emphasized a standardized rounding routine that brought physicians and nurses together more and resulted in regular whiteboard updates. Coaches in the Academy wisely helped the team tackle a small piece of the problem and then scale it, applying the new model first to one patient and then spreading it to all of a single resident’s patients.
By the late summer, following Beth Israel’s experience in the one-week Academy program, the model was rolled out to all patients in the GM unit, with time spent on rounds dropping by 15 percent but physician/nurse “face time” with patients increasing a remarkable 55 percent.
In contrast to Beth Israel’s patient-care challenge, it was a behind-the-scenes one that brought a team from Zanesville-based Genesis Healthcare System to the Academy. The two-hospital system found itself readying to merge into a single, renovated facility with a conundrum on its hands: How can the two separate pharmacies be combined into one and become more efficient in the process?
At the outset, the data didn’t speak to an optimized inventory management process: The Genesis team calculated that inventory levels had increased while patient volume itself had gone down. This created an on-hand inventory level of more than 3,000 drugs worth about $1.6 million, heading out to the two hospitals and other ancillary facilities.
Coaches and faculty from Fisher and Cardinal through the Academy once again helped the team tackle the problem by drilling down and seeking efficiencies that later could be scaled. The team found, notably, that only about two-dozen of those 3,000 drugs accounted for about half of its inventory, creating a perfect, small target for optimization.
Working with tools sharpened at the Academy, the Genesis team value-stream mapped the pharmacy inventory flow process and devised a “kanban” system for each of the drugs, specifying minimum and maximum inventory levels that better tied ordering methods to current – rather than past – activity.
The Genesis team, according to the report, is aggressively rolling out the kanban system to other drugs and by the fall had realized nearly $350,000 in savings for that $1.6 million inventory haul.
Today’s fast-paced business world is a constant balancing act of tackling short-term challenges and positioning our organizations for future ones. For those beyond the five, 10, even 20-year horizon, two provocative questions linger: What are they, and what, if anything, can we do about them now?
Center for Operational Excellence Associate Director Tom Goldsby is the co-author of a newly released book that addresses both of those. Global Macrotrends and Their Impact on Supply Chain Management: Strategies for Gaining Competitive Advantage offers an extensive look into the changes organizations could be facing a generation from now, the seeds of which have already been sown. These so-called macrotrends include: Explosive population growth in countries these days perceived as underdeveloped; a rising middle class across the globe; accelerating climate change; and the alarming scarcity of precious natural resources.
These trends might sound like the makings of a globe-trotting disaster epic – albeit a very long, didactic one written by Thomas Friedman – but Goldsby recently spoke with COE about their implications and why companies shouldn’t view them exclusively as a “doomsday prophecy.”
COE: What inspired you and your co-authors to tackle this topic?
TG: The macrotrends we chose to focus on are maybe a little more in the distance, but we really wanted to encourage companies and managers to be on the lookout for things. We find that many people are very firefighting-oriented, focused on immediate-term crises that face them, and things that already have struck the business. It’s fine to be a good firefighter, but every now and then we need to rise above and see things that are coming. We think the benefit to being a first-mover on a lot of these macrotrends is that for every doomsday scenario there are strategies companies can employ to get ahead of it.
For companies not aware of their vulnerabilities, though, they’re going to be blindsided. If you don’t take opportunities presented to you now and simply think a looming problem is something your tier-four suppliers should be worried about, ultimately it’s going to hit your shores.
COE: One of the more intriguing aspects of your research is your assertion that a “global” company will look entirely different in the future. How so?
TG: We’ve been talking about globalization for several decades now, and really, the more appropriate term is “selective globalization.” If a company has good coverage in 15 to 20 countries, they call themselves global – but they often leave out Africa, the Middle East, Central America, most of Latin America and Asia. These areas are really rising in population and rising in wealth, and consumer goods companies, in particular, are starting to take notice and figure out how they can serve a place where a burgeoning middle class is a taking shape.
Meanwhile, in today’s “global” market, competition is incredibly intense and companies are duking out for fractions of a percent of market share when there’s still very much an open market in some of these burgeoning nations. Those companies and brands that can establish a foothold in these markets could enjoy the first-mover advantage for several years or even generations if they can embrace the local culture and adapt to the needs of themarket.
COE: For some of these countries, though, doesn’t this huge potential reward come with a huge risk?
TG: Absolutely, you have to look before you leap. Yes, some of these nations are marked by civil unrest, corruption reigns supreme in many – you have to understand the environment, and if you’re looking at some of the rising nations in Africa, for example, you might have to be a little more reserved.
On the other hand, in Peru, the economy has been growing at 6 to 10 percent per annum the past several years, with no recession. They’re a peaceful country wanting to be a global player as a source of supply and as a consumer market. A company that does business in Brazil and says “We’ve got South America covered” is overlooking a great opportunity. If you’re so-called “global” and don’t do business in Peru, Chile or Colombia, you have to ask why.
COE: How has technology changed the game for supply chain leaders?
TG: Supply chain managers are being held more accountable today than ever before. Before, when something bad happened the world just shrugged it off and said “Bad things happen to all of us.” Today, there’s research showing how dramatic an impact disruptions in the supply chain can have on a company’s stock price. Today, the world learns your bad news sooner, they react much more violently than ever before, and with blogs and lots of eyes and ears on the street, people are eager to share bad news. So, technology has increased the volume and speed of information flow that raises the stakes for supply chain leaders.
COE: How do you see your research aligning with operational excellence?
TG: Operational excellence allows a company to understand the value it creates in the market and the processes upon which it relies to deliver that value. These are two critical factors in leveraging opportunities and minimizing risks. Whereas many companies remain in that reactive, fire-fighting mode, companies employing OpEx to understand outcomes at their root cause. They are going to come up with remedies faster and take advantage of the conditions found in the environment, as opposed to being consumed by the challenges. OpEx also speaks to a high level of coordination across the supply chain that allows a company to lean on supply chain partners for insights and resources. These companies are going to be in a better position to be on offense rather than defense.
Steering an organization toward operational excellence comes with internal and external headwinds, and next month’s quarterly COE seminar is tackling two critical ones with the help of its featured presenters.
Kicking off COE’s Sept. 26 seminar at 10:30 a.m. is Rubik Babakanian, senior vice president and chief procurement officer at hard drive manufacturer Western Digital Corp. Babakanian’s company stands today as a $15 billion organization with its stock price on a steady upswing, but the road to be there hasn’t been without risk. Like many manufacturers with heavy operations in Asia, Western Digital suffered severe disruptions and temporary shutdowns during the devastating 2011 Japanese tsunami and Thai floods. The events in a nine-month period rocked the global supply chain and forced Western Digital to examine its risk mitigation and management practices with renewed vigor.
Babakanian, a 30-year industry veteran, will outline the methods and tools the company has put in place to better understand its supply chain, track ever-shifting risk factors, and be prepared for the next “100-year event.” Western Digital’s story highlights the universal business challenge of investing in risk mitigation, one that’s never complete – but truly pays off when crisis comes.
At 1 p.m., COE welcomes to the stage Walt Miller, who serves as director of operational excellence at engine maker Cummins. Miller is in charge of driving and coaching a culture of empowerment and continuous learning at the company. He’ll share in this session his approach not only to coaching and developing leaders of the future, but in transforming longtime leaders deeply ingrained in a “command and control” culture.”
Miller, author of will share these principles through the lens of a Cummins case involving the turnaround of a plant that started out with a lagging on-time delivery rate costing millions of dollars in missed monthly sales and a rigid, top-down leadership model. It’s a story that shows a lean organization can be built and sustained anywhere with people, a process and a customer – and that behind every good leader is a great team and a great production and management system. The challenge is how you build it and, most importantly, sustain it.
Babakanian and Miller are just part of a full-day event that includes a networking lunch and a special event at 2;30 p.m., after Miller’s presentation . Co-hosted with Fisher’s Office of Career Management and the Operations and Logistics Management Association, the third-annual Supply Chain Career Connection is a chance to network informally with Fisher’s great graduate students interested in pursuing careers in the supply chain arena. Unlike a rigidly structured job fair, industry attendees are encouraged to mingle with students, share their career path, and share experiences with their current employer.
COE also will announce the featured keynote speakers for its April 2015 summit at the seminar, immediately prior to the 2:30 p.m. networking event.
Seating and space for all of these events are limited, so register now to reserve your spot in-person or to watch a live webcast of the morning and afternoon sessions!
At a glance:
Date: Friday, Sept. 26
Location: Ballroom, The Blackwell, 2110 Tuttle Park Place, Columbus, OH
9 a.m.: Board meeting (COE board members only)
10:30 a.m.: Morning Session – Western Digital (COE members only)
Noon: Networking lunch (COE members only)
1 p.m.: Afternoon Session – Cummins (COE members and guests welcome)
2:30 p.m.: Supply Chain Career Connection networking event (COE members and guests welcome)
Fisher College of Business Associate Professor John Gray in a column for our sister center The Risk Institute tackles the looming threat of the “100-year event” for a company’s supply chain, which could range from a tsunami to a nuclear disaster or factory fire.
The problem with these so-called 100-year happenings, he writes, is that they can come around a lot more often for companies with global reach. A company operating in 30 independent regions, for example, has a more than one-in-four chance of having a 100-year event in any given year.
Prof. Gray looks at a recent supply chain disruption for COE member Greif Inc., an industrial packager that shut down a plant in Turkey after a takeover by alleged political radicals. Greif, it’s important to note, has a well-structured risk management system in place, reinforcing the notion, Gray wrote, that “you can do everything right and will still experience adverse events.”
The stream of shapeless information dubbed “big data” in recent years has swelled to a full-blown waterfall– and for any company looking to maintain competitive edge, it’s drink or drown.
The Center for Operational Excellence at its April Leading Through Excellence summit tackled the issue of big data and analytics through the lens of operations management with a panel discussion that illuminated both the opportunities in wrestling with fast-moving torrents of information and the challenges many organizations still face.
From the discussion, moderated by Ralph Greco, director of the Business Analytics Initiative at Fisher College of Business, here are some key insights from Anson Asoka, VP of global insights and analytics at Scotts Miracle-Gro Co.; Andy Keller, VP of analytics and global process owner at Cardinal Health Inc.; and Dihan Rosenburg, director of product planning at LexisNexis:
1. There’s much more room in the big-data sandbox
High-profile victors at making the most of this ever-growing flood of social media, mobile, customer activity, and market information include titans such as Google, Amazon, and Facebook. The panelists, however, were a great example of how savvy companies are making the most of information to improve the supply chain, increase customer value, and make better decisions.
Scotts’ Asoka said it’s “an inherent part of our culture to capture information … and be able to leverage it.” That extends to constantly tracking a wide range of customer information before, during, and after product launches and feeding that back to the organization.
“We make products based on customer needs,” Asoka said of the $2.8 billion-a-year lawn and garden giant. “We don’t make products and then go find consumers.”
Cardinal, the $100 billion-a-year pharmaceutical and medical product distributor, is investing in keeping eyes trained on data tied to seasonally fluctuating illnesses, from the flu to allergies, and supply chain disruptions, such as product recalls, Keller said. That includes staying up-to-date on Google Flu Trends, a highly visible – but somewhat controversial – example of data analytics that Keller said is “surprisingly accurate.”
2. Data aren’t the meal – they’re the raw ingredients.
Panelists repeatedly stressed the fact that regardless of how much data a company is able to collect, it’s the sorting and analysis that ultimately create true value.
“Any one data point isn’t going to tell you the answer,” said Cardinal’s Keller. “It’s how we pull it all together, and use the tools and knowledge to pull (the value) out.”
One such tool was developed by Rosenburg at LexisNexis, the online information powerhouse commonly known for its exhaustive stash of archived news and public records.
SmartWatch, launched in 2012, allows customers to monitor supply chain risk through a range of market intelligence that’s color-coded and categorized by its political, economic, societal, technical, legal and environmental factors. The goal, Rosenburg said, is to get customers “ahead of the curve” – noticing, for example, that labor unrest is occurring in a factory’s home country before a full-blown strike occurs.
“When information becomes plentiful and free, the information about information is where the real gold is,” Rosenburg said.
Scotts’ Asoka said the root of the company’s approach to big data and analytics is simply a constant thirst for more.
“We need a lot (of data), and we don’t turn any down,” he said.
3. Infrastructure is important – very important.
Despite its status as a relatively new challenge for companies, the management of the data analytics function isn’t immune to some classic hurdles: Silos, project burn-out, and lack of infrastructure.
Keller of Cardinal said the company has taken a similar approach to the development of its analytics capabilities as its highly successful lean/Six Sigma deployment. In less than a decade, Cardinal’s operational excellence rollout has gone from a supply chain efficiency effort to a catalyst for enterprise-wide culture change.
“As I describe our (analytics) journey, it’s similar to our operational excellence journey,” Keller said. “It’s all about developing a structure, setting up career paths, and getting rigor around establishing a common language.”
This broad-based effort to align people and processes, though, can’t exist on an island, said Asoka of Scotts.
“Infrastructure is important,” he said. “I’ve seen over time that what really benefits an organization is to have analytics people within functions – and if you can have a horizontal cut across all those verticals you can properly manage data, tools and people.”
Most crucially is how data analytics ultimately fits into a company’s broader strategic course, said Rosenburg of LexisNexis.
“Quality requires vigilance,” she said. “It’s not a project you do and forget about.”
4. People are key – and we need many, many more of them.
In the end, panelists said, making better decisions through data analytics doesn’t come down to having the best software program or the biggest data center. It comes down to having people with the skills to sort, scour and shape the information into something valuable.
“If you don’t have the right people to really accelerate (your efforts), you’re going to continue to struggle, spending a lot of time as an organization getting alignment,” said Keller of Cardinal.
So who are these “data scientists?” Asoka of Scotts said there’s no rigid set of skills that can flag a slam-dunk analytics hire – rather, it’s an employee’s relentless sense of curiosity, paired with proven experience in problem-solving, that’s key.
Efforts to develop these data scientists of tomorrow are under way all around the country, but Fisher and The Ohio State University are taking an especially aggressive approach. The university just this year unveiled an undergraduate major in data analytics set to be offered this fall.
At Fisher, Greco said, the college for years has been providing its students with the skills needed to work in analytics, but efforts are afoot to develop an undergraduate business analytics minor and a graduate major for full-time MBA students.
“Students with an outstanding business acumen and skills in logistics, supply chain, HR, finance and other areas combined with analytics will be the managers of the future,” Greco said.
This article appears in the April 2014 edition of COE’s Current State e-newsletter. Have a colleague who should be receiving this e-newsletter? Contact Matt at firstname.lastname@example.org.