Humourless links for November 14, 2009

by Michael Keizer on November 14, 2009

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Kudos, buddy! Or: how logistics information management will help you do your job

by Michael Keizer on November 12, 2009

My previous article about I-See technology was the first post on what looks to become a mini-series on logistics information management; it gave me some fresh ideas for new posts, and why not go with the flow when you’re on a roll?[1]

This one will be about logistics data and what to do with it. Hello, are you still there?

A couple of years back, I was asked to analyse and improve on a supply line for an international NGO in an East-African country.[2] My first obvious question was: how bad is it actually? They didn’t know: although everybody knew that hardly anything was delivered on time and that there were a lot of mistakes in order fulfilment, leading to frequent stock-outs and overstocks, nobody could really give me any hard data – it was all seat-of-the-pants. When I asked what caused the problems, and where in the supply line they occurred, I was told that that was why I was hired, and could I please get on with the job?

By the time I left, I was told that the supply line had never worked as well as it did, and that I had done a sterling job; but had I?

I think it is time to let the cat out of the bag on that one: in fact, the supply line hadn’t improved a bit – at least, after I started measuring things, my indicators remained fairly flat. In fact, they showed that the supply line really didn’t do that badly even before I arrived, taking into account the context.

What did change, though, was that I used the increased supply chain visibility to give useful feedback to field managers, both logistical and operational ones. For the first time, they would know when to expect their supplies, and would be informed at an early stage if things seemed to go off-track; which meant that they could plan for it and start taking contingency measures at an early stage. I also started to churn out regular one-page overviews of how the supply chain was actually doing, which showed nicely that we didn’t do too badly. Of course I presented this as a big improvement: nobody wants to be told that they were actually quite wrong.

Now this is a nice story, but how would this have helped me if, in fact, the supply chain had been the shambles people thought it was? Having increased visibility would at least have helped me to find out where exactly in the supply line the problems occurred, and perhaps even what caused them; it would also have enabled me to see whether my remedies worked, and to which extent – it would even allow me to try out various measures, and see which one (or which combination) worked best. And finally, it would possibly have helped me to argue my case when expensive or painful measures would have been necessary.

All this turned out to be moot, and I got kudos for what was a fairly easy job. Want those kudos too? Then start working on your supply chain visibility.

[Image: Kudos Buddy by Adam Fagen. Some rights reserved.]

Back to post [1] I just love mixing my metaphors. It’s like those chemistry experiments I did in school, with sometimes similarly interesting (or malodorous) effects.
Back to post [2] Sorry, can’t be more specific than that.

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Do you see? Technology aiding supply lines – or not

by Michael Keizer on November 11, 2009

Does your organisation currently have an IC technology project running that aims to improve the supply chain? Odds are that it has, or has had one in the recent past, or is planning one for the near future – that is, if your organisation is anything bigger than a couple of volunteers with a budget of a couple of hundreds of thousands of euros. And you should: continuous improvement of your supply chain is a necessity, and ICT is indispensable to do so.

Or rather, you shouldn’t.

Too often, ICT is implemented as a stand-alone solution for supply line problems. ICT is indispensable to support any but the most trivial of supply lines, but rarely is it a solution by itself for whatever are your supply chain woes.

Does this sound like a truism to you? In fact, it does to me – but I have seen several of these ICT-as-a-panacea projects in aid logistics, so I think it is fair to say that apparently not everybody agrees. Oh, of course management of these projects will pay lip service to the idea that processes, attitudes, knowledge and training, and many other aspects will need to improve too, but in reality you see that everything concentrates on the technological solution: processes are adjusted around the technology, staff are trained in using the technology, and so on. And there we go again, in a straight line towards the next round of ‘technological innovation’.

ICT can help us to build systems that help us get the right information, at the right time, to the right people, at the right price, to make the right decisions and take the right actions. (Sounds familiar? It should.)

But: the operative word here is ‘system’. No, I am not talking about computer systems – when I say system, I refer to (ahem) ’a coordinated whole of human, physical and organisational resources (including procedures and structure), striving for a common goal’. In other words: your logistical department is only just part of the organisation’s logistics system (striving for logistical effectiveness and efficiency), which in its turn is part of the system that is your organisation as a whole (striving to perform whatever is its stated mandate as effectively and efficiently as possible), which in its turn… you get the idea. What is not a system is the shiny new ERP software that your director of resources has just bought after a slick demonstration; it could be part of an effective and efficient system – or it could break it.

I said it before and I will say it again: information and communications technology are indispensable to run anything but the most trivial supply lines; but it is there to serve the goal of those supply lines, and not the other way around. Technology should be part of an integrated system with more or less clearly defined goals. The systems should not be built around the technology, because that will hardly ever lead to real integration; instead technology, procedures, and people should be seen as a indispensable parts of the whole system, giving us eyes to see what is coming – I-see technology instead of IC technology.

(Image: Airborne Caffeine Delivery System by Todd Lappin. Some rights reserved.)

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Latest job opportunities (November 10, 2009)

by Michael Keizer on November 10, 2009

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Book review: ‘Humanitarian logistics’ by Tomasini and Van Wassenhove – a missed chance

by Michael Keizer on November 9, 2009

If you have followed this blog, you will know that I am very much in favour of more academic input into our logistics efforts. As you can imagine, I was tickled pink when I saw the ads for a new book about humanitarian logistics, written by respected INSEAD academics Rolando Tomasini and Luk Van Wassenhove.

Let me not mince words here: I am disappointed. Expectations are high when a prestigious university like INSEAD releases a book under its own impressum, but those expectations are not met – not even closely. The reason actually is made clear in the first paragraph of the book. The authors describe their experience in humanitarian logistics on which they base the book: case studies they did for WFP/UNJLC, the IFRC, and FUNDESUMA. In other words, they base a book about humanitarian logistics in general on limited experience with three organisations that are very unrepresentative of the sector as a whole. This has clear effects throughout the book: although they do make some valid observations (especially when they talk about partnering with the private sector, which is clearly their focus), much of what they describe is over-simplified, or even dead wrong.

All three of the organisations they worked with (especially the IFRC and FUNDESUMA) have a focus on disaster aid, which obviously skewed their view severely. It leads to occasionally ridiculous assertions; a good example is that, according to Tomasini and Van Wassenhove, in humanitarian supply chains “… time cycles are very short [and] new and unprecedented demands occur frequently …” (p. 8). Definitely true in some types of humanitarian response – specifically disaster response – but totally untrue of many other types. When the authors describe the characteristics of a humanitarian supply line (ch. 1), they very clearly have a specific type of humanitarian response in mind; a type of response that in reality makes up a minority of humanitarian work.

Chapter 5, which is devoted to information management (which people who know me will immediately recognise as one of my personal hobby horses), goes as far as basically describing the SUMA model (with a bit of info about UNJLC’s website thrown in for good measure) as the paradigm to follow, without recognising that it is totally inappropriate for a majority of humanitarian aid work. A bit of scrutiny of e.g. humanitarian.info would have been useful to inform this chapter.

The book comes into its own in chapter 7, about partnerships between humanitarian and corporate organisations. It is very obvious that this is what the authors are experts in, and it is the most useful and well-written chapter of the book. Sadly, that is not enough to justify its rather inflated price.

All in all, this is a missed chance. Gentlemen, I just know you can do better: get to it.

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Latest job opportunities (6 November 2009)

by Michael Keizer on November 6, 2009

[Image: Job opportunities by Coffeechica]

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Not a fairy tale: when the five rights of logistics are not enough

by Michael Keizer on November 5, 2009

Warning: serious business in a very silly disguise ahead.

You will of course remember that logistics is all about the five rights: getting the right goods, in the right quantity, to the right location, at the right time, at the right price. (And if you don’t, you could read all about it in my March article on the five rights.)

But now imagine the following scenario (perhaps a bit too literally a scenario, but please humour me).

You are the logistics coordinator for a nutritional NGO in the Kingdom of Far Far Away. After a rather nasty little conflict about a swamp, large groups of displaced people have moved to the edges of the disputed area, where spontaneous IDP camps have appeared. As there is hardly any food available there, levels of malnutrition rise alarmingly (and there there have even been some unconfirmed cases of cannibalism amongst one of the tribes, the Jinjabredmen). Your NGO has decided to intervene and you are tasked with finding sufficient amounts of the local staple, faerivloss.

You have two possible sources for the faerivloss:

  1. You can buy it in the capital for about 200,000 shrec/MT (about $800/MT). Transport by local truck (affectionately called ‘donkeys’ because of their usually greyish colour, their ability to where even stallions can’t, and their drivers’ propensity for Eddie Murphy impersonations) will cost you an additional 30,000 shrec/MT.
  2. You can get the faerivloss for free from the local sub-office of WFG (the World’s Fairy Godmother) who just received an enormous donation of the food from the Republic of Dizneeland (halfway across the globe). The donation is sitting in warehouses in the main harbour, but the government of Dizneeland offers to transport it for free to the IDP camps using a number of MH-53E Sea Dragon helicopters, stationed on a carrier just of the coast.

Not a difficult choice, isn’t it? Both options give you the right goods, in the right quantity, at the right location, at the right time; but the donation gives it to you for a price that is much righter than the locally bought goods. So you quickly fill in the WFG requisition forms and go off for a beer.

A couple of years later, you return to Far Far Away as part of your organisation’s emergency team. Although the IDP’s have all returned home after the resolution of the conflict and the accession of the new king (as the result of the unfortunate anuration of the old one), the region again is in the grip of a famine, and you quickly find out why: after the importation of massive amount of free faerivloss, the price on the local markets collapsed and the local farmers were forced of their land (and have moved to giant slums in the capital, where they joined the former donkey drivers, who now try to make a precarious living by driving taxis or, if they are lucky, work as drivers for the numerous NGOs that have made their base there). Most of the land lies fallow, and there will be no faerivloss harvested for the second year in a row. Complicating matters is that the local harbour is rendered largely unusable due to a number of very destructive hurricanes – probably the result of global warming.

Suddenly you get a sinking feeling in your stomach; similar to what you felt when, as a five-year-old, you pulled the tail of what you thought was the neighbour’s cat, but turned out to be some strange feline wearing boots and a rapier, speaking Spanish-accented English.

Of course, in reality our decisions will normally not have such dramatic consequences – but each of our decisions could have smaller but still noticeable negative consequences. When you import goods from overseas, you will have an impact on the local economy, and transport will have an impact on the global environment. And, of course, the fact that your NGO does not need to pay for the donated goods or their transport, does not mean that those costs have not been incurred.

Normally it is not up to us logisticians to make the decision whether we would forego a possible advantage for our organisation, based on wider-ranging considerations like climate change or economic consequences. However, it is up to us to make the people who do take these decisions aware of the possible consequences of our logistical choices, and ensure that they know that there is more than just the one option.

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Humourless links for 4 November 2009

by Michael Keizer on November 4, 2009

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Mountain goats, beer, and logistics: a game

by Michael Keizer on November 3, 2009

At times, the best training you can give people is a game, and that is especially true of logistics.

There are quite a number of counter-intuitive issues in logistics. Probably the most famous one is the Forrester (or whiplash) effect: forward prediction of demand in separate links in the supply chain will often lead to increasing cycles of alternate over- and under-stocks that travel through the chain like the undulations in a cracking whip. In other words: in a situation in which you do not have sufficient information about what happens further down the chain (as is so often the case), trying to look into the future can actually damage reliability and efficiency. Or to put it even more succinctly: don’t try to be smart when your ignorant.

So looking ahead can be bad for you? How is that for being counter-intuitive?

I am not going to explain here why this happens. Instead, I am going to ask you to play a game with a couple of your mates. Each of you is responsible for a link in the production and distribution of beer (hmmmm… how about Mountain Goat?), within a couple of rules – the most important one being that you are not to talk with each other, but only communicate by purchase orders and invoices. Sounds almost like the real world, doesn’t it? I mean, how often do you sit around a table with all supply managers in the full supply chain to see what each of you expects to happen next month?

Setting up the game and organising a play takes a bit of organisation, but luckily there is an online version, graciously run by the Swiss Federal Institute of Technology (who else?). So get a group of mates or colleagues online and play the game – and be astounded by the results. Please do so before reading on after the fold.

So, have you played the game? Then the results as they are explained here by prof. John Sterman should look familiar. Did you expect this to happen? Highly unlikely, unless you had some previous logistics training or have been confronted by the Forrester effect before, either in a game or in real life – or are a natural-born operations research genius, in which case I would love to work with you.

There are two things to notice here. One is that the Forrester effect is only one of a number of very counter-intuitive issues in supply line management; and people who think that you can work large-scale logistics without some understanding of the underlying dynamics and (gasp!) mathematics will find themselves running a supply chain that is either completely unreliable or highly ineffective – probably both. What’s even worse: they would probably not even notice it.

Now please note that I am not saying that we should only use logisticians with an advanced degree in logistics and operations research (although I think having more of these people would be a great thing, for various reasons); but I do maintain that you will need to do a lot of reading on the subject if you ever want to run any supply line that is even marginally larger than your local clinic in a manner that is both effective and efficient. Of course, if you don’t care that you cause regular stock-outs, or that you continuously need to destroy expired drugs that have been lying around in your warehouse for mountain goat’s… ermmm, donkey’s years, than you can forget about all that; but in that case, why are you reading this blog?

Interior cockpit of a twinjet flight simulatorThe second point to make is that, actually, it is not really necessary to know any of the underlying dynamics and (gasp!) mathematics. Am I contradicting myself here? Not really: you can gain some understanding of the two without having knowledge of it. Just having been confronted by e.g. the Forrester effect in a game is a powerful experience that you will not easily forget, even if you don’t know your regression from your integration; and it will easily teach you the importance of knowing at the start of the supply chain what is happening at its end. Few people who have played the beer game will forget the importance of demand communication throughout the chain, even if they have never heard of kanban or action triggers.

Prof. Sterman’s description of games like these as “flight simulators for management education” is a very good analogy; after all, most flight simulators these days live as games on home computers, even though they started as a safe and cheap way of training pilots. And remember, ‘safe and cheap’ here is ‘safe and cheap as opposed to crashing plane after plane until you get the hang of it’ – which, for some reason, is what we insist on doing in aid logistics.

Now please excuse me; I have a nice, cool glass of beer waiting for me. Mountain Goat, of course.

[Photo credits: Mountain Goat Beer Hightail Ale by Richard Giles; Interior cockpit of a twinjet flight simulator, courtesy of NASA.]

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Latest job opportunities (2 November 2009)

by Michael Keizer on November 2, 2009

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