1 1 March 2010 3 Steps for Reducing Supply Chain Complexity: Creating Safer Operations James William Martin (2011), Unexpected Consequences,- Why The Things We Trust Fail, Copyright 2011 by Praeger Publications . Publishing date July 2011. Not to be reproduced or modified without written permission from Praeger Publications. Copyright 2010 Six Sigma Integration, Inc.
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Operations which pose risks of injuries and death,
widespread damage or environmental contamination.
2. A lack of risk analysis
and contingency planning
Project the future using historical information rather
than considering worst case scenarios.
9. Would impact many
people across large
geography
Typically natural events or man-made events such as
environmental contamination over wide areas. Also,
poor relief responses to such events.
3. Regulatory laxness Inefficient or ineffective laws and regulations which
permit an industry to short-cut and take inordinate
risks.
10. Politically sensitive
If these occur, the public and media complain to the
extent politicians become engaged.
4. Dangerous equipment Rotating equipment which can injure or kill people.
Equipment which can crush people.
11. Application technology
ahead of control
technology
Creating systems for production without systems to
monitor, and control them to prevent injury, deaths or
property and environmental damage.
5. Dangerous application
environment
Environmental extremes of temperature, noise, light,
vibration or other dangerous conditions.
12. Dependent on
complicated logistical
systems and resources for
failure mitigation
Non-existent, resource starved or poorly managed
logistical systems to coordinate and provide relief
after a catastrophic event.
6. Complex systems
Systems relying on combinations of people,
technology and information for their operation. These
may be best solutions and cannot be simplified.
13. Poor root cause
analysis and mitigation
A chronic failure to investigate the causal factors for
failure or to implement effective solutions to prevent
their recurrence.
7. People dependent or
cognition issues
Systems requiring people gather , interpret and act on
information.
James William Martin (2011), Unexpected Consequences,- Why The Things We Trust Fail, Copyright 2011 by Praeger Publications . Publishing date July 2011. Not to be reproduced or modified without written permission from Praeger Publications.
Copyright 2010 Six Sigma Integration, Inc.
Supply chain complexity causes
process breakdowns
10
Finance
•Accounts payable cycle time
•Variance to budget
•Margin improvement
•Overtime expense
•Account receivable cycle time
Quality Assurance
•Defects
•Customer complaints
•Claims
•Rework
•Scrap
•Warranty
Billing
•Billing errors
•Excess mailing expense
Purchasing
•Suboptimum year over year cost
reduction
•Too many suppliers
•Too many contractors
•High cost per invoice
•Purchasing errors
Call Center
•Long average handling time
•Unnecessary call transfers
•Cost per call
•Abandoned calls
Administration
•High utilities expense
•High insurance costs per employee
•High facility costs per employee
•High material and supplies expense
HR
•HR staff per total employees
•Absenteeism rate
•Training hours per employee
•Employee cost to hire and retain
•Health costs per employee
•Lost time accidents
•Disability costs
•HS&E issues
Operations
•Lead-times too long
•Late orders
•Average cycle time per order too
long
•Emergency maintenance
Distribution
•Shipments exceeding standard
•Excess freight charges (inbound
and outbound)
•High inventory investment and low
turns
•Excess and obsolete inventory
•Order shortages
•Premium freight costs
•Retuned product
•Unnecessary product transfer
between facilities
•Poor on-time delivery
James W. Martin, Lean Six Sigma for Supply
Chain Management- The 10 Step Improvement
Process, McGraw-Hill Professional; 1 edition
(October 12, 2006).
Copyright 2010 Six Sigma Integration, Inc.
Behavior influences supply chain complexity
11
Akiyoshi KITAOKA, Professor, Department of Psychology,