The Problem is not the Problem. The Problem is Your Attitude About the Problem.*

When I heard this saying, I thought it so profoundly related to one of the core challenges to supply chain excellence, an inflexible mindset. Too often in supply chain management we are bounded by our approach to supply chain problems, not the problems themselves.

For example, one of the greatest challenges in supply chain management is to get beyond a focus on cost reduction as opposed to revenue generation. If you are a supply chain executive, you struggle to have that discussion with the rest of the executive team. One retailer I know took a different approach to describing their metrics to get their point across.

The challenge that the retailer had was to be able to justify the value-added services it wanted to offer because they would reduce the number of deliveries it made on any given route. The general thinking was that the fleet productivity would be dramatically impacted and there was no way to relate that to the incremental revenue from the value added services. The problem the retailer had was that it was applying traditional metrics and “attitude” to a new business opportunity. Metrics like cost per mile and deliveries per route were built to address delivery operations as a cost, not a revenue generator. Fleet productivity is only one point of the overall financial picture.

This retailer had an “attitude” adjustment about its approach to metrics and changed to a “cost per minute” calculation for its delivery resources. That way it could compare the incremental revenue for the value added services against the time-based cost it took to deliver the services. In this case, the retailer was able to determine that depending upon the mix of products and value added services, it could make more money with fewer stops on a route as opposed to a lot of stops that contained no value added services and lower margin products. Once they understood this relationship, they started to understand how their delivery operations could help drive revenue and profit.

Another interesting example of attitude change is a retailer, Sleepy’s, who implemented tighter time window bookings to benefit it as well as customers. The traditional thinking for delivery windows is the wider the better in terms of delivery operations productivity. However, this retailer found out that it was experiencing a high number of failed deliveries because its customers were not at home. Failed deliveries can be a margin killer. Think about this for a minute. If you give someone an all day window, there is a high likelihood that at some point they won’t be home during that day and Murphy’s law would clearly predict that’s when your driver arrives. A tighter time window provides more certainty to the customer and allows them to better manage their day. Sleepy’s also dynamically allocates delivery capacity to make the delivery when the customer buys the mattress to make sure it can make the delivery. Since moving to this approach, Sleepy’s has been able to improve its delivery success rate by 4.5% and reduce product damage due to excess handling.

I am sure we have all seen examples where bad supply chain “attitudes” kept a company or project from being all it could be.  It’s not easy to get beyond what we know from past experience to best frame solutions to supply chain problems. However, supply chain strategies, tactics, and technology are constantly evolving and if there were ever a place to change attitude, it is here.

*The saying “The problem is not the problem. The problem is your attitude about the problem.” has been mysteriously attributed to Captain Jack Sparrow in “The Pirates of the Caribbean” movie series.

Originally posted on Logistics ViewPoints