Who Needs Another
Consortium?
NISCI, a unique place where chains come together to work…
Patricia E. Moody
N
Mike Doyle, NISCI CEO and
chairman
“…we won’t accept
money unless they
bring a chain,
because you can’t
come here and
work alone.
Mike Doyle
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ISCI, the National Initiative for Supply Chain
Integration, is not what it seems. Off i c i a l l y
launched in September, 1997, NISCI’s mission is
“to research and develop the most effective solutions to
optimize the performance of supply chains …” Nothing
enterprise-shaking here, you say. But hear the rest of the
mission: …“(supply chains) comprised of three links
or more.”
When is the last time you saw assembled in one
room a Chry s l e r, with its first tier instrument panel
assembly supplier, accompanied by a plastic parts producer? Or how about a Harley-Davidson exhaust assembly
producer tiered along side a chrome plater or a die caster
or a custom metal fabricator? The possibilities, like the
realities of the trust-driven, “partnered to death” extended enterprise, are exponential — a multi-variate equation that can only be solved by co-located Crays wired to
the power of Niagara Falls.
But wait. What if you could assemble these chains,
m o re correctly networks of three tiers or more, in a
“skunkworks” and challenge them to apply well-practiced Design of Experiments techniques to diagnose and
c u re common supply chain problems — like bad or
missing communications, excess time and loops, unclear
metrics, even human training and education challenges.
Now there you might have something, properly grown
and protected from the distractions of consulting agendas
and seminar kings, that might, just might, turn those
multi-bulleted lists of “barriers to partnering,” and
“cross-cultural disablers,” into real-time, real-life models
of extended enterprise success stories. The winners walk
onto the field armed with a new competitive strategy, a
“Nerf” ball that flies far beyond its competitor’s sorry
attempts at patch-work supply networks “silly-puttied”
together with fragmented systems signals reinforced by
frequent customer visits and faxed production schedules.
NISCI is the “Skunkworks”
Mike Doyle, the unpaid, charismatic leader of this
new supply base initiative, emphasizes the reality of its
mission. “NISCI is unique because we are a place where
chains come together to work … like OEMs and distributors and consumers, or OEMs and logistics suppliers.
People who join NISCI are told before they send the
money in that we won’t accept money unless they bring a
chain, because you can’t come here and work alone.”
The kind of work Doyle envisions for members
focuses on hard issues like how to measure the economic
performance of supply chains (versus measuring individual suppliers, for example, a skill we have obviously perfected beyond its current usefulness). NISCI launch
initiatives number six (see Figure 1.).
Even Chrysler, for example, whose SCORE program
is well-recognized as a leading supplier development
method, is very interested in learning how to measure
chain economic perf o rmance across three tiers. Jeff
Trimmer heads up the task group for this initiative that
also includes members from Procter & Gamble, Dell
Computer, Honda, Deere, Morton Industrial Group, and
the University of Chicago. Together, members will design
some experiments to see what works, and they will test
their ideas by running them across different chains.
Design of Experiments
Doyle explains NISCI’s source of strategic direction:
“We decided that all the literature about supply chains
was confusing to us, and that we needed to define that
term: a supply chain has three links or more — if it
doesn’t have three links, call it something else.” NISCI
members will develop Design of Experiments ideas
around its six initiatives, and run them in real chains,
cross functional, across industries. “And we will watch
the failure mechanisms, re run the experiments, and
repeat the process until it works,” Doyle added.
“ We think that if we have six diff e rent chains,
doing each test in parallel, we will have six diff e re n t
experiences, re p resenting 40-60 diff e rent companies,
spread over probably six different industries,” he said.
“If a supply chain practice works in retail, but not in
manufacturing, the ‘laboratory’ observations should
lead us to understand why does it want to work here,
and not work there.
“That’s the reason why we are not just cross-functional, we are cross-industrial,” Doyle continued.
“Chrysler, for example, knows pretty much everything
about the auto industry, but what they are really curious
about is what people are doing in other industries —
how does Dell do a six months product life cycle, with
half the inventory, and ship off the Internet in three days?
What can Wal-mart learn from the Chrysler instrument
panel supplier, or the Harley front fork wheel guy.” The
differences from repeated runs of the experiments give
the process robustness and predictability.
Trained as an industrial engineer, Doyle is a strong
believer that if you don’t measure it, you are not managing it. “We have not identified or mapped these chains,
and so we have not thought about these chains from a
point of view of determining how we would architect a
chain that would maximize performance,” he said.
Think about the architecture. “You must have a
technology road map, and a manufacturing road map.
When we lay the chain on that, we can develop workable
sourcing strategies,” Doyle said.
One key issue that should be answered soon is
specifically which metrics work best across the entire supply chain to produce competitive behaviors. Doyle cites
five — quality, time, technology, waste reduction, and
business risk reduction. “If you control those five you will
know whether you are moving the system in a positive or
negative direction.”
Peeling the Onion
Words get in the way — words like trust, chain,
even speed. The more NISCI members look at the supply
chain, for example, the more it resembles an entirely
different entity, “a can of worms,” or a dynamic system.
Complex problems like this might require a marriage of
linear programming and systems engineering, borrowing some concepts from weather forecasting models, or
geologists.
The complexity of this challenge drives top NISCI
members, including Doyle, to stick to their mission of
“keeping it pure in the middle,” by bringing on the leading thinkers and implementers in the area, giving members a place to work, and letting new companies
self-select into the small community of innovators. NISCI
is not a think tank, not a consultants’ haven, but a work
place where ideas run to reality.
One idea, for example, is in the patent pro c e s s
already. Think about the different rates financing institutions charge different members of a supply chain —
some suppliers pay three-four points over prime, while an
OEM pays prime. To the banking community, the spread
…how does Dell
do a six months
product life cycle,
with half the
inventory, and
ship off the Internet
in three days?
National Initiative for Supply Chain Integration
Chrysler Corporation, Deere & Company, Harley-Davidson, Honda of America, Procter
& Gamble Co., the Trane Company, Supply America, Inc., and the National Association
of Purchasing Management.
Launch Initiatives
All begin with “Working together to improve ourselves by”… and finish with… “across
three links or more.”
1.
2.
3.
4.
5.
6.
… stimulating value creation …
… standardizing and certifying education and training to enhance performance …
… designing chain architecture which supports real-time, consensus decision-making …
… measuring chain economic performance …
… creating trust, culture, and people processes which support cooperation …
… creating a legal, regulatory, and legislative environment which facilitates collective
improvement …
Figure 1. Each tier of three links or more in the supply chain is addressing one of the six NISCI
launch initiatives.
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…if complex,
hierarchy driven
software and
organization
protocols were the
answer, we would
be there already.
covers risk, but remember, if a small supplier has been
chosen by Honda, for example, to supply a component to
a new product launch, then Honda clearly is working to
minimize and absorb the risk. Would it not follow then,
that lenders would value rate the risk of viable supply
chain members in competitive extended enterprises as
less troublesome than vendors struggling to simply stay
in business? The message to banks, obviously, is to look
at the chain as an assemblage of pieces.
If chains are going to work together, they will need
a new communications paradigm, and if complex, hierarchy-driven software and organization protocols were
the answer, we would be there already. But we think the
answer to increased supply chain complexity — the phe-
Garry S. Berryman, Vice President of
Purchasing, Harley-Davidson, Discussing
The ‘Undiscussables’
There are certain subjects that no suppliers happily feed
back to big customers — what suppliers think of
scheduling practices and personnel, for example, or
new product launch changes — Berryman calls them
the “undiscussables.”
Harley-Davidson key suppliers number approximately
280 out of 425 in total; Harley’s spend total is about
$600 million per year. So it is critical for Harley in its
growth market to move in concert with its suppliers.
Harley’s Supplier Councils epitomize discussing the ‘undiscussables.’ In March a supplier information session was held in which the customer shared in groups of 16 suppliers at a time leading strategies and issues for the coming year. Dealer Advisory and
Supplier Advisory Councils meet to discuss issues across the entire value chain 14
times or more per year.
“The passion is,” says Berryman, a veteran of Honda of America’s award-winning purchasing department, “let’s open all the doors, and be competitive. Let’s compete with the
keiretsu, even head to head, and beat them at their own game! The only way to forge
these competitive enterprises is to get all the ‘undiscussables’ on the table and decide
what to do with them. If suppliers are key stakeholders to our success, we cannot do it
behind closed doors.
“Today we had a five-hour session, a top 70 supplier visit, with the owner/president of
a key supplier, his executive vice president, the controller, two engineers, a purchasing engineer, and our top technical team members. We spent four hours talking about
the business, the technology of aluminum casting, and at the end, we weren’t done.
With our top 70 suppliers, we are trying to eliminate the gap between their strategic
planning and ours.
“The NISCI Trust Module helps us find where we agree and where the gaps are. The
Trust Module is a structured, repeatable process to work on relationship building in
the value chain.”
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nomenon of looking more like a can of worms than a
hard-forged chain phenomenon — may be real time online feedback systems, real-time performance feedback,
or what systems engineers call dynamical control.
Imagine a football stadium at half time filled with
fans watching a real-time monster TV mounted over the
backfield. Each fan is issued either a yellow or a blue 3x3
card. It will take only a few minutes for the fans — the
new intelligent agents within the system — to figure out
how to form the words “Go, Michigan” or “ Take ’Em
Down,” given the constantly visible realtime feedback of
the TV screen.
Bring on the Simulators, The Team is Ready!
“Where to next” hopefully means more work, and a
few more self-selected members. An individual can affect
a team, a team can affect a group; a group can affect an
organization, but an individual cannot change society.
“Right now,” says Doyle, “we are probably a team, but
we need to become a group!”
An Invitation from Bob Parker,
Executive Director of NISCI
A place where the best of the best come to work
together
Bob Parker, NISCI’s
sole full-time employee
and supply management
veteran, feels that what
NISCI is trying to do in
administration — no big
staffs, a virtual organization — mirrors supply
chains. Of the six initiatives in process, Parker
believes “no question Bob Parker, NISCI Executive
which one is going to hit Director
the road first — Aallied
Die Casting will be the first to complete NISCI’s Trust and
Cooperation Module. Harley, the OEM customer, Aallied,
and two more suppliers — one in plating and one in tool
making — make up the four pioneers.
A supply chain is in a boat race and they need to
understand that they are in the same boat. They need to
stroke together. The consumer is the prize. There is no
second place. The consumer by choice feeds either one
chain or the other.
“Our job at NISCI is to cause people to see who is
Edward Kwiatkowski, President of Supply America Corporation,
Headquartered in Cleveland, OH
in the boat and to understand what we are trying to
accomplish together. Everybody must buy into the mutual goal — maybe it’s cost reduction or taking a new
market,” Parker said.
Cost Savings Potential
Tom Stallkamp’s (Chry s l e r’s former purc h a s i n g
chief) priorities are quality and cost reduction. In his
view, one third of everything that happens, from thinking
about designing a car to operating it, is waste. Dave
Nelson of John Deere says there was 30 percent waste in
the Honda chains — and they are pretty good! That’s the
potential NISCI is looking at.
It takes at least three points of competence in each
line to connect the chain properly. In the Harley-Aallied
chain, for example, there is a technical guru within each
link who is responsible for what the chain is trying to
accomplish — the technical point of competence. It’s
important that the representatives chosen‚ whether they
come from marketing, or quality, or manufacturing —
are the people the chairman would ask. They are the
right pool of competence: They know what has to happen, they know when to proceed, when they have support,
and when to hold and go get the support.
Deming told us to look at the whole system. We are
coming around to believe that any time you try to make
the chain work better, you run into the trust factor.
People won’t open up until they have trust. Any chain
that wants to use any of our material probably must go
through the Trust Module first. That’s where the software
people miss it.
NISCI is now taking re s e rvations for chains of
three links or more to participate in the NISCI Trust and
Cooperation Module. It’s based on three years of experience by Harley-Davidson, which developed the module.
A phone call to 1/888-AT-NISCI will get you a catalog
of materials including 11 videos taken at the group’s
launch.
Supply America, a not-for-profit corporation that deals with supply chain management
issues, provides cost-effective services to supply chains, particularly small- to medium-sized companies, through its network of 350 field sites staffed by over 200 engineers. Supply America is basically an organization that was the network started by
NIST in 1989 — growing from three centers to 80, with 350 field sites — a partnership between industry, government, and the states.
“We are actually a deployment network for industry,” said President Ed Kwiatkowski.
“There will be road map in terms of wants and needs as to what the market wants, and
we will be able to deliver needs for the industry. It’s going to take some time because
this is a new paradigm shift for this country — viewing the supply chain as an extended
enterprise. Lots of waste has been taken out of the factory floor. The next challenge is
how to deal with waste in the supply chain.
“Small companies — those having fewer than 500 employees — represent significant
growth for the economy and significant challenges within the supply chain. One of the
reasons Supply America belongs to NISCI is that we think we understand their issues.”
Enlightened Self-Interest
“We want to be a place where people self-select to
join,” Bob Parker said. “Our posture is not to sell. Peter
Drucker said that selling is not so much convincing the
horse to drink your water as it is the search for the thirsty
horse. We are prepared to talk with any horse thirsty for
the above.”
Patricia E. Moody is Target editor and a member of AME’s Northeast
board of directors. She is a certified management consultant and
has published Leading Manufacturing Excellence (John Wiley & Sons),
Breakthrough Partnering, a guide to how leaders form customer/supplier partnerships, and Powered by Honda, BP for the Extended
Enterprise, co-authored with Dave Nelson, Deere vice president of
worldwide supply management, and Rick Mayo, a BP pioneer and
Honda purchasing manager. She is a founder and former treasurer
of the Marblehead Community Charter Public School.
For inquiries about NISCI events and membership,
contact: BobParker1@compuserve.com
© 1998 AME® For information on reprints, contact:
Association for Manufacturing Excellence
380 West Palatine Road, Wheeling, IL 60090-5863
847/520-3282
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