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The basics of managing a collaborative supply chain (Part 3 of 5)

This is the third post in series on collaborative supply management.  The posts are based on a case study of the pig industry which I’ve rewritten to bring out how we manage collaborative supply chains.

In post 1, I described the supply chain for pork products simply and pointed out that feedback gets lost in complex supply chains and does not reach people who need it.

In post 2, I pointed out that Toyota showed that it is not necessary to choose between cost-driven high volume businesses and high margin niche luxury businesses if we are able to manage our supply chains to deliver ‘just-in-time’.  Becoming nimble becomes easier with modern computers.

In this post, I’ll move from telling you about the general problem to what the Scottish pig industry did to manage their collaborative supply chain.

The Scottish pig industry already had an efficient system of delivering pigs and pork to market

The Scottish pig industry got together to do what they do well even better.  The farmers, the butchers, the shop-keepers and yes, the farm and meat inspectors run the ‘forward system’.  In psychological parlance, they track – they pay attention, they coordinate and they get everything done in an intricate and complicated dance.

And they added a diagnostic system which feeds information on the whole system back to individual players

The Scottish pig industry, working together, then added a ‘diagnostic system’ which collects information and feeds it back to everyone in the food chain every three months.

An example of a collaborative supply chain

Let’s take an example of how it works.

The farmer has records of how much food was given to a particularly pig, what supplements it gobbled up, how often it was ill and what medicines it was given.

By monitoring food throughout the chain, farmers can now learn what happens to a pig after it leaves them and they can find the condition of the meat when it lands on our plates (or rather leaves the supermarket in our trolley).

Let’s imagine that sometimes the pork I eat is fantastic and sometimes it makes me regret my purchase.  The information system in Scotland lets farmers know that this variation is happening.

The information system can also analyse the variation to see whether it the fluctuations are triggered at a particularly farm, a slaughter-house, a shop or transport system.

Once we have seen the numbers, then we can begin to understand ‘unexplained variance’

Moreover, the information separates out explained and unexplained variance.

Explained variance means, in plain English, that we know what caused something.  If we know what caused a blip, then we know what to do and we do it with confidence knowing that when we do the necessary, quality will go up and will be seen to go up. The consumer will be happy again.  Bravo. Simple. We can get it done.

I’ll explain in the next post what we mean by unexplained variance.

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