Whenever we speak of supply chains we are referring implicitly or explicitly to three tangible flows that in one direction or another go through the different processes involved: Flow of Materials, Flow of Information and the flow of Money. They are tangible because I can see them, physically verify them, evaluate them, etc.
If we analyze the supply chain from the point of view of succession of interrelated processes, we must consider two dimensions of processes: First, the Planning processes where we anticipate or forecast events that may occur in the supply chain and allocate resources to respond to those events (Sales, Purchases, Manufacturing, etc.); Second, the execution processes where all the actions to fulfill the plans are developed, in a transactional way in the day to day of the chain.
In the traditional way as we see the flows in Planning processes, there operates a single flow, the Information flow with which we make decisions and predict future events. In the execution processes we also see the action of the three traditional flows: materials, information and money.
But in these two dimensions (Plan and Execution) we make decisions all the time. And these decisions in one way or another speed up or slow down the other flows in the supply chain, creating problems and restrictions.
How many times the supply chain is interrupted due to a decision making out of time, or how many times the supply chain stops because there is no one who makes the decision to buy or pay, or how long it takes for a company to make a decision. decision because permissions are needed from the organizational hierarchy?
Then an obvious question arises: Is there a flow of decisions in a supply chain? And the obvious answer is: Yes, it is the most important flow but it is a hidden flow, it is the part of Iceberg that we do not see.
Do we know this both internally and at the level of our customers, suppliers and third parties?
If the answer is no, we are in Chain timing problems and surely we are spending money on optimizing the other flows when the solutions are in changing the way we make decisions. A company or chain can have an excellent flow of materials (Transport Fleet, conveyor belts, forklifts, etc., a good Information system (SAP, Oracle, barcodes, RFID, etc.), a good flow of money (Payment / collection policies, cash liquidity, etc.) but if you do not have a good flow of effective decisions that will allow you to obtain the best Service / Cost ratio in each one, you will be in trouble.
The flow of decisions depends on the people, only on the people. We are the element of the chain that decides the actions to be taken in each event. This is why it is the most subtle flow of all four. Dependency on people means relying on knowledge, emotions, behaviors, empowerment, paradigms, abilities, tiredness, assumptions, etc., all of which are difficult to measure and improve.
The efficiency dependence of the flows of materials, information and money is directly related to the efficiency of the decision flow. But as in the Iceberg, it is hidden under water, so to know it we must dive, analyze, diagnose and continuously improve decision-making in quality and speed. Just as we can prepare a map of the flow of Materials, Information and Money, it is necessary to design the map of the flow of decisions to accompany the other flows. A detailed map of the chain's decision system is a good first step to improve overall Chain flows.
It is necessary to clearly describe who makes the decisions (those responsible), when they must make them (time) and with what criteria to make them (parameters).
A key point in these definitions is that all planning questions have an associated "when".
Characteristics of the elements associated with the decision flow
Who):
- Do you have the knowledge to make fluid decisions? Do you understand the implications of not deciding in the right time? Do you have the tools to make fluid decisions? Do you clearly understand the parameters under which you decide? Do you clearly understand the implications of making decisions outside parameters?
When:
- The event and moment in which the decision must be made have been established. The maximum time that each decision must take is specified. The time horizons over which planning is decided have been established. The speed at which decisions have to be made is clearly understood. There is some sort of criteria for these speeds (not going fast all the time).
Parameters:
- Are there maximum times for decision-making? Are the service / cost relationship parameters within which decisions must be made clear? Do you have special cases where the parameters can be exceeded?
