Insight


Involvation’s Wheel of Five


Tackling complexity effectively


To help organizations recognize and successfully deal with good and bad variability, Involvation has developed the Wheel of Five for Supply Chain Management. After this initial introduction, the tool will be explained in a series of five further articles.


I


n many boardrooms, the mantra is to improve service while reducing costs. That’s easier said than done, especially when forecasts are always wrong, plans are outdated before the ink is even dry, lead times are long and unpredictable, stock levels are sky high, fire-fighting has become the norm and there is a gen- eral air of mutual distrust... and no mat- ter what you try, nothing seems to really help. In other words, the complexity has become overwhelming and many busi- nesses are struggling to cope. The good news is that much – if not most – of that complexity has been self- created. And if you can create something yourself, you can also stop creating it. The all-important question is: how? To answer that, we need to find the source of the complexity.


Final nail in the coffin


Imagine a world where there’s no vari- ation, where everything is stable, com- pletely predictable and reliable. Wouldn’t that be nice?! Thanks to first Henry Ford and later Taiichi Ohno, the automotive industry has come quite close to achiev- ing that; car manufacturing is still com- plicated, but it’s no longer complex. The


reason: because variation and uncer- tainty have been removed. Variability is a key source of complexity and the final nail in the coffin of every process (Hopp & Spearman, 2000). So it could seem that reducing complexity is merely a matter of rigorously eliminating variabil- ity, just as the automotive industry has successfully proved.


Not so simple


Unfortunately, it’s not quite so simple in reality. Unlike in the automotive indus- try, everyone in low-volume/high-mix environments must seriously consider chronic residual variability. Besides that, it can be necessary to accept variability in order to keep customers happy (e.g. an ice-skate manufacturer), or even to turn variability to your advantage by add- ing more of it (such as Zara). Such cases illustrate so-called ‘good’ variability. So besides eliminating ‘bad’ variability, it is also important to recognize, accept and organize ‘good’ variability.


DDSCM’s wheel of 5 eliminate


waste of capacity,


stock and time


eliminate unnecessary variation


in demand and supply avoid overload


with workload control and spare capacity


chase variation


with insight in variation, potential flexibility and effective decision making


end custo- mer


absorb variation


with stock and time


To help organizations recognize and suc- cessfully deal with good and bad variabil- ity, Involvation has developed the Wheel of Five for Supply Chain Management (see image). This tool is based on the laws of supply chain physics and con- tains five complementary guidelines/ design principles for effectively manag- ing complexity to achieve the business goals. On the one hand, the Wheel of Five is intended to inspire an improvement strategy and solutions. On the other, it can be used to check whether improve- ment measures really do contribute to achieving the objectives. In a series of five articles, each of the five guidelines (Eliminate unnecessary variation in sup- ply and demand; Absorb unpredictable variation using stock and time; Man- age predictable variation with potential flexibility and effective decision-mak- ing; Avoid overburden by managing the workload and creating overcapac- ity in strategic locations; and Eliminate waste of capacity, stock and time) are explained in more detail based on case studies.


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SUPPLY CHAIN MOVEMENT, No.40, Q1 2021


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