Roberta J. Duffy
Motorola's newly named chief procurement officer, Theresa Metty, delivered a riveting keynote address on Tuesday afternoon of ISM's 88th Annual International Supply Management Conference in Nashville. The topic was "the war on complexity," and Metty told the story of Motorola's successes in reducing complexity, both in terms of product components and product profile.
Complexity can creep into (and hurt) the supply line when any of the following are present:
For example, Metty says that there were several instances where each specific phone that Motorola manufactured required its own specialized part. Components were not standardized and many parts that served the same functionality actually required specialized tooling. Furthermore, in order to manufacture the phones, Motorola had to know all of the specifics very early in production because the inflexibility of the design meant that substitutions would not be possible at a later date. So, sales forecasts had to be much more accurate at a much early date in order to avoid any delays. It's easy to see how over 1,000,000 variables would have to be 100 percent correct 90 days out if manufacturing wanted to go smoothly. Given the volatility of a high-tech consumer product line, this was not an easy task.
However, if complexity could be taken out of the design and supply chain process, modifications to the product could be made seamlessly at a later date and actual customer orders could be filled quicker. For example, if an order for 10,000 units of a Model A blue phone was modified to Model B in a different color, those adjustments could be easily made because the "guts" of the phone could stay the same and the parts that did need to be substituted would easily fit on the same shell, meaning the manufacturing didn't have to start from scratch again.
Metty used the analogy of an unfit supply chain when such complexity is present. The key, however, is to sell all the substantial players on the fight to reduce complexity. This is no easy task as it requires a new mindset and different philosophies about design. To gain support and commitment from the various groups, Metty says she pointed out the advantages that each would realize with a less complex product. Engineering would benefit because it would decrease a product's time to market and allow them to optimize existing components. Sales would benefit because no longer would inaccurate long-term forecasts cause such havoc. They could modify forecasts 30 days out and still know that product would be delivered to the customers on time. Manufacturing would benefit because there would be less retooling when a change was needed and less obsolete inventory since components were going to be designed for multiple uses. Most importantly, the company's leadership was sold on the idea because they realized how costs would decrease when product didn't have to be taken apart and reassembled to accommodate any order changes.
Theses innovations, which Metty has put in place during her short time (3 years) at Motorola, have resulted in such revolutionary positive effects that it's no wonder the firm has created, for the first time in history, a chief procurement position, which Metty now holds.
By Roberta J. Duffy, editor of Inside Supply Management™