Flow: How the Best Supply Chains Thrive

“Business leaders have only so many days in a year, and every action has a clock attached to it.”

 - Flow, p. 30

The central premise of Flow by Dr. Robert Handfield and Tom Linton is that supply chain flows (including cash, inventory, and information – as equals) operate just like the physical laws of nature. Faster flows are better, and increased, accelerated movement is more important than the amount of cash, inventory, or information being moved.

Their perspective is an interesting one, and it stems from a realization that came to them just after publishing The LIVING Supply Chain (read my review here). A supply chain isn’t just about its nodes; it is about the movement (or flow) of things between the nodes – in both directions.  

Flows reward simplicity… supply chains can be complex as long as the flows are simple. As obstacles change, so does the path of least resistance – like the course of a river. Unlike a river, however, well-worn paths are not necessarily strategic, and the incremental changes that we feel comfortable making may not go far enough to address the huge disruptions we are seeing today.

The authors share their point of view that we are now working and living in a post-global world. The traditional advantage associated with sourcing in low-cost labor countries is being offset by transportation costs. I agree with that point, but I do wonder about supply chains (like semiconductors or solar panels) that seem rooted in a particular region, not because of flows but because of what the governing bodies in those locations are willing to deal with from a materials and environmental standpoint.

One executive that the authors spoke with offered a word of caution for procurement specifically:

“Procurement people are too slow to see what is happening around them, and today are failing to see how digital technologies are changing the rules of the game for competition.”

To that point, some of the authors’ best insights are not about supply chain flows at all, but about decision making. For instance, they talk about connections between “supply chain scope of practice” and the ability of leaders to make decisions.

• How does a flat or tiered organizational structure affect the speed and quality of decisions?
• How confident are you for how long about the decisions that you make?

The same is true of their insight into critical thinking, a skill that is always in short supply:

• Agility can be observed in an organization’s ability to facilitate distributed decision making
• And is dependent upon a willingness to let people fail.

Most interesting of all is the acknowledgement that supply chains have to be able to function under imperfect conditions. Whole systems may be problematic (especially when they have to interact with the public sector – but that’s my opinion), but supply chains can’t wait for them to be fixed. Get the best data you can, empower decision makers to act, and then… let your inventory, cash, and information flow.