job essentials by Mike Elsas, Director Production and Distribution Management
DATA = KNOWLEDGE, KNOWLEDGE = POWER
By M. Elsas, Director Production & Distribution Management
The Wall Street Journal Europe
Dow Jones Consumer Media Group, EMEA
When I started working for The Wall Street Journal in 2002 as Distribution Administration Manager, I immediately focused on collecting, understanding and improving the available data. How else could I understand the complexity of a production and distribution network consisting of 10 print sites and over 50 distributors, delivering to 75 countries? Throughout my 7 years with the company, it turned out that gathering data and improving visibility by adding qualitative data was a key to success. Decision making is highly depending on qualitative data. Therefore holding the data, understanding the ins and outs and being able to report data in a quick and comprehensive way makes you a valuable, not to be missed player a highly competitive organization.
The answer to all questions is DATA. Any theory, lean, mean, six sigma, JIT, TQM, TOC, etc. depends on data. If you know the data, you can effectively manage the supply chain. Not knowing the data will put you in a weak position. Therefore the data is more relevant than the theory. With that respect, data knowledge combined with common sense will get you on the right track.
What is key for understanding your supply chain performance?
Answer: Supply Chain Data (Quality). Without any data it becomes extremely difficult to measure how effective your supply chain is operating in terms of quality and cost. For data to be usable it must be accurate, consistent, complete and it must be valid.
Example: In order to evaluate your distribution network performance, you need to know arrival deadlines, you need to be able to evaluate arrivals against these deadlines, be consistent in reporting and make sure you have valid data. Such performance rating is not only extremely helpful in distributor appraisal but also in helping to solve structural problems.
Wrong answer: Analyze Complaints. My supply chain is performing well as we don’t get a high level of delivery complaints through the Customer Service Department.
Remark: Unfortunately the number of complaints alone is insufficient to measure performance. It says nothing about optimization of the supply chain (there may be faster or cheaper ways of getting a copy delivered, but if the reader is not aware of these, he won’t complain)
What defines the supply chain material flow, by and large?
Answer: Supply Chain Data (Quality). A supply chain consists of the move of both materials and the data surrounding it. The material flow will be only as good as the data that goes with it.
Example: For newspapers to be produced, shipped and delivered to the end reader, print sites need to know exactly how many copies they have to produce, which distributor will pick up the copies and what the address is of the final destination. Supplying incorrect/incomplete information will result in non deliveries and copies produced will remain undelivered…
Wrong answer: the supply chain material flow is optimized when you are able to take away all physical bottlenecks.
Remark: In part that is correct, however without adequate data to backup the material flow, you haven’t achieved anything. We could have the fasted press, dream mailroom equipment and the best distributors, but if we are not providing them with correct data, they are unable to produce correct quantities in the correct order of truck departure.
What are key factors of effective purchasing and contract negotiation? (don’t think in terms of negotiation skills, think data)
Answer: know your business! Make sure you have reliable DATA supporting your strategy. You rely heavily on your knowledge about past and present. Without having supporting data on volumes and cost (evolution) and the factors determining it, you are lost during negotiations. Further a good knowledge and understanding about industry data and competitor data will allow you to be in a better position to negotiate a good outcome for your company.
Example: If a transport company tells you their prices will go up with 10%, you need to know the components determining transport costs, their %ual breakdown within total cost, the cost evolution of each individual element etc. If you know this, only then you will be able to judge the validity of the price increase request and you can start building your defending strategy for… not accepting it…
Wrong answer: I am an expert in effective purchasing and contract negotiation as I have followed expert courses in negotiation and purchasing.
Remark: I’ve been involved in negotiations where other stakeholders had followed very expensive negotiation skills courses, but did not have sufficient data knowledge. In the end, it did not help them much.
What defines a good Service Level Agreement? How can you effectively use an SLA agreement to improve distributor performance?
Answer: develop meaningful key performance indicators and link them to a reward system. Meaningful means measurable, consistent and valid. Again data is of extreme importance. The purpose of and SLA agreement using KPI’s is to visualize performance. When you hold the relevant data, you can use that power to show distributors how good or bad they are performing against previous months or across the market. By sharing that information and the underlying data, they will accept their areas of improvement and tend to consolidate their strengths.
Example: At WSJE we were able to visualize and penalize problem areas through SLA agreements, which lead to a considerable improvement in retention rates. At the same time we were able to reward good performance so that good performers were encouraged to perform even better. The incentive for good performance was higher than the penalty for bad performance.
Wrong answer: A good SLA agreement Is one that uses KPI’s that are build in such way that you can penalize bad performance and hence recover some of the losses made due to the bad performance.
Remarks: a penalty works well for short term improvement. A reward is more ‘rewarding’ in the long term.
Biography
Mike Elsas is a Supply Chain Specialist with focus on business process re-engineering and distribution network optimisation. He has over 15 years experience
in supplier contract negotiation.
He is currently Director Production & Distribution Management at The Wall Street Journal Europe. In this role he is responsible for strategic issues related to WSJE, WSJ US Edition printed in the UK and Barron's production and distribution operations. He manages partners of outsourced production and distribution services through service level agreements.
He has been with the WSJE in Brussels since 2002 in various roles. Prior to joining the WSJE, Mike worked for several international logistics companies in Belgium. He received a License in Applied Economics from the University of Antwerp and earned an MBA from Antwerp (UAMS) Business School.