Different philosophies of business, different parts of a business, different personalities running the different parts of a business, etc. all have naturally conflicting objectives. To be an effective manager, you must understand and accept those conflicts in order to have compassion for your fellow managers and design effective action.
Sometimes, it’s helpful to visualize a model that can be used to explain how different philosophies (or departments or people) interact with one another. Throughout business literature, it’s common to find business models that use basic geometric shapes (i.e., triangles, squares, circles, etc.) so viewing supply chain management objectives in the triangle should be a fairly familiar concept. In geometry class, this triangle would be called an equilateral triangle because the lengths of each of the three sides are equal.
The objectives of The Triad represent the fundamental objectives of a Manufacturing Control System (MCS). The overall goal of a successful MCS is:
“Simultaneous improvement in all areas for the purpose of generating stakeholder value (as opposed to localized improvements in one without concern for the others).”
The stakeholders in an organization are its owners, managers, employees and often customers, suppliers and the community where the business operates.
The purpose of the model is to logically connect strategic, but often conflicting, initiatives within the operations of a business organization for the sake of generating value. Strategy and tactics throughout the organization must be designed to support simultaneous improvement of the areas. The areas and the corresponding objective, or rule, includes:
- Inventory – focus on minimizing
- Customer Service – focus on maximizing
- Productivity – focus on maximizing
- Cost – focus on minimizing
- Quality and Accuracy – focus on maximizing
Surrounding these areas is the Management Culture of the organization. This topic would not be complete if we did not at least mention how the culture influences these results. How the objectives are determined, managed and achieved is affected by the management culture of the organization. Different cultures will place different emphasis on these areas. Something to keep in mind, even though the model is a triangle, there are more forces (or objectives) then sides, as evidenced with cost located within the middle of the shape. This provides some flexibility to the model, as we will sometimes replace cost with quality and/or accuracy, both of which have maximization rules.
For a more detailed presentation on how to apply this model to your business, I encourage you to review our recent webinar recording. I hope you’ve found the concept interesting, as this is just the beginning of a topic for which I have quite a lot more to share. To read more about this concept, click here to go to the next post.
Thank you for beginning our series on Solving Department Issues Using the Triad! If you'd like to skip ahead and reference the various parts of the series, you can find them all here.
- Customer Service
- Inventory and Productivity
- Cost and Quality and Accuracy
- Watch the Recorded Webinar