[Plant Operations] Operational Dependencies: the Internal Supply Chain

Think back to the last time you watched a military formation performing in perfect harmony. Every movement was precise, on count and in step. The formation leader was calling cadence and to some observers the language was foreign, but every person executed his responsibility as if the formation were one person. Imagine what would happen if someone in the formation did not step off on the left foot or did not listen to the cadence, it would cause havoc for whoever was in front of and behind that person. If those beside this person were not vigilant they would be affected as well. Even though only a few participants would be affected, the whole formation would perform unacceptably. Tremendous planning, coordination, communication and practice are required for satisfactory execution that meets the team’s and audience’s expectations.

Now, imagine what a food plant environment would be like if it performed like a precision performance group. There is a leader, considerable planning of operations, coordination of department functions, communication of various schedules, execution of the plan, and a final product. Food plants can operate like performance groups if they organize, plan, perform and evaluate their performance and make modifications based on performance and input from all support groups. However, when details are overlooked the product can be compromised. If the compromised product is not detected and held from distribution the outcome can be serious and even deadly, as recent product safety issues have proven.

The goal we face is to routinely operate in a manner that will deliver a product that meets consumer expectations. Food plants have to perform every minute, hour, day and month, but they don’t have the luxury to practice before performances. Each department and function must perform optimally for the entire operation to move in a harmonious manner toward a common goal.
I would guess that if a food company objectively evaluated its customer failures there would be a considerable number related to food safety, sensory or functional problems. I would also guess that the root causes would point toward not having the right information, on the right criteria, at the right time, which suggests that different departments are not aware of the downstream effect that their functions have in the operation’s overall success.

Typically, Supply Chain Management articles, education and conversations revolve around the components outside of a manufacturing operation, meaning ingredient and packaging suppliers and distribution. Usually, company or plant department coordination and improvement activities are handled by weekly operations meetings or individual department improvement activities specific to their functions. The goal is to improve the department performance. In many instances, there is little emphasis on measuring the downstream effect.

Unfortunately, the department that is inconvenienced with another department’s failure is burdened with fixing it as well, unless the fix is technical in nature.

Too often, food plants experience execution failures that result in operational problems and these interruptions can result in failure to meet customer orders, affect material quality, increase waste, and cause rework; resulting in unnecessary cost and sometimes causing adulterated product that violates government regulations, legality and product safety criteria. When these situations occur, a blame game ensues. With enough questioning and root cause analysis, the cause can be determined. These situations are perfect opportunities for the leader to take a look at operations from a dependency perspective.

It is important that the Plant Manager communicate to departments that they are part of an internal supply chain and that the final product represents the plant. In order to improve the flow of information and execution from one area to another, it is imperative to understand what is needed to facilitate the flow.
There are a number of current continuous improvement philosophies and processes that can be used to create an approach for process improvement such as Six Sigma, Kaizen, 5S, TPM, Risk Assessment (Severity and Occurrence), Gap Analysis, etc. We can use these concepts to explain a method for working through an operations dependency analysis and implementing continuous improvement activities to maximize the internal supply chain.

SETTING THE STAGE. (*The following example is hypothetical.) Company A’s Sales Department received a request from a premier customer to either develop or modify a product that the customer currently purchases from a competing supplier. Time is limited and Company A wants to impress the customer, so sales, R&D and General Management meet to launch the process. Since this initiative is sensitive, Company A keeps the project as silent as possible and restricts those involved to R&D, Sales and General Management until it is necessary to involve other departments. As development progresses, one new ingredient is purchased and tested by R&D outside of the normal procurement, testing and quality approval process. Eventually the recipe is finalized and R&D purchases enough ingredients to run a couple of bench top tests. The tested product is evaluated, and it is decided that a plant trial is not needed since the process looks simple enough and only minor changes to the process flow are required. Company A sends selected bench top samples to the customer for review and the customer immediately places an order.

Then, the customer requests a few changes from the initial sales discussions. The quantity is increased by 25%, two other distribution centers are added, and the delivery timeline is moved up. However, upon further discussion the lead time provided by the sales person did not include transit time to the DCs. Company A decides to proceed without informing the customer in order to meet their commitment.

Now the challenge begins. General Management (GM) decides it is time to involve the operations departments and calls an emergency meeting to plan the production schedule and see that it will accommodate the new opportunity. GM discusses the opportunity and attempts to energize the staff by explaining how important the project is. The project becomes a top priority and departments are asked to do whatever is necessary to deliver the order. R&D explains what has transpired to this point and what it sees as the challenges.
Purchasing asks about the location and quantity of the ingredients and packaging that will be used. They mention that they will have to see if the proposed suppliers have stock available to deliver to the plant ASAP.

Next, the QA Manager asks to see the ingredient specifications taken from the product information that was sent with the samples used for testing. It is discovered that the information only includes use, handling and some analytical information designed to provide R&D with functional data. Company A’s QA Manager asks the supplier’s QA Manager to fax the ingredient specifications, but upon review he notices that one of the new ingredients has a microbiological hazard that has not been considered in their HACCP Plan. QA comments that the customer requires a microbiological test prior to product release. Since the product has a new ingredient with no history at the plant, it is recommended that the product is not released until the results are received. General Management and sales decides that the product can be released pending the results because the product would be in transit and could be quarantined if needed.

The Production Manager now calculates that the amount of product needed will exceed one shift. This means that second shift will need to finish the product, pushing the regularly scheduled production to the third shift, which usually handles sanitation. General Management decides to run into the sanitation shift and cut back on the cleaning.

Since there is no time for a trial run, the team brings in the supervisory staff and introduces the product, production schedule, changes in usual process flow, and issues to watch for. After a lengthy discussion, the staff agrees to do the best they can and take care of problems as they arise.

The following issues arise during production. First, the mixing process is not the same as the bench mixers and the initial mix doesn’t have the same texture or color as the bench mix, so adjustments are made by adding more ingredients. Second, since the mixed component is different, the depositing weights and volume are different, so deposit volume is changed. Third, baking time and temperature needs to be adjusted to accommodate for the modified component and, not surprisingly, some of the initial baked product has to be discarded which reduces the amount of final product. During these challenges a topping is mixed in advance for application prior to packaging. It is placed on the side of the finishing line at room temperature and forgotten about until it’s time for the final topping. QA takes samples of the finished product and sends them to a microbiological testing laboratory.

Final production revealed the following information. The final amount of product was not produced due to mixing, depositing and baking adjustments. There was consensus that the product was close enough to the initial samples, so it was sent to the customer. During transit, the microbiological results reported an unacceptable level of coliforms, so the product was quarantined at the Distribution Centers and the QA Manager arranged for more sampling. When notified of the issue, the customer decided to look at the product for sensory criteria. Then, they reported that the product did not look like what was sent to them previously and rejected the order at all DCs.

GETTING STARTED. This is an example of failure due to not having a functional internal supply chain where supporting departments have the necessary information to succeed. An Operational Dependency Analysis would have been greatly valuable in this scenario. A description of the process follows:

Senior Management Commitment
Senior Management should notify the facility that a continuous improvement project is underway and inform everyone of the purpose, goals, objectives, performance expectations and project leader. Senior Management support plays an important role in project completion. Their stamp of approval emphasizes the importance of the project. The project leader should receive some type of training relative to team leadership, coaching, facilitating, etc. to keep the project on task.

Select a Process
In order to get the project off the ground, select one or two processes that need improvement. In the prior example, several processes are candidates! If the team cannot identify any major issues, review recent customer complaints, internal process deviation reports, HACCP deviation reports or incident reports to spot trends for improvement. If the team cannot agree on which process to select, perform a risk assessment using severity and occurrence. This assessment will also comply with HACCP validation requirements to evaluate food safety complaints and document resolution.

Select a Team
The project leader can select a few core employees to perform a flowchart of the process and then add others for specific input. It is important to remember to keep the core team and vary membership as the need arises, especially during the investigation phase. Too many participants at once can stall the progress.

Flowchart
The next step in the process is to create a flowchart. This will require a core team representing each of the operating departments involved from the first step to last. Create a flowchart of the process as it occurs. Then, envision and chart the process as it should occur, given no restrictions to resources, plant layout, people, budget, timing, etc. When you can clearly see the differences in the two flowcharts, you can easily perform a gap analysis.

In our example above, the flowchart could be for a functional product commercialization plan. The first step could start with a sales communication document that has initial information required by other departments. Subsequent steps would include appropriate timing to facilitate logical progression and coordination.

Dependency Discussion
The team leader will start the dependency discussion with persons involved in the first and next successive steps. Since we are emphasizing the Internal Supply Chain, consider the department and function of the first step as Supplier #1, and the next successive step as Customer #1. Questioning should start with Customer #1. This person should be up front and tell Supplier #1 what he finds unsatisfactory in order to optimize task performance.

The goal of this discussion is to determine if the optimum process can be attained. Documenting this discussion facilitates other long-term continuous improvement opportunities. The discussion will cover why Supplier #1 cannot meet Customer #1’s needs. As long as the team leader acknowledges the supplier requirements, the conversation will be productive. It is entirely possible that Supplier #1 needs other resources or clarification, much like Purchasing and QA need ingredient specifications to purchase the right materials and to update the HACCP program.

The next step is to facilitate a discussion between Customer #1 (who is now Supplier #2) with Customer #2, who is the next step in the process. This process continues throughout the entire process flow. During these discussions the team leader must be aware of the friction that can occur and keep the conversations focused on the task. This is one reason for keeping these discussions between the Supplier and Customer. However, there may be a need to include others on specific issues or when clarification is needed.
There will be a wealth of information brought to the table and even some issues not initially considered will surface. Plant dependencies are not linear and in fact, as the process continues, a team will often find that particular functions affect more than one successive step. A spreadsheet can be developed to organize the information and document the inefficiencies and required improvements from each supplier and customer discussion.

Dependency Analysis Documentation
Documenting the dependency information can be effective. It is important to recognize the barrier mentality, which is a mindset that an improvement cannot be done for whatever reason. Typically, the first response about a suggested improvement is a reason that it won’t work. Since an improvement was identified, it warrants further debate. I suggest documenting the barriers and discussing the best ways to overcome them. This approach creates a positive discussion environment and sometimes solutions to other problems are identified.

Improvement Steps
Once the dependency discussion is completed, the project leader is ready to begin facilitating improvement activities with each department. Activities can happen in linear or parallel steps depending on their plant-wide effect. Some improvements will have to be made before next steps can take place, however, some steps can be improved in advance.

The team leader’s next step is to discuss and document improvement strategies that include expected performance outcomes and ensure that the supplier and customer agree. During development and research of improvements, suppliers need to communicate with their primary customer before making changes so the customer knows what to expect. To optimize development and change, the supplier should always involve the customer and test a change before it is finalized. Final changes to processes and procedures should only be made when the customer approves them, just like in a supply chain relationship involving a supplier outside of the company.

CONCLUSION. The hypothetic example in this article included several different internal supply chain failures. It is not recommended to tackle all of them at once. A more practical approach is to discuss a particular situation and agree on the starting point; then proceed through the customer-supplier discussions. Internal supply chain dependency discussions create teamwork and a better understanding of the challenges occurring in other departments. AIB

The author is a Food Safety Eduction instructor at AIB International.