I came across a couple of great stories recently that illustrate the great things that come from creatively reaching back into the supply chain, and out to the customers. Too many companies I work with are insular – managing themselves a lot like feudal China, walled off from the world. They measure and manage only on the basis of how things affect themselves, with little thought to how they can improve their lot by learning what goes on among their stakeholders. Suppliers and customers are almost adversaries to be negotiated with in a never-ending struggle for pennies.
Reader David DiPietro sent me a story about a New York outfit called Great Lakes Kraut – as in sauerkraut. The Flanagan family makes 125,000 tons of it a year. These guys had a great plan that revolved around buying all of the cabbage they need to make their kraut from growers nearby … only mother nature had different plans. It rained like crazy and the local cabbage yield went in the tank. The next best place to buy cabbage was in the south, which means a lot of freight expense – 20% of it wasted because only 80% of the cabbage is good for making sauerkraut.
While most companies would accept the fact that costs are going to go up, and either lay off a bunch of people or jack up prices, these guys got creative. They built a factory on wheels to take the front end of their process to the source of the cabbage. I'm sure most companies would react by saying such a thing is impossible for them, because their equipment is too big, too heavy, requires special utilities or whatever from a myriad of excuses. I will bet there were those at Great Lakes Kraut who said the same things. But they did it anyway, and they now process the cabbage on sitte where it is grown, and only ship the good stuff back to New York for the tail end of the process.
The other story is from Kroger. If you read this article from the Detroit Free Pressit is a lot like other 'going to the gemba' stories. David Dillon is the big boss at Kroger and he apparently spends a lot of time hanging around Kroger stores, often incognito, checking things out. The most interesting part is the reference to dunnhumby. For those who don't know, dunnhumby is a data collection and alalysis outfit. Kroger is one of the who's who of brand names using dunnhumby, but where most companies worship data and do just about everyting by the numbers, Dillon says, "The data only tells you so much. Dunnhumby tells me what to look for and I go in and see."
The best part of the article is Dillon noticing a guy in a Kroger store buying something with food stamps, only to learn the item wasn't eligible. Food stamps are an increasing part of Kroger's revenue what with the economy in the tank. Dunnhumby data told Dillon that – but it was him being in the store that told him of the embarrassment making a mistake about eligibility causes. You can picture the customer having to put the item aside after being told he couldn't pay for it. So Dillon made the food stamp items easier to discern – making the store friendlier for folks shopping with food stamps. When he said "data only tells you so much", he said a mouthful.
Both stories revolve around creativity and initiative. They are about getting out of the familiar confines of the office and the factory – making a little extra effort. One results in shaking a big chunk of waste oput of the supply chain, and the other is about creating a little more value for customers. There are great lessons to be learned from both of them.