History will never forget the name George S. Patton. This World War II superhero was the combat general who charged into Sicily, swept across France like a tidal wave and blazed through Germany, capturing 10,000 square miles of enemy territory in just 10 short days! He was the Nazis’ worst nightmare. Much is known of his military genius and bravery, but what is little known is that the heart of his strategy was materials and logistics. He once remarked, “Gentlemen, the officer who doesn’t know his communications and supply as well as his tactics is totally useless.” In other words, supplies and success are inseparable.
In addition to everything else, managers must have a good depth of working knowledge regarding turnaround materials. For instance, what percentage of materials is typically accounted for in the detailed planning phase? In a $50 million turnaround, how much should the average materials budget be? Which materials are most often over-ordered and under-ordered? What are the most common reasons for materials impacts during turnarounds? What are the current prevailing strategies for reducing materials costs? What are the most effective methods of tying materials management to transportation and communications? What are the deltas in cost and effectiveness when considering in-house versus outsourced materials management?
Executing a turnaround has often been compared to going into battle. Would it surprise anyone that the U.S. Department of Defense is obsessed with logistics and materials? The Army Logistics University (ALU) was created to ensure combat commanders and other key decision makers have the correct level of appreciation and competence regarding the complexities and gravity of materials and logistics. What we call “bottlenecks,” the army more aptly calls “chokepoints.” The ALU teaches, “Chokepoints cause shortfalls in military operations, and blind spots cause commanders to make decisions without all of the facts. Both chokepoints and blind spots elevate operational risk.” If a couple words were substituted in the previous sentence, it would fit perfectly into most turnaround reviews.
There is rarely a post-turnaround “lessons learned” meeting where materials management is not listed as a concern. Fortunately, chokepoints and blind spots can be eliminated. Turnaround managers typically don’t have purses that resemble the Defense budget and can’t launch a world-class logistics and materials university or create a Goliath logistics and materials database like W.A.R.S. (Worldwide Ammunition Reporting System), but they are beginning to do the next best thing. Rather than struggling with Don Quixote’s “unbeatable foe,” they smartly delegate materials management to proven specialty companies that have perfected the process and are experts at delivering world-class logistics and materials.
A couple salient points from the ALU illustrate why outsourcing may not be a bad idea: “Distribution and material management are tough subjects to master.” Even with vast experience and almost unlimited funding, it is still an admittedly tough business: “Within the … material/distribution process … there are communication gaps in both the human and electronic domain.” Turnarounds are often battles where casualties are measured in damaged careers. No one makes the point more clearly than Napoleon himself: “The amateurs discuss tactics; the professionals discuss logistics.”
One of the most common mistakes committed by turnaround managers is to underestimate the sheer complexity of logistics and materials management, leaving both the schedule and budget at higher risk of overrun. Being talented at planning, scheduling and execution is altogether insufficient for turnaround success. Can great job plans bring success if materials are delayed? Can a great execution strategy succeed if materials are unavailable? Some have compared materials management to the third leg of a three-legged stool, but it would more accurately be compared to the seat of the stool, holding all the legs together and giving them purpose. What blood is to the body, materials are to a turnaround. No materials means no execution and no need for anything else.
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