AMN Perspectives by Thomas Group: Experience at Work

Posted: Aug. 31, 2004, 9 a.m., EST

by John Steidl, Thomas Group consultant and David Demers, president of Avicon

IRVING, TX — How do you apply concepts of systems thinking and concurrent engineering to the problem of re-inventing your supply chain? Last time we briefly introduced the PICO approach to designing an integrated operating model; this week we’ll describe it in more detail.

The PICO Perspective

PICO stands for Process-Information-Cash-Organization.

In the past, supply chain transformation initiatives typically focused on one or two design perspectives, such as process reengineering, and/or information technology. Today, a fast-changing marketplace requires rapid, balanced solution design and greater internal and external partner collaboration. Companies can meet this challenge through an approach that incorporates the concurrent engineering of the PICO dimensions.

To illustrate, a company wishing to reduce its order-to-delivery lead-time would likely benefit from a careful examination of its core business processes, information, cash and organizational flows in order to identify potential bottlenecks. The company could then work to eliminate the bottlenecks while at the same time identifying ways to increase the velocity of the inventory flows. Addressing all four perspectives simultaneously increases the inherent improvement opportunities in asset velocity, cost and response time as well as the efficiency and success of initiative implementations. Simultaneous engineering of the PICO perspectives ensures that the information flows support the business processes and are aligned with contractual arrangements and organizational structures. This typically results in reduced time-to-market and an improved capability to react quickly to customer demands.

Velocity is the common denominator among the process, information, cash and organizational dimensions of the DNA solution patterns that form an integrated operating system. From an engineering perspective, this model simultaneously:

* Speeds up the physical flows and core enterprise processes within and across the trading-partner community.

* Accelerates integrated information access, including near real-time availability and operational visibility within the enterprise and across the trading-partner community.

* Leverages speed and alternative cash engineering options to reduce cash-to-cash cycle time, release fixed-asset resources, and lower operating costs.

* Increases organizational capabilities to rapidly identify, collaboratively design, implement and manage high-speed solutions.

A DNA solution pattern incorporating all four PICO dimensions represents a unique supply chain pattern for a company, a pattern that can be tailored by geography and product line. An organization could have a variety of distinct patterns. Once assembled, these DNA patterns form the company’s supply chain integrated operating system, which seeks to achieve specific supply chain goals.

Next time we’ll talk in more detail about each of the four PICO elements.

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