Supply Chain vs. Cleveland Cavaliers

Cleveland Cavaliers 2013-2014 winning percentage (actual): .402

Cleveland Cavaliers 2014-2015 winning percentage (projected): .671*

Cleveland Cavaliers 2014-2015 winning percentage (projected, revised): .805**

*About eleven seconds after LeBron announced he was returning to the Cavs, the Internet exploded and when the dust cleared, the experts projected Cleveland’s win total for 2014-2015 would bounce from the 33 games they won a year ago to 55 games.

**Roughly five minutes later, FiveThirtyEight.com projected 66 wins for the Cavs, if they land Kevin Love (which should happen in less than a week).

That means that if the Cavs end up with the best player on the planet (LBJ), the player with the longest streak of double-doubles since gas was 61 cents per gallon (Love) and a two-time All-Star (and former 3-point shootout champ) point guard (Kyrie Irving), they should win about 8 out of every ten games they play. Not bad. Not the best of all time. And certainly not nearly as good as what defines world-class in on-time customer delivery.

If you’re really good at shipping on time to your customer, you’re doing it 99.5% of the time. If you’re barely good, you’re doing it 95% of the time. Anything less than that and you should be bringing in someone like ROSCO to diagnose and fix what’s broken.

Even if this year’s Cavs hit 66 wins, that 80.5% would be considered a failure by supply chain standards. So let’s say that an 82-win season (100% winning percentage) is reasonably unattainable and that a perfect season should be based on the 1995-1996 Chicago Bulls 72-10 record (MJ’s first full year back from hiatus, The Worm’s first year as a Bull, Scottie Pippen, Toni Kukoc, Steve Kerr, etc. etc.). To get a 95% success rate with that adjusted 72-win standard, the Cavs will need to win 69 games this season.

To be fair to the Cavs, if you judged Hollywood box office success by the same standard (current box office gross as a percentage of historical best), the last week of July 2014 would have been a .596 success (“Lucy” was #1 and the total box office was $228,076,260 versus one of the best weeks in history – end of June 2013 at $382,677,164 with “Monsters University”, “The Heat”, “Despicable Me 2”, “World War Z”, “White House Down”, and “Man Of Steel” – all over $30M that week).

And if even if the best player in baseball, Mike Trout, goes on a tear, his OBP (on-base percentage) might squeak north of .400 (currently .378).

And the U.S. Congress only passed 56 bills out of the 5,700 that were introduced in their 2013-2014 session – giving them a .009 success rate.

So the Cavs will likely finish somewhere better than Congress will but not as good as a company with a capable supply chain.

Why the higher standards for your small business than for the NBA’s elite? Why call out the unheralded supply chain organization for shipping on time 94 times out of 100, when in most walks of life that’s a solid A? Well, for one, supply chain isn’t a zero sum game. For the Cavs to win 72 games, that means someone else is going to be on the losing end 72 times. For Samsung to ship on time to Best Buy 99.5%, that doesn’t mean that LG can only ship on-time 0.5%. On-time delivery is a result of a customer-focused, process-driven supply chain, not defeating the Knicks. And unlike the success the Cavs may or may not have this season, your company’s successful on-time delivery won’t require trading away former #1 draft picks. All you need is someone to identify areas of improvement, define a path forward and help get you (and keep you) there.

—What are your customer’s expectations? Do they provide forecasts? Can you forecast for them – based on history, seasonality, market landscape, etc.?

—Are your supplier lead times less than your customer lead times?

—What’s your inventory re-order policy?

​—Do you know what you have in inventory and how long it will take you to pick and ship it?

A hard look at questions like these will get you started.

(originally posted August 18, 2014)

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