Accelerating and Prioritizing Process Improvement Efforts

Process/Symptom/Value Matrix

If the supply chain were (as the term implies) really a linear, sequential relationship of entities exchanging goods, information, and currency in a binary, stepwise flow, it might not be quite so difficult.

However, you know that the supply chain really is a complex network of inter-dependent people, organizations and fixed assets, and that goods, data and currency pulse from node to node in almost any direction following the path of least resistance.

This “value network” contains the money you seek.  But, since the movements of material, data and cash are continuous, dynamic, and interdependent, the benchmarking results that tell you that you have some aggregate potential do not often change, despite your efforts to the contrary.

You don’t have a crystal ball, but you still need to make higher quality (i.e. more profitable/valuable) decisions in less time.

How do you prioritize your efforts to attack undesirable business symptoms with better decision processes so that revenue growth, return on net assets, and profitability are increased?

Let’s start with what we know.

We know the undesirable business symptoms.  These are the measurements that make our sleep fitful, cause our hair to turn gray, churn our stomachs, and make some business meetings uncomfortable.

Undesirable business symptoms directly and negatively impact financial measures that determine the value of the enterprise (e.g. Economic Value Added or EVA® ).  We want to ameliorate these symptoms.  A symptom that does not significantly inhibit revenue growth, return on net assets, or margins can be addressed as a secondary priority.

The problem is that the undesirable business symptoms are aggregate measures.  They require decomposition in terms of the root cause.  A Process/Symptom/Value Matrix (PSV Matrix) relates business decision processes to symptoms, ultimately allowing us to link potential root causes within each decision process to undesirable business symptoms.

For more on this idea, I’d be honored if you had a look at my short paper, “Finding Value in Your Value Network“.

Something else to ponder about as you head into this weekend is the motto of the State of New Hampshire, “Live free or die,” spoken by General John Stark on July 31, 1809.

Take good care and have a wonderful weekend!

About Arnold Mark Wells
Industry, software, and consulting background. I help companies do the things about which I write. If you think it might make sense to explore one of these topics for your organization, I would be delighted to hear from you. I am currently employed by Incorta, but I am solely responsible for the content in Supply Chain Action.

3 Responses to Accelerating and Prioritizing Process Improvement Efforts

  1. steve wasilewski says:

    Way cool stuff. I like it! Steve Wasilewski

  2. lccsuppliers says:

    Yes. How can we increase return on net assets, and profitability? Thanks

    • Arnold Mark Wells says:

      I would suggest constructing a Process/Symptom/Value matrix for your business and then focusing on the decision processes that are going to have the most direct impact on the metrics that you are trying to affect (e.g. RONA and margin or profit). I can help you with this, if you need it, of course.

      Off the top of my head, so to speak, if you are a distributor that hold inventory, then you might benefit from careful safety stock planning, a demand planning process, and carefully planned collaboration with major trading partners. You can find blog posts on all of these at Supply Chain Action.

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