Supply Change episode 3: Design Thinking — engineering a better supply chain

May 6, 2019 Matt Vermeulen

Episode three is all about design thinking. Roy Anderson interviews Ron Volpe to go deep into what design thinking is and how it applies to the supply chain.

So, what is “Design Thinking?” And how does it fit in with the supply chain?

To understand the role of design thinking in the supply chain, you first have to recognize that in business, “the road is littered with products and services that nobody needs.” And often the reason those products failed is because the creators were designing the products based on what they thought the market wanted, rather than what the people actually wanted to buy.

Design thinking is about designing products, services and processes, always with the end-user in mind. When you apply design thinking to the supply chain, you have to think of every stage of the process, from “farm to table.” And your ultimate objective has to be designing it for the end user.

Is the process of design thinking a quick exercise or a long term process?

Generally, there are three steps for crafting a solution with design thinking: empathy, ideation, and experimentation.

So when you apply design thinking to the supply chain, rather than thinking, “well, this is what we think somebody wants, and this is how we think the supply chain would work,” you can do something called “walking the supply chain.” That means going from a manufacturing plant to a distribution center to a store so you can understand the full journey of each product.

Understanding that supply chain journey helps build empathy around both what your customers and partners are looking for. And even more importantly, it gives you a better understanding of how your end users are using your product.

Another way to gain insights is through analogous observations. That means finding industries that have unique forecasting challenges, visiting a company in that industry, and looking for analogous processes that you could take back into your own organization.

One example is with the forecasting challenges on short shelf-life products. So consider the Los Angeles Times. If you think about newspapers, once they make the number of newspapers they’re going to make, that’s it, they either sell them or they don’t sell them. So understanding how many papers to circulate and where to distribute them is really critical. If you’re in a completely different industry than newspapers, but still have challenges forecasting short shelf-life products, then understanding how the Los Angeles Times manages the challenge in forecasting might be something you’d want to adopt.

How do you apply what you’ve learned from other industries to your own?

Every workshop should have a challenge statement, and every analogous observation should be built and designed to relate to your particular challenge statement. It forces you to seek out the tools and craft to build a sustainable supply chain rather than just focusing on the product you’re selling.

Supply chain people want to learn more about supply chain innovations. And learning from other industries becomes not just a way to learn more, but it becomes a way to develop alliances with other industries and companies.

People love the workshops and analogous observations. You get the excitement of learning new ideas and getting inspired by other industry innovations.

But the challenge is taking your learnings, developing prototypes, and committing to agree on the things you’re going to do in the next 30 days to pilot your learnings. The hard work is continuing to have your teams together focusing on those changes after the really exciting workshop.

One way to do that is to create teams from both companies to keep the relationship alive and manage the creation of those ideas over an entire year. Carrying it forward for a year requires stamina and buy-in and a dedication to see it through.

Is it difficult to keep the good ideas in practice without losing momentum?

The critical component is getting senior leadership to buy-in. Without senior leadership buy-in from both organizations, you’re not going to get momentum to finish the task. The reality is senior leadership for both organizations need to agree and commit to saying, “I’m in it for the long haul.” Because if they’re not, it’s just a fun exercise to do for two or three days.

The greatest buy-in you get is when you’re able to launch new ideas faster than you would in any other way. And the second boost in buy-in is when your solutions that you’re generating are more innovative solutions.

So how does someone like a chief supply chain officer really benefit from a design thinking process?

One benefit is to develop new ideas, get them launched faster, and drive innovation within the supply chain. The other benefit that comes out of this is that the relationship is infinitely better between the two organizations working together.

You should be able to answer: who’s the end consumer you’re designing for? Why is it better if that person ends up with a better product and a better process, and how can you work together to make this a deliverable?

Start thinking about designing your supply chain as if your supply chain was an end-user product. If you think about designing for your end user, you start thinking differently about your relationship with the supply chain.

What’s the biggest concern for people thinking about implementing design thinking?

Design thinking has a messy aspect to it, and finance doesn’t want to be messy. It’s sometimes a little harder to get the finance team to get outside of the box and be okay with the fact that you’re going to fail fast so you can succeed faster. It’s certainly good to recognize that the way a finance team approaches this kind of process might be slightly different, but it’s still very valuable to have finance as a part of the process.

Subscribe to our podcast to hear more about the challenges and innovations in the supply chain wherever you listen to podcasts.

Roy Anderson 0:05 
I’m Ron. And I’m Roy, welcome to supply change.

Today we’re talking about the benefits of design thinking for the supply chain. Now, Ron, I am a very simple procurement guy, could you please help me and describe what is design thinking?

Ron Volpe 0:31 
So I’ve got to tell you, I am super excited and passionate about this topic. In an earlier episode, I talked a little bit about my time working with the guys over at IDEO. And that’s really where I became a disciple of design thinking. So let me start by saying i’m not a “build it, and they will come” guy. And what I mean by that is, I think the road is littered with products and services that nobody needed. And that’s a result of designing things based on what we, you know, the producer thinks is the market wants rather than what people want to buy. So, design thinking, for me, it’s really designing products, services, processes. Anything you’re looking to sell and thinking about the end user in mind.

Roy Anderson 1:16 
All right, but what are the 123 steps associated with design thinking? Or? Or is there? Is it a long term process that take months, a year or minutes and hours?

Ron Volpe 1:27 
Yeah, look, I think of it in three steps. I think there’s empathy. I think there’s the ideation step. And then the experimentation step. Let me talk a little bit about empathy. One of the things that I thought was really innovative in terms of the approach we took around design thinking and supply chain was, rather than get in a room and think about, well, this is what we think somebody wants. And this is how we think the supply chain would work, we did something called walk the supply chain, and what that was, was us walking end-to-end from procurement all the way to the shelf. With a retailer understanding every component of their supply chain, it took, you know, and it would take us a week to do it. But we go from a manufacturing plant to a distribution center to a store. And in some cases, what we would do is actually follow, and not in a weird or creepy way, but we would align with shoppers, and go all the way to a shoppers home and understood how they were putting the groceries away. So we understood the full journey of our products around both what our customer in that case, either Safeway or any retailer, was looking for. But it also even more importantly gave us a better understanding of how our end users using a product, where are they putting it away, what pack sizes were working.

So we started with one and we ended up doing roughly 70 workshops of that ilk, with customers all around the globe, doing that exact same thing. And another component of it, another component of that I talked about was that I thought was really insightful was we would do something called analogous observations as part of that process. And what that would be was, if we were working on a forecasting problem with a particular customer, what we would do is find industries that had unique forecasting challenges, and then visit those industries and look for analogous processes that we could take insights back into our organization.

So an example of that was one I’ll give you was we were working on forecasting challenges on short shelf life products. So what we did was, we spent time with the Los Angeles Times. And if you think about a newspaper, and although not many newspapers are not as popular as they once were. Several years ago, we spent time with the New York’s or the Los Angeles Times, because if you think about it, once they make the number of newspapers they are going to make, that’s it, they either sell them or they don’t sell them. So understanding how many they’re going to need, where they’re going to need them was really critical. So jointly, our teams and you know, myself, our team, with the supplier, Kraft, and the retailer spent a day at the Los Angeles Times understanding how they did forecasting and how they manage the challenge in forecasting. And then what we do is we come back to our organization back into a workshop setting, and share what we learned at the Los Angeles Times around forecasting, and then think about what things were they doing that we weren’t doing in our organization, or in our model, that might be something we’d want to adopt.

And what was interesting is, that was one example, we ended up doing something like 40, different analogous observations over three or four year period, we did everything from the blood bank. So following the flow of blood from somebody’s arm until it was using a hospital; we worked at, there’s a pizza shop here in the in the Bay Area, that does something where they just make one flavor of pizza every day, which from a supply chain practitioner’s perspective is the ideal supply chain, no variation, one skew, same same product on each. And we understood kind of how they were making pizza, all of those and they’re 40 of these kind of observations, gave us an opportunity to not not only understand what our end consumer wanted to have, but also understand what others in that using the same kind of processes that we’re doing that we could borrow from.

Roy Anderson 5:11 
So they all opened up their operations for you to be able to dive into it? Was there a lot of pushback or resistance?

Ron Volpe 5:21 
Now, you know, and I get that question a lot. The reality was, and maybe it’s because I come from a supply chain background, but I do find supply chain, this going to sound weird, but supply chain people like to help other supply chain people. And that really, you would be shocked at how easy it was when we said, “Look, we’re non-compete, we work in the grocery industry at that time, we want to see you come make cars,” we went to a Czech Republic car manufacturer. So we want to understand what the flow of processes are that you use to make cars and see what there is that we can what’s there that we can help a Czech grocery retailer. But shockingly, I would say nine times out of 10 people would be very receptive to having us open up their operations and spending a day with us to help learn, and and really, really with no, no ask back, it was simply “Hey, that sounds like a really interesting process. Yeah, come on down, we’ll spend the day with you.” So it was pretty amazing.

Roy Anderson 6:16 
Yeah, now you had to get these nuggets of gold from these various different processes, but they all have commonality, how well were you able to then take those nuggets and incorporate it back up the supply chain into the manufacturers that actually had to make the changes to deliver things more efficiently?

Ron Volpe 6:33 
Yeah, and, you know, on a podcast like this, I’d love to be able to say, every idea every nugget we get we ended up implementing. And I would say realistically, we probably got 30% of them that we did something and influenced some process within our supply chain. And I’d say 70% of them ended up being inspiration. So they may be something that wasn’t really replicable, but it was certainly an inspiration for us as we went back into the workshop, to understand, you know, to see how we might be able to borrow it.

And these workshops I talked about, that we had, with partnership with one of our customers, largely were built around a problem. So as I said earlier, there was one that we did, and it was around how do we improve forecasting, but we did it, we might have done a workshop that talks about how do we remove, you know, take a waste from our supply chain? Or how do we deliver on time better, that kind of thing. Every workshop had a challenge statement. And every observation, every analogous observation we included in that workshop was built and designed to relate to that particular challenge. So look, it worked out very honestly fabulously for us.

Roy Anderson 7:45 
Did you take away anything in terms of the people that you met, I mean, this is cross products and categories and manufacturing lines and cultures. Anything that you take out of it in terms of the people you met?

Ron Volpe 7:58 
Yeah, you know what? One, and it kind of is a little bit of like what I said earlier, which was supply chain people, especially if they’re not competing in a particular industry, I think want to learn more about what supply chain innovations are out there, what technological advancements are out there. And I think what it ended up being was not just a way for us at a customer to learn more. But it was also a way for us to develop an alliance with a particular industry, with a particular company, to continue to use the notion of design thinking and innovation to be a platform for collaboration for us ongoing. So, you know, what I say is, even after the workshops were concluded, and observations were concluded, there was a relationship that was built up, that would continue thereafter. So it was it was, it was really a way for us that was very different, and ended up delivering a lot of benefits. I’d also say that the hard work around design thinking, and the heavy lifting around design thinking is less about that workshop day. So what I’d say is, and these workshops we’d run would last one two three days in length, depending on the challenge, depending on where we’re working. And depending how many observations we wanted to get done.

There was massive amounts of excitement around doing those workshops. I mean, think about it, if you’re you’re working on forecasting, you decide we’re going to go up to the up to Toronto with a customer, and spend two days learning how they control traffic signals in the city, Toronto, it’s a really different way to think about supply chain. And so people really are generally pretty pumped and those workshops ended up yielding in, you know, inevitably six or seven ideas.

So my comment earlier about the three stages: empathy, ideation and experimentation. If I back up a little bit, what we talked about is go out, understand what’s going on in the supply chain, understand both sides go out and look at other supply chains to get inspiration, come back in, do a several rounds of divergent/convergent brainstorming. So take the challenge statement, and get as many big ideas up as you can, and then whittle them down to kind of the four or five or six big ideas that you want to work on, and then develop prototypes that go out and that’s the third critical step agree on here are the five things we’re going to do in the next 30 days to pilot these learnings that we’ve got out of this, my point was going on that all is to say, that’s the easy part, the heavy lifting was really to continue that continue having the teams together and continuing focusing on those challenges after you get out of three days at this really exciting workshop. And what we do is we create teams that were really were sole role was to manage that relationship, and manage through fruition of those ideas and, and stay together between the two companies over a year’s period. So that was a heavy lifting. And again, being completely candid, I would say eight out of 10 times those teams stayed together and stayed focused, we delivered a great result. But as you’d expect, they were we were going to be partnerships with were a lot of excitement around design thinking for three days, carrying it forward for a year requires more stamina, and it may not work. But overall, it was an amazing process for us.

Roy Anderson 11:10 
I found that a lot of these great ideas required people to keep pushing, almost like pushing that big boulder up a hill. And as soon as you stop pushing the boulder would roll right back down to a lower level. Did you did you find that keeping the good ideas in practice, difficult?

Ron Volpe 11:30 
You know, and I think the critical, critical component of that was getting senior leadership buy-in. Look and one of the things I would tell you is that for any of these engagements we did that were all about design thinking I was not a supporter of doing it unless we had senior leadership buy-in from both organizations. Because to your point, the reality is, if you have senior leadership agreeing with senior leadership, and I’m thinking c-level in each case, I think is higher level likelihood that if we get very honestly, if it starts lower in the organization, we had less success. So I wanted senior leadership for both organizations to look each other in the eye at the start of this. And as we’re designing for the workshop, to say, “Yep, I’m in it for the long haul.” Because if they weren’t, it was just a fun exercise to do for two or three days.

Roy Anderson 12:17 
Now to get the buy in from those c-evels, was it because of end customer satisfaction? Was it total cost reduction? Was it better quality or service?

Ron Volpe 12:27 
All of the above. So very honestly, in some cases, we were, you know, to give you some real examples, we were trying to lift revenue in the cereal aisle. So we focused on what can we do from a supply chain perspective to lift revenue in the cereal aisle. In other cases, we’re looking at the costs of certain components as a supply chain. It really was a focus on what was the burning platform for this partnership to get solved. And that’s what we kind of used as a dig site. Because if it wasn’t a burning platform, it was just something to solve, I I think the feeling was we weren’t going to have that that stamina to stay with it over the long haul.

Roy Anderson 13:05 
So how does someone like a chief supply chain officer really benefit from a design thinking process?

Ron Volpe 13:11 
Yeah, look, I think, a couple of things, I think one is, in this case, not only do to develop new ideas and get them launched faster, and drive innovation within supply chain. But the other piece that came out of this was the relationship was infinitely better between the two organizations. I think when you go out and you commit to this, finding new ways of working together, and you go out and you look jointly at new supply chains together, I think you develop a bond between the two organizations that you probably wouldn’t otherwise, it is stepping away from the day to day I mean, and and we’ve all been in those kind of relationships and the business world is is rife with them where companies work together, there’s an adversarial component to it sometimes, this is a way of stepping out of it and thinking, you know what, we’re not designing for either of us, who’s the end consumer we’re designing for? Why is it better if that person, you know, ends up with a better product and a better process? And how do we work together to make this a deliverable. And I think if you think about, again, something I mentioned in an earlier podcast, if you’re thinking about designing as if your supply chain was one, and if you think about designing for your end user, in which case, both of us are a party to that that supply chain, I think you start thinking differently about supply chain in your relationship. It takes a village from a supply chain perspective, what I mean by that is you’re optimizing the whole, I can’t build a supply chain on my own. I used this example, when I was in the grocery industry, Walmart can’t build a supply chain on our own, we’ve got to have both sides working together to get the best outcome.

Roy Anderson 14:50 
Absolutely. Now it is interesting, when I talked to supply chain people and they’re wrapped up in the transactional work, the day to day work, they don’t see what type of value they could bring once they get rid of the transactional work. And what I hear from you is that this design thinking is not something you can do in the five minutes between, you know, tactical activities, but you have to break away from it to be able to see the bigger picture. And that this is a lot of work. And it is something that these teams should be doing to drive better innovation within their supply chain. Does that make sense?

Ron Volpe 15:24 
No, it totally does. And, and the reality is that, and again, going back to something from a prior podcast, I think this is what we’re doing is taking what designers of products, so Apple is an example, have done historically, and thinking about it from a supply chain perspective and thinking about it in terms of designing transactions and designing processes, in procurement, supply chain, etc. So this is really about taking what’s worked elsewhere, taking the practices of understanding who’s going to buy that product and taking it into a supply chain and leveraging it. And I like to think that the work we did back in the day was fairly seminal in terms of, I don’t think a lot of that kind of thinking had gone into designing processes, supply chain processes, back then 10 years ago, it certainly is the case now. And from a supply chain officer perspective, I think it ensures that what you’re working on what you’re building is going to have an end user in mind. So it’s it’s it’s a critical way to work.

Roy Anderson 16:25 
See if you recognize this, people have this concept of well, if it’s not made here, it can’t be any good. Have you, did you experience that during these efforts?

Ron Volpe 16:35 
Yeah, you know where I dive into that question, I’d say in general, even folks that are in design thinking, I think sometimes we give more credit to ideation than iteration. And what I mean by that is, there’s more cachet in it if you come up with the idea than if you build on somebody else’s idea, and I think that’s it, another thing that I learned from this process is that, you know, this when you go through divergent/convergent brainstorming there’s a build on others idea component to it that we talked about a lot of times in those workshops. And I think that’s another way of working, way of thinking, way of getting organizations to think, whether you’re in supply chain or anyplace else is, making sure that there’s the right kind of reward in the organization, not just for the person that comes with up with the big idea. But the person that makes the iterative idea even better than it was. So there is absolutely the notion of not designed here, that we tried to battle. And I think the way we approach it was, there’s just as much cachet in it for the person that makes a great idea slightly greater, as there is for the person that came up with a big idea.

Roy Anderson 17:45 
And have you found though, that as you’re pushing these bigger ideas, it’s going to require a lot of people to change their careers, change their jobs, change what they do for a day to day basis. We need to change in order to make these things happen. And that the change agent, in this case you’re the change agent, using these new design thinking concepts. Did you ever find yourself a target?

Ron Volpe 18:06 
a target, in a sense of, asked that question one more time.

Roy Anderson 18:10 
If anything goes bad that you’re the person that’s going to take the fall?

Ron Volpe 18:13 
Oh, yeah, I think that comes with the territory a bit. But it’s okay. I think that anytime you’re in change, and you’re doing stuff like this, you recognize, and I’m going to get the phrase wrong, but I’ll try it anyways. “succeed sooner to fail.” “to succeed sooner, you need to fail often.” And you got to be okay with failure to be able to deliver on, you know, with the big ideas. So as long as you recognize that that’s the way innovation goes that that’s the way design thinking goes that you’re going to know fail five times to get to the big idea, then I think you can weather that kind of feedback. So it never bothered me at all.

Roy Anderson 18:46 
I’ve also heard is like fail fast concept. That’s exactly right. Exactly. Right. So then, I’ve also told people, people get stuck in there, and they feel like their career is not moving anywhere, I said, “be in the companies that are innovative.” Now last question for you. Is there anything in design thinking that scares you when you deal with the finance world?

Ron Volpe 19:05 
It doesn’t scare me. But what I would say is that design thinking has a messy aspect to it. And finance people and this is stereotyping, so I’m not trying to, finance people (and I don’t think it’s a bad way) don’t tend to be messy people, so I think it’s sometimes a little harder to get the finance team to get outside of the box and be okay with the fact that you know, we’re going to fail often to succeed sooner. And frankly, I don’t know that you want your finance team thinking “we can fail five times just as long as you have a good ideas at six.” So I understand where they’re coming from but it doesn’t scare me. But you certainly have to recognize that the way a finance team approaches this kind of process might be slightly different. But it’s still very valuable to have as part of the process.

Roy Anderson 19:47 
Now our next episode is about B2B. The Case for applications. I think we’re going to both be fighting for airtime on that one. So I’ll talk to you then.

Ron Volpe 19:56 
I look forward to it. Take care, Roy.

You’ve been listening to Supply Change, a Tradeshift podcast. Thanks for joining us.

About the Author

Matt Vermeulen

Matt Vermeulen writes about B2B commerce for Tradeshift. Whether he's writing about Accounts Payable best practices or debunking AI myths, Matt enjoys making complex topics easy to understand and fun to read.

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