I grew up in a town called Bremerton, Washington.  It is situated on the Kitsap Peninsula right in the middle of Puget Sound.  Given its location so close to the ocean there are a lot of naval installations in the vicinity.  The majority of the residents work at the Trident Missile Base (nuclear missiles), the Keyport Underwater Warfare Base (torpedoes), or the Puget Sound Navel Shipyard (ship repair).  This type of employment created a huge middle class. In addition to these blue collar workers, Bremerton had a supporting cast of people there to help with every need.  Doctors, lawyers, shop keepers ... you name it ... they were there to support the town and the surrounding area.

One of the residents, a lawyer, had a huge house built on property overlooking one of the great views of Puget Sound and Mt. Rainier.  It was a beautiful home fit for a very successful family.  In addition to the home, the property offered landscaped gardens, elegant trees, and a garage designed for six to 10 cars.  People from Bremerton would take visitors on drives around the town and, invariably, swing by the lawyer's house to have everyone gawk at the fancy house on the hill.

Oddly, over the years, very few if any, people ever saw the inside of the house.  If anyone ever was allowed on the property, it was to tend the gardens or clean the various fixtures.  If there was a gathering of friends, the entertaining was done on the grounds, not in the house.  This behavior caused everyone to wonder what wonderful treasures were inside.  It led to a mystique about how fancy it must be to keep others out.  How else would such privileged people live?  Everyone could see how successful the family was.  Who could hold it against them to be so private.  They lived in luxury, as everyone could see, and everyone aspired to have the trappings of success just like the lawyer's family.

Now, you must be asking why would a blogger aligned with inventory optimization and supply chain planning bring up a story about a lawyer's house in his hometown?

Something happened to that house that has become a metaphor for me when I examine highly regarded and not so highly regarded companies and their supply chains.  Let's face it, companies like to dress themselves up.  Just like the people in Bremerton, Washington, executives see other highly regarded organizations from the outside and wish they could do the same thing: be the envy of all.

While the outside lobbies and transportation vehicles might be awe-inspiring, it is the guts of the organization that makes the products.  Many C-Level executives look at supply chains as the dirty underbelly of the company. The black hole, if you will, of activities where the products are pushed out and revenue comes back.  In my 30 plus years of working in and around supply chains I have found executives treating the supply chain like our lawyer friend in my story, as something that is inside and not to be seen by the outside world.

So what happened to our affluent lawyer and his house?

One night, when no one was at home, a fire started.  Indeed, the lawyer and his family were on an extended vacation.  Due to the location, neighbors did not see the flames until it was too late to save the house.  The fire raged for hours until it was controlled.  The next day news of the fire spread.  People flocked to the property to get a glimpse of the destruction.

At first, everyone was focused on the house itself.  It was reduced to rubble.  As they looked closer they started to say the same thing.  "Where's the furniture?  Where's the cars?  Where's anything??  When the family came back from their vacation they had to confirm what the town now knew.  The house was a façade to their wealth.  They had very little money and everything was tied up in being property poor.  They actually lived like paupers in the mansion.

I originally recalled this story from my youth when I visited a leading US paper company.  This company had won many awards for customer service excellence and was a model for collaborative planning, forecasting and replenishment (CPFR).  The vendor managed inventory personnel were doing extraordinary things with top retailers like of Wal-Mart, Target and Costco.  However, on the advice of one of the planners, I went to interview one of the internal logistics managers.  He looked like he had been beat up with a bag of rocks!  In his attempts to provide the best possible customer service to the retailers he was, literally, burning down the house with expedited orders between warehouses to cover potential out of stocks.

When everything is said and done, a company is a supply chain.  When companies focus on individual KPI's but not on the entire chain, they run the risk of our poor logistics manager ... burning everything up to keep up the façade.  Over the past 30-40 years companies have touted the idea that a pull-supply chain is the best supply chain.  What is happening is these companies are getting wrapped up in nomenclature and trying to mimic pull based supply chains without understanding the real requirement is not to be "pull-based" but to be demand driven.  Synching the supply chain up to customer demand requires a shift in focus from silo'd thinking to a network vision based on customer input.

The metaphor of the burning house is to get executives to think beyond old methodologies.  Building a supply chain so that it is faster, but not aligned to the proper signals creates something like my lawyer's house ... pretty on the outside, but noting of substance and ready to burn up.  Now is the time to review the focus of your supply chain before an accident happens.  Don't let your company be that burning house on the hill!

Photo by: Michael W Murphy // license by: cc