Applying the Timeless Principles of Sun Tzu’s Art of War to Achieving Excellence in 21st Century Supply Chains.
Several years ago, Dr. Eli Goldratt said, “In the future, competition will be among supply chains.” Over 2,500 years ago, Sun Tzu included mastering logistics as a cornerstone of successful operations. What can we learn from a military theorist of 500 BC that will strengthen our supply chains in the 21st Century?
Before looking at the timeless principles of Sun Tzu, we need to establish a baseline of who he was and why his theories on strategy and warfare from over 2,500 years ago are important to us today in achieving supply chain excellence.
There are over 20 quality translations of Sun Tzu’s treatise The Art of War. Some of these translations ponder whether Sun Tzu actually existed; some postulate that The Art of War is a compilation of several writers; one translation suggests that Sun Tzu was actually Lao Tzu the author of the Tao Te Ching; one suggests that Sun Tzu was a younger contemporary of Confucius. Recent archeological findings point to the fact that Sun Tzu did indeed live in the Wu Province of China around 500 BC and was a military advisor to the King of the Wu Province.
The Art of War was first translated in the Western World around 1772 by French missionaries. There is some evidence that this translation was read and used by Napoleon. This is militarily important because the actions of Napoleon influenced Carl von Clauswitz’ On War and Jomini’s The Art of War. Not only did these writers influence the actions of General William T. Sherman during the American Civil War, but also modern military thought and modern day principles of war.
Other examples of The Art of War can be seen in Mao Tse Tung’s Little Red Book, the Japanese attack on Pearl Harbor in December 1941, the Tet Offensive in Viet Nam in 1968, and in the allied actions during Operation Desert Storm in 1990. So, how does such a military classic apply to 21st Century Supply Chains?
The Art of War was written in a universal style that enables it to be applied to a variety of subjects, as is evident by the over 300 books on Sun Tzu available from online bookstores. To apply this treatise on strategy and war to supply chains, we will look at some key passages in The Art of War and substitute supply chain management for war; the company/corporation for the state; and leaders for generals. With these substitutions there is some great advice in Sun Tzu’s work that apply to today’s supply chains.
The Art of War starts with, “Warfare is a great matter to a nation; it is the ground of death and of life; it is the way of survival and of destruction, and must be examined.” Using our substitution these words can be rewritten as: “Supply Chain Management is a great matter to a company; it is the road to prosperity; it important to the survival or ruin of the company, and therefore, supply chain management must be examined.” Sun Tzu lists five factors that must be mastered to be successful in any operation:
1. The Way or the Tao. In supply chains this is the link that brings the thinking of the workers in line with the vision and strategy of the supply chain leaders. The key to doing this is to make sure that communications are clearly stated, clearly understood and clearly articulated from the perspective of the employees that have to implement the vision and strategy. 2. Climate. In Sun Tzu’s day this concerned how to operate in the different seasons and different climatic conditions. To be successful in today’s supply chains, leaders must be able to operate in all business climates, world wide.
3. Terrain. During operations in the Wu Province, to be successful the armies had to be able to master mountains, valleys, rivers, plains, etc. In 21st Century supply chains, leaders must be able to master the global operating environment and the supply chain infrastructure in order to survive.
4. Command. Sun Tzu equated command with “generalship.” Using our substitution of terms, this means that to be successful, companies must have quality leaders in charge of their supply chains. We will look at this area in greater detail when we look at the major themes of The Art of War.
5. Regulations. Sun Tzu included logistics as part of the regulations that must be mastered. Since the term supply chain had not been invented yet, the term logistics applied to all of the functions that we equate with supply chains. This is why Sun Tzu is the basis for this look at achieving supply chain excellence – 2,525 years ago he recognized the need to master supply chain operations if you wanted to be successful in operations.
Having mastered these five factors in your supply chain, there are several key threads that are woven through Sun Tzu’s work. These key threads include Matters of Vital Importance, Clear Communications, Leadership, and Employee Training.
Matters of Vital Importance. How many areas do you measure and track in your organization? I once worked for an organization that had over 100 weekly and monthly reports on supply chain operations. When I took over the organization, I send a couple of the reports forward and waited for my boss to ask for the reports that he thought were important. Out of the 90+ reports that I did not send forward, he only asked for one! The dashboard of your automobile contains a series of lights, warnings, and readouts such as the speedometer, tachometer, oil pressure, and water temperature. The purpose of the dashboard is to let you know how your automobile is performing and to track those items critical to the health of your automobile. In your organization, you should only be tracking those items that are important to the health of your organization – customer service, quality, expenditures, etc. How many people are like my old organization and are tracking way too many areas that have nothing to do with the life or health of the organization? What are you measuring and benchmarking?
Clear Communications. How many times have you received guidance that made no sense but to your boss it was perfectly clear what he/she wanted done? Sun Tzu said in Chapter III of The Art of War, “The Grand Duke said “one who is confused in purpose cannot respond to the enemy.’” I will tell you that an employee that is confused in purpose cannot respond to the needs of the company or the customer. Please do not interpret this to mean that the customer or the boss is the enemy, but the same principle applies. In his classic work, 7 Habits of Highly Effective People, Steven Covey explains the need to “seek first to understand and then be understood.” Mr. Covey is saying the same thing that Sun Tzu said centuries earlier – communicate in such a way that the goals, vision, and mission of the company are clearly stated, clearly articulated, and clearly understood from the perspective of the employee that has to implement the programs. History is full of examples of ineffective communications and the resultant military failures. Do not let your company fall into this trap of not ensuring that the employee fully understands the purpose. Do not stop at the employees, make sure that your customers and your suppliers also understand your purpose.
Leadership. Perhaps the theme most prevalent in The Art of Waris the importance of leadership to be successful in any operation, large or small. Sun Tzu did not fall into the age old discussion of management versus leadership. He clearly understood that leadership –“the ability to influence people by providing purpose, direction and motivation” – was critical to the success of any operation. Sun Tzu called it generalship, my experience is that not all generals are truly leaders, so we will call it leadership. In Chapter III, Sun Tzu tells us that leaders “are the assistants to the” to the company. “When their assistance is complete, the” company “is strong. When their assistance is defective, the” company “is weak.” It is the same in any supply chain, when the supply chain leaders are strong, your company is strong. Sun Tzu tells us, “Therefore, leaders who understand strategy preside over the destiny of the people, and determine the stability or instability of the organization.” In supply chains, it is the same today as it was for the military in Sun Tzu’s day. Supply chain leaders determine and communicate the strategy of their supply chains. When all of the leaders of the company understand the supply chain strategy of the company, the company will be stable and prosperous. Another key area of leadership that Sun Tzu emphasizes throughout his treatise is the fact that leaders are visible to all of the workers. Therefore, leaders have to remember that they have to set the example all of the time for their employees to emulate. The days of “do as I say, not as I do” are long gone.
Training. “To rely on rustics and not prepare is the greatest of crimes; to be prepared beforehand for any contingency is the greatest of virtues…..What is called foreknowledge cannot be elicited from spirits, nor from the gods, nor by analogy with past events..” Training of employees and keeping them current is not an option in 21st Century supply chains. FORTUNE magazine publishes a list of the “Best Places to Work in America” every year. One of the common threads that ties all of these companies together is an emphasis on training for employees. Although the average training requirement is in excess of 50 hours per year for these companies, some of them require over 240 hours of training every year. Why? These companies want to make sure that their employees are “prepared beforehand for any contingency.” There is also a tie between the amount and quality of training that you provide your employees and employee retention rates. The higher your employee retention rates, the lower your costs will be for initial training for new employees. Also, the higher your employee retention rates, the higher the probability that your supply chain will be more efficient and come closer to the ultimate goal of 100% perfect order fulfillment. The United States Army uses a methodology known as the After Action Review to emphasize training and assist organizations in producing more efficient and effective organizations. This process is a simple to implement system that has 8 steps.
1. What was the plan?
2. What actually happened?
3. What went right?
4. How do we sustain those areas?
5. What went wrong? This could be major or minor but you still want to improve the performance.
6. Why did it go wrong or not according to the plan?
7. How do we fix that in the future?
8. Who is responsible for fixing the problem? What is important here is not who made a mistake, but rather, what went wrong and who will be responsible for ensuring that the fix: a) fixed the problem and b) did not create a bigger problem.
Recent articles on the response or lack there of to the residents of Louisiana, Mississippi, and Alabama after Hurricane Katrina reveal that the concern of the leaders involved focused on fixing blame rather than fixing the problem. How many times in your organization have you seen the same thing? Next time you have a problem try using the eight steps of the After Action Review process to address the problem. To be effective you have to be brutally honest in the process.
Sun Tzu provides a common sense approach to leadership and supply chain management. Take the time to look at the 13 chapters The Art of War using the same substitution that we used here – supply chain management for war; leaders for generals; and the company for the nation/country. What you will discover is a manual for improving your supply chain that is as true today as it was 2,525 years ago.
Remember – you can use these principles to improve your supply chain, or you can continue to be like the dead fish. Even a dead fish can swim downstream with the current and give the illusion of progress. Wouldn’t you rather swim against the current and improve your operations? The choice is yours!