Whitepaper: The Wheel of Five for Supply Chain Management

To help organizations recognize and effectively deal with good and bad variability, Involvation has developed the Wheel of Five for Supply Chain Management. The five parts of the wheel are Avoid overburden, Absorb variation, Effective decision-making, Eliminate waste and Eliminate unnecessary variation. 

Avoid overburden by managing the workload

If it’s no longer possible to guarantee on-time delivery, the system is overburdened. In other words, to offer delivery reliability, it is necessary to avoid overburden. In short, this can be done in two ways: by making extra capacity available and by managing the workload. Two familiar examples from everyday life are the rush-hour lane (extra capacity) and avoiding the rush our (workload management).

Absorb variation with stock and time

Of the five principles in the Wheel of Five, ‘Absorb variation with stock and/or time’ is possibly the one that is most commonly ignored. Rather than being absorbed as quickly as possible to reduce the upstream or downstream disruption it causes, variation actually tends to be passed on and is intensified each time (bullwhip effect). Although this is often unintentional and even unconscious, the consequences are significant.

Manage predictable variation with effective decision-making

“Variability will always degrade performance of a production system,” according to Hopp & Spearman. “If you don’t reduce the variability, you will pay the price in the shape of depletion, high stocks and/or long and unreliable lead times.” In other words, it makes sense to minimize variability. But what exactly is variability?

Eliminate waste of capacity, stock and time

Variability comes at the expense of capacity, time and/or stock. That is a law of supply chain physics, whether you like it or not. The only solution is to reduce the variability, because the more variability you have, the more capacity, time and/or stock you will need as a buffer. The same holds true in reverse, of course: The bigger your buffer is in terms of capacity, time and/or stock, the more variability you will be able to cope with.

Eliminate unnecessary variation in supply and demand

Variability negatively impacts the performance of every system. Therefore, in order to improve system performance, it is necessary to reduce the variability – and there’s no better way to start than by reducing the source of all variability: variation. After all, no variation means no uncertainty, let alone variability.

Download the whitepaper

In this whitepaper of the Wheel of Five for Supply Chain Management you will also find the practical perspectives of Ton Ramstijn (Project Lead Logistics at Stedin), Mario Wiersema (Site Manager Logistics at GKN Fokker Hoogeveen), Dennis Pronk (Involvation), Hans Engelman (Lean Manager at Van Geloven) and Frank Gelen (COO of 247TailorSteel).
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