JOURNEY TO SUPPLY CHAIN EXCELLENCE
Having a competitive advantage with supply chain management (SCM) no longer exists. That window of opportunity has closed. Some firms took advantage of and exploited it well. Many companies however squandered that chance.
What is required now is supply chain excellence. It is not an option; it is a necessity. It is needed for companies in the United States, in China, in India, in Germany and in most places worldwide. The global marketplace of suppliers and customers is a reality. Effectively directing and managing the supply and movement of products across the world demands supply chain excellence. The longer and more complex is the supply chain; the greater is the need for excellence.
Achieving supply chain excellence does not happen overnight. It takes time and much effort. It is a journey. There is no one way to do it. The how-to-do-it depends on many factors, including the company, the industry it is in, market forces and conditions and much more.
The first step is to define where your company is, performance wise, and its industry. With this, the context of supply chain importance and performance can be developed. Top management has issues that it considers important. These may be "pain points" to them. These issues should be long term. A revolving door of short-term topics and crisis du jour are not what is meant for building excellence. A short-term, limited-focus approach was often an important reason why companies missed on making supply chain management a competitive advantage--that and not realizing how important supply chain management is.
Financial-based measures, especially short-term ones, are not the metrics for company excellence or for supply chain excellence. These divert attention from real issues. This is not business heresy; it is quite the opposite. Stock-market prices are a good example of short-term measures that can deflect management from important, strategic concerns.
Also determine the company culture and how that fits with developing SCM excellence. The culture, for example of tight cost control, may create limitations on the ability to develop the structure needed for supply success and improvement.
Evaluate whether management wants supply chain excellence. Not every firm accepts and practice supply chain in the world. They do not see it as a core competency or requirement. Some even still think of it as shipping or distribution, regardless of titles that may be used. That determination is very important. It is a reality check. The company may need it. But if management does not see the need and does not care to see it, then a different tact is needed to "get by" and take care of the day-to-day.
Next assess where your company on the road to supply chain excellence. The assessment does not have to do as much with the supply chain measures with costs or functionally-driven, such as carrier on-time performance, orders picked or similar metrics. Those measures may not place the supply chain, and more importantly, the company, in a defined context as to how well the company is doing.
Instead the key performance indicators should reflect contribution toward the measures and issues recognized in Step 1. This is the proper perspective. It makes SCM view the company and use the same language as top management. This is not a subtle point. It puts supply chain management into the key issues. SCM becomes a "player" in the organization. For example, if customer service is one of the issues, then how, why and where does SCM fit into that? What is its role and responsibility? And what will it do as part of the company effort to improve customer service?
Or management may want to transition into new products or markets. These may demand a supply chain approach that is not currently used by the company. Identifying risks, mitigating them, and designing the new program can be an exciting challenge and opportunity.
Supply chain excellence requires structure. The foundation of the structure is the process, technology and people. SCM is a process. Process is how and how well the organization, both internally and externally with suppliers and customers, operates. SCM flows across almost every part of the company. A smooth horizontal flow in a vertical organization is a challenge. Identifying gaps and redundancies in the process is needed.
Technology is very important in dealing with supply chain complexities with international sourcing and with the planning and execution of the supply chain on an ongoing basis. However technology is a process enabler. It cannot fix a flawed process.
People involves more than talent and ability. People include the organization of these individuals. It involves how they are organized as to function or business unit or results-based. Also, there is the determination as to the approach of centralized, decentralized or a blended version. Plus where people are located in the company, both as to geography and placement in the company should be part of the structure design.
Take the initiative. The assessment many identify many needs, both for being a relevant part of the business effort and in developing excellence. Prioritizing is essential. Everything cannot be done and cannot be done at the same time. Resources must be determined and allocated wisely.
Collaboration must be an integral part of the journey. Alliances, both inside the company and with key trading partners, are important to ongoing and deliberate progress. These should evolve into an integrated process. They generate insights, provide additional resources, mitigate risks, reduce stress and increase the pace of progress.
Resilience is needed. The planning and execution no matter how well it looks on paper will have problems. Aligning supply chain management into the company power structure and being a robust part of the shared identity are important.
Wherever the journey begins, however the plan and map is done, the effort must be regularly monitored and measured. As one need is near to completion, work on another need should begin. Success reinforces the desire for continuing on the road to excellence. Periodically check to make sure that there is no backsliding from earlier results.
Patience is also needed; the journey will take time. Adapting to change may not be easy. It will also need to be evaluated from time to time as both external forces and internal changes may require.
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