A recent article in the Supply Chain Management Review outlined A Plan for Building a New Supply Chain because, according to the author, supply chains need to be redesigned from the ground up to remain competitive. Now, I wholeheartedly agree that the average supply chain lacks efficiency and needs to be improved – in some cases drastically – but I’m not sure that supply chains need to be redesigned from the ground up.
Most successful companies understand the basics of their supply chains – and have those basics in place. After all, the entire point of a supply chain is to move products from the manufacturing plants to the retail outlets where anxious consumers will buy the goods. And since your average reasonably successful company knows where the goods should come from, where the goods need to go to, and the means it has at its disposal to move those goods, it’s quite clear that not only are the fundamentals of a supply chain reasonably well understood – but that, at a high level, a more efficient supply chain will look similar to the current supply chain. And even though I’m all for supply chain streamlining, I don’t know if a new supply chain is necessary, at least not in the average case.
However, the article did have some strong points. First of all, the five S model appears to present a valid approach to reaching a good end-state as the five S’s appear to cover most of the key points. Once you’ve addressed Structure (physical and operating model), Scope (depth and breadth), Span (supply chain extent), Scale (degree of verticalization vs. virtualization), and Skills (both availability and impact), about the only thing missing is the sixth S: Shift – how innovative is the new supply chain?
The article also had a good short list of key people, process, technology, and global success factors that is worth repeating:
Process Success Factors
- Lean, but flexible, processes
Don’t optimize to the point where it becomes tough to change and adapt to future demand, design, or technology shifts.
- 80-20 rule adherence
Get the 80% right, and the process will adapt to the remaining 20% over time.
- “Adopt and Go” philosophy
Don’t over-plan the implementation to the point where it takes forever to achieve the benefits.
- Design for Global Commonality
Fewer distinct products means fewer distinct supply chains.
People Success Factors
- The right mix of strategic, tactical, and executional skills
Successful supply chains require all three skill sets.
- Train and re-train regularly
It’s all about sustainability – and that applies to people as well as processes. You can’t run a 21st century supply chain with 20th century skills.
- Focus on distributed process management and optimization
The world is still round – but supply chains are flattening by the day.
Technology Success Factors
- Distributed Applications
Monolithic applications are a thing of the past and must be avoided at all costs.
- Global Accessibility and Scalability
The future calls for consolidation and global distribution across processes and functions.
- Repeatable, Limited Deployments
Every iteration should reduce cost and cycle time.
Minimize customization as to minimize total cost of ownership.
Global Success Factors
- MEASURE, MEASURE, AND MEASURE
You need visibility and accountability to remain at the forefront. This is the only way to ensure that it does.