In addition to offering insights into planning horizons and supply chain strategy drivers, the recent report on Supply Chain Strategy in the Board Room by the Cranfield School of Management and Solving Efeso also summarized six drivers of a successful supply chain strategy. While there were no surprises, the points do deserve reiterating.
- A balanced input of vision.
A strategy developed without the blinders on generally works better than one developed with the blinders on.
- Frequent review.
When there’s a regular review to insure the strategy is being followed and implemented properly, the strategy will tend to be more successful.
- Balanced input of quantitative modelling.
Decisions based on a consideration of facts tend to be better than decisions made solely by gut instinct.
What gets adapted gets implemented.
- Integrated risk management.
A supply chain that is less prone to collapse tends to function better than one that is more prone to collapse.
- Benefit tracking.
What gets measured gets managed is a timeless truth.
It would have been nice to see more insightful drivers considered, but c’est la vie. The reality is that if every company made these six drivers part of their supply chain strategy checklist, the average supply chain would function much better than it does today.
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A cooperation between the Cranfield University School of Management and Solving Efeso that resulted in the publication of Supply Chain Strategy in the Board Room (based on a survey of 181 senior logistics and supply chain executives) between July 2009 and January 2010) had a couple of surprises in the top ten findings, at least to me.
While the following findings made sense:
- The most important supply chain performance drivers are cost focus, customer lead-time and customer quality but these vary by sector
Unfortunately, supply chain initiatives are still primarily focussed on cost and not the overall value supply chain can deliver in terms of risk mitigation, service level improvements, and innovation.
- Customer service issues and cost issues are the main triggers for strategy review
Reviews are usually reactive and not proactive.
- Supply chain strategy implementations are not straightforward
The supply chain affects all areas of the business and multiple systems in sourcing, procurement, logistics, warehouse, and trade management are needed to address the supply chain end-to-end.
- Successful supply chain strategy implementations have top level support
Great results typically require significant changes to systems and processes, which just don’t happen without support and leadership from the top.
- Cross-functional accountability and a balanced combination of several key approaches and techniques also improve the likelihood of success
All of the affected parties need to collaborate. This will generally only truly happen if they are all held responsible for the success or failure of the initiative.
- Development of the supply chain strategy is largely internalised
Even though most corporations don’t truly understand how to revolutionize the supply chain, those that embark upon defining a supply chain strategy generally try to do it themselves without the help of an expert guide from outside the organization (even though Consultants are Cheap).
- Of the many barriers to success, the major ones are company culture, lack of leadership and poor supply chain visibility. Barriers are predominantly people-related, rather than technical.
Implementations may be difficult, but with the right guidance, support, and elbow grease, they can be done relatively quickly and efficiently and, depending on the system or process in question, sometimes be completed in a few weeks. Most of the solutions are fairly matures these days. As a result, any hiccups are generally caused by humans and not hardware.
The following findings are a little shocking:
- Supply chain is recognised as an important part of the business
While I hear a lot more talk these days about how important supply chain is to the business, I still don’t see a lot of action. It’s shocking how many mid-market companies still don’t have basic e-RFX/e-Auction platforms even though affordable solutions have been available for years! As far as I’m concerned, it’s Action, Not Words, and until I see more action, I won’t believe it.
- Service and corporate strategy are key drivers
No, cost is. While 10% of the true innovators might have moved onto service and strategy in an attempt to generate long term value, 90% of the time it’s cost, cost, cost. (If you get any other response is just lip-service.) While it should be value, it’s still cost.
- Review of supply chain strategy is highly cross-functional and in many cases, a continuous process with regular monitoring and continuous adaptation according to circumstances
Well, at those few companies that actually have real supply chain strategies, review is likely to be cross-functional (as these are the few companies where the CSCO/CPO will actually have a seat at the table), but at the vast majority of companies monitoring is irregular, adoption is haphazard, and cross-functional participation is still a pipe-dream. Sorry, but this is either wishful thinking on the part of the survey respondents, or the survey sample was very skewed towards the 10% of true innovators. If review and monitoring was continuous, you wouldn’t have 40% to 60% of negotiated spend unrealized at the average company, because maverick spending would be caught and eliminated, overcharges would be caught and never paid, and off-contract shipping options avoided in all but true emergencies.
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