Even if everything is going okay, and especially if everything is going well (as good fortunes never last), it is important to stress-test the supply chain strategy on a regular basis. If the weaknesses in the supply chain are not uncovered before a supply chain disruption occurs, it could mean the difference between a minor hiccup and a major disaster that shuts down production for a week and costs the organization millions of dollars in losses.
The weaknesses will only be uncovered if the organization is asking the right questions. After all, as Peter Drucker has warned, the most serious mistakes are not being made as a result of wrong answers; the truly dangerous thing is asking the wrong questions. If the right questions are not being asked of the supply chain strategy, there’s nothing to stop the organization from taking the wrong fork in the yellow brick road and ending up lost in the jungle instead of back home in Kansas.
So what are the right questions? That’s a good question in and of itself, but thanks to Robert Simons, the Harvard Business Review and a recent article on how to Stress-Test Your Strategy, it’s one that is fairly easily answered as the right questions to start with are the seven counterparts to the seven questions every business should be asking at the strategic level. More specifically, the seven questions that should be asked to test your supply chain strategy are:
- Who Is Your Primary Stakeholder?
The organization has to serve its primary customer, but as an internal function, you have to serve your primary stakeholder who must, in turn, serve the primary customer. It’s important to know who the primary stakeholder is because supply chain generally has multiple organizational stakeholders, each trying to pull the organization in disparate directions. Unless the organization can quickly focus in on the most important direction, which it can if it knows whose needs must be met first, it will lose a lot of time, energy, and productivity. - How Do Your Core Values Prioritize Customers, Stakeholders, And Your Team?
An organization must serve its customers (who are the source of life-blood revenue) first, stakeholders (and internal supporters) second, and it’s employees (workers) third. By keeping this trio of parties happy, it will ensure success and thereby achieve the first goal of business — generating value for the shareholders. - What Critical Performance Metrics Are You Tracking?
Only what’s measured get managed, and since it’s critical that the right things are managed, it’s critical that the right things are measured. Furthermore, it’s even more critical that the right things are measured in the right way. For example, as a measurement, “on-time outbound shipments” is a useless metric. What ultimately matters is whether or not it reaches the customer on time, not that you shipped it when you said you’d ship it. - What Strategic Boundaries Have Been Set?
Where does your function begin and end? Does it stop with sourcing and procurement? Does it include logistics management? Does it include risk management? Does it stop at risk identification or does it include the implementation of mitigations? Are the mitigations limited to disaster recovery or do they venture into financial hedging? Despite pressure to the contrary, no supply chain organization can do everything on its own, and it must ensure that those functions it is responsible for are appropriately staffed and monitored. - How Is Creative Tension Being Generated?
What incentives do your team members have to push through the boundaries and find ways to improve processes and policies? There should be a constant effort to improve the supply chain while adapting it to the current economic conditions. - How Committed Is Your Team To Helping Each Other And Key Organizational Stakeholders?
No person can be a peninsula thinly attached to the rest of the team if the organization as a whole is to consistently generate great results. The amount of skill and knowledge expected of today’s supply chain professionals is simply staggering and the team has to work together if they are to succeed. Furthermore, they have to help those whose help they need, and finance in particular (which might mean leaning to speak the language of the CFO: Part I and Part II) as the ultimately control the budget and resources the supply chain organization has at its disposal. - What Strategic Uncertainties Keep You Awake At Night
If something isn’t keeping you awake at night, then you fail to realize that there are half a dozen things that could grind your supply chain to a halt at any particular moment. You need to be constantly thinking about these possibilities and coming up with ways to prevent them, or at least mitigate the damage they could do if they materialize.