A recent Industry Week article on how Manufacturers are Redfining Themselves had a great quote by Michael Collins who said you can’t cost-reduce yourself to growth. “I look at some of these companies that have been successful and see what they’re doing differently from those that are just floating along. You know what I see? They’re willing to go out on a limb and develop unique strategies. That’s what separates them. And whether you’re trying to grow a business or a supply chain, the net requirements are the same — if you want your supply chain to be successful, you have to invest in it and take chances every now again. New technologies, new processes, and new distribution models will be key to future growth and success.
And you have to rethink the value that the supply chain contributes (from a value-focussed or high-definition perspective). The sidebar provided in the article lists some good starting points, once appropriately translated to the supply chain.
- Identify “Blue Ocean Space”
Where are the real savings opportunities that supply chain has not yet tackled. Are there any sacred cows such as marketing, legal, or HR spend where supply chain could make a huge impact? Is supply chain involved in NPD, or only in sourcing after the design has been approved and expensive single-source components locked-in?
- Think Beyond Processor Mentality
Real savings come from strategic planning, sourcing, and network design – not tactical PO processing.
- Offer a Value Proposition that Goes Beyond Sourcing the Cheapest Part
What about quality, sustainability, and end-customer value? Customers will pay more for high-quality products that give them a (perceived) value end, and since profit is revenue minus cost, any contributions to revenue also have a huge impact on overall business performance.
- Ask the Right Questions that Identify Risks and Opportunities
Don’t just focus on opportunities or risks. The greatest success will come from a careful balancing of risk vs. reward.
- Offer specialized high-value services that can’t be easily duplicated.
Find ways to save other departments money that they can’t duplicate without your help. For example, better e-negotiations, deeper spend analysis, or better JIT inventory management with 3PL support.