Category Archives: Supply Chain

Want a Successful Supply Chain Enterprise? Architect It!

As per Wikipedia, an enterprise architecture is a rigorous description of the structure of an enterprise that describes the terminology, the composition of the subsystems, their relationships with the external environment, and the guiding principles for the design and evolution of an enterprise. The goal of an enterprise architecture exercise is an operational description of the organization that is comprehensive and includes enterprise goals, business functions, business processes, roles, organizational structures, business information, software applications, and computer systems that are in alignment.

Done right, an enterprise architecture provides the logical framework that establishes the links between business strategy and organizational structures, processes, databases, and technologies and improves organizational performance by decreasing organizational cost, reducing complexity, reducing risk, and increasing organizational agility — keys to success in today’s tough economic climate.

Furthermore, the integrated view of business and IT architectures not only allows for improved performance, but limits operational risk by allowing for the controlled coexistence of old and new processes. It’s a great recipe for success as it allows for the controlled evolution of the supply chain function from good to great.

As proof that it works, consider this recent article in Startegy + Business on Strategy by Design which discussed how even a large (UK) government agency, which had been largely paper-based with fragmented workflow processes and outdated IT systems, was able to reduce the average time to process claims by more than 70% while slashing the number of processing centers by 60% by adopting the discipline of the EA process.

So how does one master Enterprise Architecture and build a successful supply chain enterprise? According to the article, the organization focusses on the dimensions of:

  • Strategic Alignment

    that focusses on achieving real business results

  • Leadership & Staff Development

    where top management communicates the intended value throughout the organization

  • Performance Measurement

    that accurately captures the impact of the EA initiative on a regular basis is critical to strengthen the message

  • Organizational Structure and Formal Processes

    that provide a strong foundation

It’s a good message, and a good plan.

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You Don’t Need a Genie to Fulfill Your Wish!

Nor do you need the CFO to give you a big fat check either! If you want more automation in your supply chain, and according to the recent A.T. Kearney Indirect Procurement Study titled “Higher Visibility, Greater Expectations”, most of you do, all you have to do is call up one of a few dozen e-Procurement providers with a (new) SaaS offering and tell them you’re ready. Not only can you start for a small monthly fee, but the savings will pay for the system many times over.

And if you don’t know what system is right for you, just re-read SI’s recent series that provides A Hitchhiker’s Guide to e-Procurement. It will assist your organization in determining what is really important, what functionality the organization should be looking for, and how the solution compares to other solutions in the marketplace.

Stop waiting, and start buying. Considering you can pay by the drink, quit any time, and take your data with you … in the worst case, you select a system that only enables part of the efficiencies that are available, but that allows you to determine the full extent of the efficiencies the organization could reach with a system more in tune with the best practices the organization identifies as appropriate for adoption. In this case, you simply cancel the monthly contract and migrate to the new system, and triple the organization’s savings.

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McKinsey Insists that Five Global Forces Will Reshape Your Supply Chain

… but are they right? Let’s take the five global trends they have identified as key transformational forces one by one:

  • The Great Rebalancing

    The emerging market countries will contribute more growth than the developed ones.

    Once emerging countries increase their standards of living across the board, they will no longer be low-cost countries. If you rely on low-cost countries to power your supply chain, you’ll have to find new low-cost sources of supply.

  • The Productivity Imperative

    Developed economies will need to generate pronounced gains in productivity to power continued economic growth.

    In addition, an average company will need to generate pronounced gains in productivity and efficiency to survive — including enhanced efficiency and productivity in the supply chain. As a result, an average company will have to accelerate its adoption of new processes and technology.

  • The Global Grid

    The global economy is becoming increasingly connected with increasingly complex flows of capital, goods, information, and people.

    The supply chain will have to become increasingly connected as well. This will require more communications and information technology at each and every stage of the supply chain.

  • Pricing the Planet

    Demand for resources is rising, supplies are becoming constrained, and changing social attitudes are heightening the focus on environmental protection.

    Supply chains will have fewer top talent resources, will have to focus on helping engineering identify designs that require less of those raw materials in short supply, and will have to be redesigned to decrease their environmental footprint.

  • The Market State

    The contradictory demands of market growth and safety nets is putting governments under extraordinary pressure.

    • As a result, supply chains can expect to be subjected to an onslaught of legislation in the near future as governments attempt to adapt.

In other words, McKinsey is right and the five global forces will have an effect on your supply chain. In the short term, you will have to:

  • streamline your processes,
  • adopt new technologies,
  • implement lean and minimize waste,
  • improve your ability to comply with regulations, and
  • start looking for new low cost sources of supply.

And then you’ll have to get creative.

Supply Chain Problems? Look North for a Solution!

I was thrilled with the results of the recent IACCM worldwide study that found “Canada is ‘Top Dog’ when it comes to World Trade”. It just confirms what I’ve known all along … there’s no one easier to work with than us canucks and no one more eager to help you solve your supply chain problems.

Furthermore, as Tim Cummins notes, with companies and public sector agencies worldwide increasingly concerned about reputation risk, it’s ethics, fairness, integrity that really matter. If there’s one thing us Canadians tend to have in spades (politicians excepted), it’s ethics, fairness, and integrity. The reality is that Canada is the sort of environment that can be trusted and where risks can be managed effectively. So come north. We’ll be glad to help you out!

The Board Room CPO

In addition to offering insights into planning horizons, supply chain strategy drivers, and keys to supply chain success, the recent report on “Supply Chain Strategy in the Board Room” by the Cranfield School of Management and Solving Efeso also discussed what it all meant for supply chain leaders of tomorrow. It’s conclusion was that the CPO of tomorrow needs to fit the following profile:

  • Strong Communicator: gravitas within Leadership teamin many companies, the sourcing / procurement / supply chain leader still doesn’t have a seat at the table, and even when she does, she often reports to the COO, CFO, or another CXO that’s not the CEO
  • Multi-Disciplinary: able to understand corporate & customer service strategywithout this insight, the CPO will never develop a supply chain strategy that complements and enforces the corporate strategy
  • Collaborative: works as a team player, does “external sensing”in modern terms, the CPO must have a high EQ IQ
  • Vision-Led: but practical and pragmaticthe CPO must be able to think long term, but able to adapt to short-term circumstances and fluctuations
  • Fact-Based: but able to deal with “ambiguity and ambition”the CPO must have a solid grasp of true analysis, and apply those skills whenever data are available, but also be able to fill in the gaps with wisdom and experience when data is sparse
  • Culturally-Intelligent: able to deal with a mix of global, regional, and local culture/leadership stylesmodern supply chains are global and they are going to stay that way

In other words, nothing that Sourcing Innovation and other top blogs haven’t been telling you for years, but it’s nice to see more support for the profile.

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