Top three issues impacting supply chain management
Michael Lamoureux over at Sourcing Innovation had asked several bloggers to comment on their thoughts on the top three issues impacting supply chain management today. Here’s my take:
1. Supply chain management should be more strategic - for years the emphasis in supply chain management has predominantly been on cost reductions. This is a very important, but tactical view of the contributions that supply chain management can make to the organization. As companies are increasingly forced to compete on a global basis, they must start to view their supply networks as a competitve advantage that can not only deliver low costs but impact top-line growth through superior responsiveness and best-in-class customer service. Companies need to deploy every asset at their disposal to win in today’s marketplace and a responsive supply network is such an asset. Failure to recognize this will leave companies short-handed against their global competitors. To accomplish this requires leadership from the top by increasing the exposure of the supply chain initiatives and value to the organization. Metrics that track contribution to top-line growth in addition to cost reductions are critical to ensure proper visibility. It’s easier than ever to lose a customer today, and supply chain execution can be a major impact on company revenues and brand performance.
2. To thrive in the 21st century requires 21st century strategies and techniques - AMR Research was the first to really emphasize the need to become demand-driven. Becoming demand-driven represents a new paradigm for companies that have historically been supply-centric in their thinking (thus the term supply chain management). As AMR points out, making this transition requires top-down executive leadership since it impacts the entire organization and how it operates. While technology is only a component of becoming demand-driven, it’s an important and essential piece. Today companies are trying to make the transition while continuing to utilize 20th century technologies. These technologies were firmly rooted in the supply chain planning and supply chain execution mindset that focused on running the business like clockwork. With the amount of change in today’s globally distributed supply networks, the increasing global competition and the ever shortening product lifecycles, the business imperative has shifted to becoming demand-driven and dealing with the business when it doesn’t run like clockwork. Companies need to align technology solutions with the new business priorities to become demand-driven and arm their people with the enabling technologies that will support the business changes they are striving to implement. Failure to do so will leave a good strategy with no legs to make it work.
3. People make the difference - As companies seek to leverage supply networks as a strategic advantage and become more demand-driven with the appropriate tools to support these transformations, they have to reinvest in the people that will make the difference. Why? Because increasingly things don’t go according to plan, and it’s people using human judgement that make the difference and can best figure out the best course corrections to make when the unexpected happens. There’s a tremendous amount of dialog in the industry about collaboration. However, if you look a bit deeper, it’s all focused on system-to-system collaboration - which is a good thing. But what about people-centered collaboration? To deal with change across a distributed supply network, people need to be able to collaborate with other people with the right domain expertise and insights to make the right course corrections quickly. Where 20th century technologies focused on automated processes by removing people from the equation (which made sense when the business could be expected to run like clockwork most of the time), 21st century technologies need to re-engage critical front-line decision makers to leverage the human capital across the extended enterprise to respond quickly to change (i.e., deal with the business when it doesn’t run like clockwork). There are certain problems you just can’t plan your way out of, and people are essential to dealing with these.
