Came across this good post entitled “Companies don’t compete; supply chains compete” which attributes this quote to the CIO of Nortel.  I’m not sure you’d get everyone to fully agree with this given how many other pieces there are to the puzzle, but I think it’s more true than not.  Worse yet, I think there are way too many important people that wouldn’t believe this at all.

I think in many companies supply chain management is that essential component of the machinery that makes a company function that is frequently overlooked.  A case in point is Apple.  Apple is justifiably renowned for it’s product innovation/design and marketing prowess.  But, Apple wouldn’t be Apple without excelling at supply chain management.  Yet, nobody talks about that…unless something goes wrong.  In a rare behind-the-scenes look, there was just recently an article published talking about the “operations wonk” that is second in command at Apple and responsible for their supply chain excellence (see Supply chain excellence at Apple).  I’m sure nobody outside of Apple and his direct family knows that Tim Cook is that person.

As more and more companies compete on a global basis and have supply chains that span the globe, your competitive position in the market increasingly does depend on your supply chain management prowess.  Excellence in supply chain management dictates significant aspect of customer satisfaction, operating performance (margin, inventory, etc.) and many other key performance indicators (KPIs) that determine the health of your company.  And these are critically important because they determine the amount of available cash and investments you can make in launching new products, opening new markets, etc.

It’s unfortunate that supply chain management too frequently gets viewed in a tactical way at the most senior levels of many companies.  I think the key to raising the awareness level of the contribution that excellence in supply chain management can deliver is to tie the impact directly to the key performance indicators that the top executives monitor and care about the most.  This is actually a part of the methodology AMR Research uses in determining their annual Supply Chain Top 25 list and they’ve been able to demonstrate the direct correlation between supply chain excellence and these KPIs in both good times and bad.

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Tags: Key performance indicators, Supply chain management
Posted in Supply chain management
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