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3 Steps to Achieve Supply Chain Excellence

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3 Steps to Achieve Supply Chain Excellence

3 Steps to Achieve Supply Chain Excellence - Having a competitive advantage with supply chain management (SCM) no longer exists. That window of opportunity has closed. Some firms took advantage of and exploited it well. Many companies however squandered that chance.

What is required now is supply chain excellence. It is not an option; it is a necessity. It is needed for companies in the United States, in China, in India, in Germany, and most places worldwide. The global marketplace of suppliers and customers is a reality. 

Effectively directing and managing the supply and movement of products across the world demands supply chain excellence. The longer and more complex is the supply chain; the greater is the need for excellence.

Achieving supply chain excellence does not happen overnight. It takes time and much effort. It is a journey. There is no one way to do it. The how-to-do-it depends on many factors, including the company, the industry it is in, market forces and conditions, and much more.

Step 1.

Financial-based measures, especially short-term ones, are not the metrics for company excellence or supply chain excellence. These divert attention from real issues. This is not business heresy; it is quite the opposite. Stock-market prices are a good example of short-term measures that can deflect management from important, strategic concerns.

Also, determine the company culture and how that fits with developing SCM excellence. The culture, for example of tight cost control, may create limitations on the ability to develop the structure needed for supply success and improvement.

Evaluate whether management wants supply chain excellence. Not every firm accepts and practices the supply chain in the world. They do not see it as a core competency or requirement. Some even still think of it as shipping or distribution, regardless of titles that may be used. 

That determination is very important. It is a reality check. The company may need it. But if management does not see the need and does not care to see it, then a different tact is needed to “get by” and take care of the day-to-day.

Step 2.

Next, assess where your company on the road to supply chain excellence. The assessment does not have to do as much with the supply chain measures with costs or functionally-driven, such as carrier on-time performance, orders picked, or similar metrics. Those measures may not place the supply chain, and more importantly, the company, in a defined context as to how well the company is doing.

Instead, the key performance indicators should reflect contribution toward the measures and issues recognized in Step 1. This is the proper perspective. It makes SCM view the company and use the same language as top management. 

This is not a subtle point. It puts supply chain management into the key issues. SCM becomes a “player” in the organization. For example, if customer service is one of the issues, then how, why, and where does SCM fit into that? What are its role and responsibility? And what will it do as part of the company effort to improve customer service?

Or management may want to transition into new products or markets. These may demand a supply chain approach that is not currently used by the company. Identifying risks, mitigating them, and designing the new program can be an exciting challenge and opportunity.

Supply chain excellence requires structure. The foundation of the structure is the process, technology, and people. SCM is a process. The process is how and how well the organization, both internally and externally with suppliers and customers, operates. 

SCM flows across almost every part of the company. A smooth horizontal flow in a vertical organization is a challenge. Identifying gaps and redundancies in the process is needed.

Technology is very important in dealing with supply chain complexities with international sourcing and with the planning and execution of the supply chain on an ongoing basis. However, technology is a process enabler. It cannot fix a flawed process.

People involve more than talent and ability. People include the organization of these individuals. It involves how they are organized as to function or business unit or results-based. Also, there is the determination as to the approach of centralized, decentralized, or a blended version. Plus where people are located in the company, both geography and placement in the company should be part of the structure design.

Step 3.

Take the initiative. The assessment many identify many needs, both for being a relevant part of the business effort and in developing excellence. Prioritizing is essential. Everything cannot be done and cannot be done at the same time. Resources must be determined and allocated wisely.

Collaboration must be an integral part of the journey. Alliances, both inside the company and with key trading partners, are important to ongoing and deliberate progress. These should evolve into an integrated process. They generate insights, provide additional resources, mitigate risks, reduce stress, and increase the pace of progress.

Resilience is needed. The planning and execution no matter how well it looks on paper will have problems. Aligning supply chain management into the company power structure and being a robust part of the shared identity is important.

Wherever the journey begins, however, the plan and map are done, the effort must be regularly monitored and measured. As one need is near to completion, work on another need should begin. Success reinforces the desire for continuing on the road to excellence. Periodically check to make sure that there is no backsliding from earlier results.

Patience is also needed; the journey will take time. Adapting to change may not be easy. It will also need to be evaluated from time to time as both external forces and internal changes may require.

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