Developing a comprehensive supply chain strategy is critical to maintaining supply chain excellence and continuous improvement. Not only does this drive operational efficiency, but also it gives your firm the tools to capture marketplace success.
In this blog we recommend five areas to focus on that must be evaluated when developing or improving your enterprise’s supply chain strategy.
Top-5 Areas to Focus on When Developing Your Supply Chain Strategy
1. Suppliers & Customers
We’re listing suppliers and customers first for one simple reason: your supply chain lives and dies by your suppliers and customers. Without receiving input from your supply partners and generating output to your customers, your firm isn’t providing value to the marketplace. Clearly, this requires a well-defined strategy to be continuously successful. To achieve this there are two main fundamentals you must evaluate:
Organize your customers by potential growth, profit, and costs to serve. This will enable you to develop a customer collaboration strategy that focuses on your most important customers – the ones that’ll help grow your firm the most.
Utilizing a strategy that encourages an open-book relationship will create significant benefits for your business and your customers. Keep in mind that open book doesn’t mean share all information without reason. Your goal should be to jointly define, measure, report, and manage supply chain metrics. Additionally, your company’s goal should be to obtain as much point of sale and customer inventory movement information as possible. This will allow you to develop internal processes that’ll react quickly and be flexible to your customers’ needs. Furthermore, it’s important to have an honest understanding of your customers’ capabilities and growth strategies so you can best serve and scale with them.
2. Organizational Structure
Developing a supply chain strategy that utilizes an organizational structure which doesn’t support it will stymy continuous improvement efforts and prevent your organization from maximizing the value it could capture. When having your internal discussion on supply chain strategy you must always consider how a new strategy works with your current organizational structure, what tweaks must be made to align your structure with a new strategy, and understand if drastic changes are required to maximize your perceived value capture.
To effectively accomplish this, consider creating “before and after” RASIC charts, identify process owners, and ensure the process needs align with position requirements. A final point of emphasis is developing a scorecard for tracking KPIs that looks, feels, and operates the same way as your organization, and can be segmented by suppliers, customers, products and warehouses/manufacturing.
Processes are obviously critical to supply chain strategy execution because they define the steps to launching and managing the desired strategy. Additionally, processes tie all the other items outlined herein together so that they can work in concert. While processes will be specific to your firm’s function and market, there a few items that must be payed close attention to that apply to all organizations.
First, your supply chain processes must be inline with current leading practices. If this isn’t the case, your company will be leaving many opportunities for improvement on the proverbial table. To achieve this alignment, supply chain leaders must be constantly learning and understanding what the future looks like and what the best of the best are doing.
Second, processes must be informed and revised by large-scale network studies that, when completed, properly identify areas of waste in your supply chain network. When waste is identified, processes must be revised to remove it and prevent it from returning.
Finally, all processes that are in place must be clearly tied back to the scorecards used to measure your supply chain health. This will enable your team to receive and monitor KPIs that’ll inform your organization’s process performance and strategy improvement efforts.
Technology requirements vary considerably from market to market and by company size. Supply chain technology requirements also evolve as your business grows. You’ll require different technology solutions at different times during your enterprise’s growth, so to effectively plan for the future and ensure your technology supports and maximizes the effectiveness of your supply chain strategy, you need to design a technology road map that balances needs with cost.
There’s no reason to buy the latest and greatest platform before you have to. Your technology must also feed into your internal and external performance measures and scorecard framework. Finally, keep in mind that technology is a tool, not your entire supply chain strategy, and it should be used to drive efficiency and information transparency in your organization.
The final area that must be evaluated is the people in your organization; arguably the most impactful element on your supply chain performance, and yet the hardest variable to control. The most important part about managing those who execute your supply chain strategy is fostering an environment where they can grow personally and professionally, and where they can have a direct understanding of how their individual efforts impact the firm’s supply chain excellence and strategy execution.
To achieve this, we believe there are two overarching areas to focus on. First, make a connection from employee performance reviews to supply chain performance by tying process group KPIs to KPIs directly managed by a given employee. Use this connection to set targets and to generously reward performance. Second, provide significant investment into supply chain skills, training, and accreditation. This will not only foster a culture of employee collaboration and individual professional growth, but also it’ll attract the brightest talent in the marketplace. Simply put, as the individuals on your team grow, so does your supply chain excellence.
Bolstorff, P. and Rosenbaum, R. (2012). Supply Chain Excellence. New York [i pozostałe]: AMACOM American Management Association.
Engel, H. and Oliver, K. (2019). Supply Chain Strategy: Back to Basics. [online] strategy+business. Available at: https://www.strategy-business.com/article/04313?gko=925ed
Supplychainquarterly.com. (2019). Supply chain excellence: It’s tough to make it to the top – and stay there. CSCMP’s Supply Chain Quarterly. [online] Available at: https://www.supplychainquarterly.com/articles/20170803-supply-chain-excellence-its-tough-to-make-it-to-the-topand-stay-there