I reviewed with a client recently the overall historic progression of supply chain thinking, and it had a somewhat jarring effect. I think we’re all familiar with the early ideas of what I call “General Ledger” driven supply chain – there’s a line item for Procurement, there’s a line item for Manufacturing, a line item for Logistics… And you optimize those organizations to be very efficient.
The problem of course is that efficiency in any one focus area may drive inefficiencies in the other – great purchasing may drive inefficient manufacturing; great manufacturing efficiency may drive terrible logistics to the customer. The highlight of this kind of thinking is essentially that you’re not just inwardly focused; you’re even blind to the issues in your own company. The next stage was focus on the supply chain, the great discovery: how you focus on orchestrating activities cross-functionally to efficiently move a product to the customer. Unfortunately, there you can also evolve the “General Ledger” supply chain to the “Product P&L” supply chain – the vital link to the customer is still hidden, and while you may be very optimal for a product, you’re not optimal in a market. Continue reading →
In my role with SCC, I recently had a great discussion with some healthcare research and provider groups in the US, relative to the development of Supply Chain Strategy – segmentation, setting strategy, benchmarking and so forth (see an excellent online CBT on Strategy and benchmarking at http://supply-chain.org/resources/scormark/tutorial). The conversation followed the normal course for discussion – the high cost of healthcare in the US, what is appropriate segmentation, where are benchmarks for healthcare in the various areas? Continue reading →
I am frequently asked, “What is the most important thing…” in performing a particular Supply Chain Transformation program, or in different case studies. My answers vary: to wrestle with Tolstoy, “all good programs are the same; all bad programs are bad in different ways.” Over several years, my team adapted a checklist that identifies which Supply Chain Transformation programs will be successful—which corresponded to major modes of management of change: Continue reading →
The promise of Supply Chain re-engineering, like other management techniques, is the promise of a kind of business utopia where your business is growing, reducing costs, and simultaneously improving performance, all in a wonderfully self-optimizing system. Business people, however, are frequently rational, and to a rational business person, this utopian promise sounds a bit too good to be true. If you want to build up confidence in a supply chain center of expertise (COE) group, I’d suggest you try different tactics. A utopian solution is too hard to sell. Continue reading →