The Supply Chain Management Process

The late Michael Hammer of “Re-engineering the Corporation” fame put it succinctly once in a forum I attended in Philadelphia: “An imperfect process is better than no process, and a good process is best of all.” I’ve looked at many Supply Chain maturity models for companies, and some look at vendor dimension – degree of collaboration – while another may look at resource – degree of rationalization. All are based however on having a supply chain management system which evolves to progressively improve overall supply chain performance.

While countless (literally for me: I don’t know how many I’ve spoken to) organizations focus on “standardization” of their supply chain processes for perhaps efficiency purposes, I’ve rarely heard an organization discuss the standardization of their management processes – usually when I bring it up I get a puzzled look. There is a simple question I ask which usually highlights this issue – I ask “do you feel you have a disconnect between business strategy and day-to-day operations?”, and if the answer is yes, then it tells me there is no managed process that continuously pushes business priorities into day-to-day management priorities and metrics. Even more telling is when the teams don’t know what the “business strategy” is for a particular product family or customer segment.

I recently met with 150 or so Supply Chain leaders at DuPont, and what was interesting to me was that DuPont had a defined four-phase management process that was part of an overall annual planning cycle. While they weren’t happy with every part of it – “imperfect process”, it was understood, accepted, and helped easily and clearly translates their overall business strategy (not supply chain strategy) down all the way to resource level. If I were to look at the maturity of their process with a CMMI framework – Capability Maturity Model Integrated, from Carnegie-Mellon University (I recommend it as a quick and easy maturity assessment), they didn’t have ad-hoc management processes (Level-1 or initial/chaotic – ever heard of a fire-fighting team as a management approach?) but they were repeatable. Most of the “enterprise” management process was definitely repeatable (their annual cycle). As well, they were in the process of making it defined (Level-0 – four cycles, Level-1 – Major activity areas and finally Level-2 process activities with SCOR as a tool, for example) or getting to CMMI Level-3. If you look up CMMI (Wikipedia works for both CMM and CMMI) to look at all the components, DuPont was getting rapidly in place for Level 4 (standard management performance metrics).

If you cannot cite your own company’s business strategy, or know there’s a yawing gap business supply chain strategy and operations, and cannot point to an annual, quarterly, or monthly process to align them (MRP or forecasting is not what I mean!) you should start talking to leaders in other companies and see how they do it. The most successful SC organizations, from within Boeing and Siemens overall to Boehringer Ingelhem and Heineken – they have a management process, and use it.