Home' MHD Supply Chain Solutions : MHD Nov-Dec 2014 Contents PART 2:
VALUE OF A SUPPLY
In Part 1. of this series, you may recall
how we discussed some of the common
challenges attributed to managing supply
chains effectively. We have recognised that a
key factor for dysfunctional supply chains is the
misalignment between the business strategy.
The level of adequate and competent execution
capabilities in the organisation was another
contributing factor that was identified in Part 1.
Managing the corrective actions in such
situations, will involve a structured review
process of the organisation, the vision and
mission statements, and the management
approach to driving company-wide integrated
programs. This is a major process and would
undoubtedly create a high degree of disruption
to the organisation. It will also present
management with a formidable challenge and
requires decisive leadership in the organisation
to initiate and sustain such a program.
Whilst one might feel that this sounds so familiar,
they will be heartened to know that their company
or circumstances are not alone in facing such
issues. Surprisingly. there are many organisations
that fail to embrace the knowledge and science of
managing supply chains. This is also manifested
in the HR statistics of how few companies have
invested in supply chain competencies and strate-
gic management education and training in a con-
sistent manner across the whole organisation.
By cherry-picking and applying snippets
of supply chain practices, one does not really
harness the full supply chain methodologies
that are able to integrate the supply execution
capabilities to the business strategy.
In this part of the series, we will examine the
value of deploying a supply chain structure into
the business model, irrespective of size, market
sector, or the goods or services involved. Most
business leaders are very familiar with business
strategies, business models, product strategy, mar-
keting strategies, investment strategy and many
other strategies relevant to the business functions.
But these strategies, campaigns, product launches
and the like, are plans on what and when to do
something that will bring revenue and profit to the
enterprise. But what about the how?
The business strategy
What is crucial to achieving the goals of the
business strategies is the implementation and
execution of the strategic plans. The various
strategies need to be executed in a coherent
and synchronised manner, they or will be inef-
fective in their deployment. The more the strat-
egies, and the increased business complexity,
the more critical will be the timing, methodology
and accuracy of the execution model.
Managing the execution processes of a
company business strategy, and sustaining the
business model, would suggest the need for an
overall 'super' strategy to make it all happen. This
would seen quite evident, but it is not always
clear on how it would be done and who would be
responsible for the execution of this activities.
This is, in fact, the first step, to appreciate
the value of a supply chain function within an
organisation, a clearly defined and structured
system to enable the execution of the business
strategies and model.
Figure 1. shows a traditional business struc-
ture, in the classical chain of command. The
introduction of a supply chain function would
seem quite easy to bring it into organisation,
which could be a dedicated supply chain
function working with all the other functions.
This approach would be easy to implement
and create the path of least resistance,
disruption and cost. A solution that many in
the organisation would well subscribe to, as it
involves minimal change to their departments,
authority and responsibilities. But before too
long, managing such a structure would prove to
be very difficult, yield low results, and eventually
collapse. It will fail because the only change
made was to create a new horizontal functional
layer into the existing organisation, and give it
the name of supply chain. The expectation that
the existing vertical organisation would follow the
directives and coordination of this new function
is a dream, and not sustainable.
Note: all the diagrams are designed for
illustration of the point of principle and are
not intended to represent the optimum supply
chain model or structure.
What is a supply chain ?
At this point we should pause to reflect on the
definition and components of what makes up
a supply chain, and then to appreciate how it
becomes relevant to an enterprise.
There are many interpretations and
definitions of what is a supply chain. Some
imagine it to be a complicated methodology,
where you need to have highly skilled and
intellectual graduates to understand it and
work it. Whilst others confuse or interchange
terminologies to make simple things sound
more sophisticated than what they really are.
The simple and unambiguous definition of a
supply chain can be described as: A series of
tightly interconnected and related processes that
form the backbone of an enterprise's capabilities
to transform and deliver its revenue generating
goods and services to its customers.
MANAGING SUPPLY CHAINS
STEPHANIE KRISHNAN, JOE LOMBARDO AND RAYMON KRISHNAN
MHD SUPPLY CHAIN SOLUTIONS --- NOVEMBER / DECEMBER 2014
SUPPLY CHAIN 73
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