Home' MHD Supply Chain Solutions : MHD Jan-Feb 2015 Contents In Part 2. of this series, we discussed the
value that can be derived from a supply
chain model, when it is closely linked to
the business strategy. By virtue of aligning the
business resources and processes, there will be
visible improvements in the levels of business
performance. In addition, we can also expect
notable reductions in the business operating
expenses from such an alignment.
The value and benefits from such a
structured approach can be measured not only
in financial terms but also in commercial value,
and in organisational growth and development.
The realisation of any value and benefits will
require a committed management engagement
and a degree of financial investment, necessary
to drive such a company-wide initiative.
Top management commitment
The management engagement that we envisage
starts with a good understanding of how
supply chains work and how they must be
linked and adapted to the business strategy.
This is a fundamental mindset change versus
the traditional management methodologies
deployed. It would be necessary for the
CEO and his/her senior management to fully
embrace such a new initiative as a formal
transformational change management program
across the whole organisation.
The program launch can only begin with
the full engagement of top management (the
CEO and senior executives), who would provide
the organisation with the inspirational and
operational leadership towards a new direction.
Such a program should be viewed as a medium-
to long-term journey for their organisation, for
which a governance board would be created, to
set the milestones, time-line checkpoints, and to
monitor progress. Governance parameters would
clearly be dependent on the business model
dimension, the organisational structure, and
the complexity of the transformational process.
The upfront preparation and planning work for
the program are crucial to the sustainability and
success of efforts and investment deployed.
Management would also need to facilitate
the necessary resources, such as a budget for
education and training, as well as allowing the
organisation the space to make the necessary
transition while maintaining current business
activities. The program progress needs to be
monitored regularly to ensure adherence to the
program mandate, and to allow management the
opportunity to perform the appropriate tuning
and adjustments as necessary. This attention
to progress reviews is part of management's
commitment. Management at all levels needs
to make time to personally review the program's
progress -- delegating such an important task
does not inspire nor motivate the organisation to
make any changes or take the program seriously.
Defining the execution model
Once top management commitment and
buy-in by key stakeholders has been
established, designing the appropriate
execution model will be crucial. Setting up a
supply chain execution model does not have
to be an unduly complex process, but it is
mandatory that top management defines the
deliverables from the supply chain model,
expressed as KPI, to help focus attention on
the right process priorities.
However, we should not confuse the business
KPI with the supply chain KPI, which may
appear to be similar but are not the same.
Business KPI tend to be more financially ori-
entated, like percentages for, sales growth, profit
margins, market share and inventory turns,
OPEX (operating expenses),CAPEX (capital
expenditure), cashflow, and similar control KPI.
Supply chain KPI measure the capabilities
and performance of operational processes and
flows. The typical supply chain KPI would,
generally, revolve around KPI that measure time,
cost and quality of the supply chain activities
Depending on which part of the supply chain
is being measured, some of the KPI used would
be: product time to market, lead time from order
to customer, customer complaints, response time
to customer complaints, machine downtime, time
to machine uptime, logistics cycle time, just-in-
time delivery, order pick-to-line, material pick-
from-stock, and many other such KPI.
For the CEO and senior executives, they
should typically define at least the top 5 supply
chain KPI that they will want to see in their daily,
weekly or monthly performance dashboard.
This definition is fundamental at the design
stage of the supply chain model as it will
immediately put in focus the management
execution strategy. This is the first crucial step:
to link the business strategy with the supply
chain execution model.
WHY DO SOME FIND IT SO CHALLENGING TO MANAGE THEIR SUPPLY CHAINS?
PART 3: BUILDING AND SUSTAINING AN ENTERPRISE SUPPLY CHAIN MODEL.
STEPHANIE KRISHNAN, JOE LOMBARDO AND RAYMON KRISHNAN
MANAGING SUPPLY CHAINS
"Management at all levels needs to make time to
personally review the program's progress -- delegating
such an important task does not inspire nor motivate
the organisation to make any changes or take the
MHD SUPPLY CHAIN SOLUTIONS --- JANUARY / FEBRUARY 2015
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