Home' MHD Supply Chain Solutions : MHD July-Aug 2017 Contents HOW SUPPLY CHAIN
3.0 CAN LEAD TO
ost of the McKinsey (or their clone)
trained strategists ask me to show
data to back up my assertion
that Supply Chain 3.0 is real, and is here,
now. On the other hand, more intuitive
executives (mainly from a sales and marketing
background, as I observe) ask me to explain the
benefits of supply chain 3.0 . Finally, the third
group – those whom I call the transformational
leaders – ask a simple question: how can we
use the power of supply chain 3.0 in effecting
beneficial business transformations.
First a caveat – no benefit accrues to those
who do not act. And no, just any random
action will not suffice (though, in most cases,
any action is better than no action); you need
action based on cohesive, strategic thinking.
That is the reason for the word ‘can’ in the title
of this article – all benefits are just potential
energy until converted into reality by your
Of course, I have not yet talked about how
supply chain 3.0 differs from its previous version
supply chain 2.0. While the full detail of that is
a subject for another article, it will be necessary
for us to know that these are different, and that
supply chain 3.0 is a step change above supply
chain 2.0. So, we will briefly delve into various
avatars of supply chains as we look at the
benefits of supply chain 3.0.
To understand the potential benefits of
supply chain 3.0, let us look at the current
business context. My personal takeaway
message is that something immense is
happening across the world of business: the
combination of globalisation, bandwidth, rising
standards in the east and financial adjustments
in the west are creating both opportunities and
Is the retail business model toast? I asked
in return: which model is safe? Think deeply
enough and you can see the same threat lurking
everywhere in many different forms.
But the old cliché is right. Every threat does
hide an opportunity. I believe this despite
the fact that I do not know enough Chinese
language to attest to the fact that the Chinese
character for threat and opportunity is the same.
There is a lot of talk about VUCA – Variability,
Uncertainty, Complexity and Ambiguity – when
strategists discuss the business environment
today. It is a bit ironic that so many military
terms get incorporated in the strategy parlance
during the time of duress.
However, one thing is clear – that old
organisational models are not adequate
anymore. New challenges need new responses.
Things are changing, moving, and old business
models are not working anymore.
That is why I even proposed a new
organisational model in my book The 5-STAR
Business Network, from which some of the
following excerpts are taken with modifications.
It is a well-known aphorism in the circles of
architecture that form follows function. In other
words, the structure of a particular unit, in
general, evolves to facilitate the functioning of
that unit. Moreover, if the form does not match
the function, the structure will change or the
function changes over a period of time.
While conducting research, we examined
the organisational structure of more than 50
companies; almost all of them looked variations
of the generic structure given in the figure below:
The titles in the boxes, as well as placement
of the boxes, vary quite a bit; however, most
companies still agree this is the best way to
look at how they are organised to serve their
At the same time, most of these companies
have evolved within the last two decades;
their functioning has become almost entirely
customer centric with their customers’ priorities
driving most of the business workings.
In our work with corporations, I have
frequently found that the supply chain structure
frequently results in limiting the effectiveness of
The traditional structure of the organisation
shown in Figure 1. frequently stifles customer
responsiveness and innovation.
“The business model has changed, and most people
are yet to understand the profound change.”
Figure 1. Traditional
MHD SUPPLY CHAIN SOLUTIONS — JULY / AUGUST 2017
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