If you were hired as the top Supply Chain Management executive at a company, what would be your top three initiatives to improve the company’s capabilities?
Here is my list:
1. Get the right people on board! You can’t accomplish anything else if you don’t have the right talent. The toughest part of the job will be getting rid of people who don’t have the right skills and attitudes. As a new executive, the best time to do a house cleaning is within a few months of taking the job. Once people are let go, you free up space to bring new people on board. But be patient! Hold out and make sure you get people with the skills and knowledge you need.
2. Understand your costs at a granular level! What are your total landed costs by stock keeping unit, product, and product family? What are your costs to fulfill to different customers, and how do those costs change based on a customer’s order size, value added services, and product assortment?
3. Benchmark your supply chain! Benchmarking is not an exact science. Different companies can perform at different levels based on their strategy, the degree of automation in their facilities, and their customer’s requirements. Nevertheless, belonging to organizations like the Warehousing Education and Research Council (WERC) and the Supply Chain Council can be a relatively inexpensive way for your company to get some benchmarking data to see how it is roughly doing compared to others. Some software providers, like SAP, also have free benchmarking services. Discovering that your company is subpar in a particular area can be another argument for receiving the project resources you need to make improvements in that area.
Different companies will have different strategies. They will be at different levels of competence when it comes to collaboration with trading partners, sales and operations planning, having continuous improvement processes in place, supply chain risk management, and the journey to truly becoming demand-driven. All of these things are important. But you have to start somewhere. If everything is a goal, then nothing will be accomplished. Focus is critical.
I believe that starting with these three things will better prepare you for any other supply chain initiative your company might take today or in the future.
But not all of these things are easy. Getting better costing data will likely take more than a year. Your company may need to buy and implement the right supply chain execution solutions to achieve success in understanding your costs. And you will probably need some help from consultants. Finally, the goal of achieving a high level of supply chain talent is never ending.
What would your top three initiatives be? I’d love to hear.
These are all good initiatives that would be at or near the top of my list. You imply it in the first initiative but I’d expand it a little by mentioning a talent assessment prior to just getting rid of people. I am interested in your comments on how you would assess the competency of the existing supply chain staff.
I also suggest that understanding revenues on a granular level is as important as understanding cost. Understanding the revenue stream from each SKU, product, family and customer and customer grouping will be as key to your success as understanding costs (after all, it’s the different between costs and revenue that keeps our organizations going). I’d strongly suggest walking through the cycle of quotation/RFQ, contracts and actual invoices to get a very detailed understanding of this area of the business.
On the benchmarking initiative, you need to mention the other half – the process side. The quantitative benchmarking you did mention is only half the story. The numbers say how you are doing. But to improve performance, you need qualitative benchmarking – what am I doing right or wrong in my processes? CSCMP’s Supply Chain Process Standards are a very useful tool for this. And the Minimum Standards are free to all, not just members. Go to http://cscmp.org/resources/standards.asp.