Clearly, one of the increasingly common themes in supply chain in the last 2-3 years has been better alignment between the supply chain function and the corporation.
As just one example, we summarized earlier a presentation by The Limited’s Paul Mathews on this topic, which turned out to be one of the most popular News and Views pieces we’ve run this year (see Time to Align the Supply Chain to the Boardroom). But this is a theme that I’ve heard with increasing frequency from many quarters, including new CSCMP President and former practitioner Rick Blasgen, SCDigest Contributing Editor Gene Tyndall, and many others.
It’s also an area I have spent some time thinking about for many years, and have developed a simple model that may be of interest to SCDigest readers.
It came about frankly in the course of my career at various times looking to sell supply chain related solutions to corporations. Looking for any angle I could get, I would often review a company’s annual report, hunting for strategies, goals and initiatives I thought were related to whatever product or program we were trying to peddle.
I was surprised at how often, even at a VP level, the supply chain managers had little idea of what I was referring too.
At the supply chain/logistics executive office, my perception is that this type of significant disconnect between the company strategy and the supply chain focus has closed in most companies, though not completely. In his presentation, The Limited’s Mathews goes through an entertaining story of how long it has taken him in his career across a number of companies to get this supply chain alignment thing right.
The important point is that in addition to the benefits both organizationally and personally from better alignment, it’s a process that’s almost sure to deliver more company support for supply chain efforts.
So, my model is pretty simple (see the graphic Aligning Supply Chain Initiatives with Company Strategies).
- Ensure you clearly understand what the corporate or brand/business unit objectives and strategies are, both qualitatively and quantitatively.
- Develop a set of supply chain strategies and initiatives that support the overall strategies and objectives – a direct linkage.
- Define the metrics that would be used to measure the success of that initiative. Clearly, it is important to make sure this metric or metrics are well aligned with the broader company/brand metrics.
- Identify the capabilities and changes that are needed achieve the metric goals.
It’s really in steps 3 and 4 that sometimes the alignment and linkages get lost. Number 4 is critical to really understanding what needs to happen to truly create the alignment: Is new technology support required? Process change? Better visibility? Integration with customers? Without taking it down to this level, it’s easy to take the first steps towards alignment, but then not have the horsepower to deliver.
This model is of course also undertaken with an eye towards getting resources and financial support. Clearly, if you pursuing initiatives that are directly linked to the strategies and goals of the company, the likelihood of funding and executive support for those supply chain projects will increase. The metrics and the capabilities required to get there also provide the basis for developing the business case, which will probably be required even if the initiative is perfectly aligned with company/brand strategy.
In 2002, I spent some time with a VP of Supply Chain for a very large consumer packaged goods company that used a process like this in part. Twice a year, he and his team take a fresh look at company strategies, and formally identify the programs they have in process or could pursue to support those corporate plans. In some cases, this resulted simply in effectively communicating that alignment to the appropriate executives – the CEO and functional peers. In other cases, it led to new initiatives, which generally would require some level of other executive support, and in some cases funding. Key again was aligning the metrics between the supply chain and the corporate goals.
I am paraphrasing, but I remember him telling me something like, “This process has been very successful in getting resources made available to the supply chain.
This executive also shared with me privately the corporate strategies for that year. Four of the six listed had significant supply chain implications. But those linkages need to be specifically spelled out.
The bottom line: alignment doesn’t just happen. The more comprehensively this alignment is developed, the better for all – the supply chain organization, and the corporation.
Our model may seem obvious, but think a lot of companies have room for improvement in this area.
Do you like SCDigest’s Supply Chain Alignment model? What would you add or subtract or otherwise improve? What do you think the keys are to better alignment? We’d love to hear your stories and perspective.