This Week in SCDigest

You asked for a response to your article about Supply Chain Strategy, of the apparent lack of it in the study group.

That is like throwing a steak at a hungry dog.

In 1988, as a young logistician, I stood in front of the senior executives of a Fortune 500 company and said that figuring out the supply chain was a strategic weapon against the competition. I then proceeded to demonstrate how we could change multiple tactics in our supply chain execution that would create over $100 million of incremental operating cash flow, fulfilling a strategic need of generating more cash to support paying off debit. Only a year ago I challenged that most people in supply chain management mistook tactics as strategy, that most people would not recognize strategy if it bit them on the leg like a hungry dog.

Woof.

Cream rises to the top, and accounts for about 12% of the total volume of a gallon of raw milk. There are other natural distributions like that, but it is a good proxy for the point. The best companies in supply chain are perhaps only 12% of all of the companies in the business universe. The CEO and CFO of those organizations realize that getting their supply chain right, as in having an overall strategy for how they look and develop their supply chain, is a strategic exercise. These same leaders understand that supply chain strategy must be in alignment with the marketing strategy, the financial strategy, and the personnel strategy. It is one piece of the puzzle, and only about 12% of the companies out there make the effort to really figure it out.

Less than that get it right.

Even when the CEO get it, and wants to drive a supply chain strategy, there are always factions in the organization that don't get it, that will resist the notion. Call me crazy, but it is true. The Vice Presidents, the Directors, the Managers, they are all focused on their tactical areas, lower managers looking up their silos for leadership and the upper managers listening to the grumbles of how the operators in the other silos are making things bad.

There are dozens, hundreds, perhaps thousands of insightful CEOs who get it, but are unable to overcome the cultural inertia to change the business model. I used to think that little companies had a harder time gaining the necessary alignment, but they are just as bad as the largest of the corporations.

I toiled for over a year in the late 80's to develop ways to determine the total landed cost of the different products we sold so to develop a model we could use to support the strategy modeling for product sourcing. At the time we called it the Real Cost model. Almost 6 months into the effort my Vice President left a note on my desk. "When we see Real Cost we will not us them at store level. We don't know how to handle Real Cost."

I still have that note hanging on the wall at my desk, over 25 years later because the statement is just as true today as it was then.

Oh, our systems are so much better now, and we can get the total landed cost, the real cost, of getting the product onto the shelf or into the plant. However, so many managers barely know what real cost is, or how to apply it.

Woof.

There really is a huge pot of gold for the managers who do get it, who are lucky enough to be part of a team of managers that use measurements and metrics to understand the dynamics of how their supply chains can work in concert with the financial, marketing and personnel components of the operations model. The potential is always there. It is just damn hard to get all of the people aligned to go after it.

David K. Schneider
David K Schneider & Company, LLC

As a Supply Chain student, I found this article very interesting as to where I should put some of my learning focus on and how a potential employer might be looking for.

Carrie Harrison

Just two observations about what a Supply Chain Manager should be doing. First and foremost is to concentrate on delivering excellence to the customer operationally. Secondly is to promote and facilitate supply chain thinking throughout the supply chain.

That way they will see what good looks like and actually understand what it means when it all comes together.

David MacLeod
Learn Logistics Limited

It is amazing how hard it can be for a retailer to get its perpetual inventory to be right at store level. RFID or not, it's just addition and subtraction. Even more critical today with needing an accurate picture of availability to promise for online, and store inventory needing to be exposed to the web shopper who wants to click and collect.

Peter J. Charness
SVP America, Global CMO,
TXT Group