SCDigest Editorial Staff
SCDigest Says: |
Perhaps even more important, the survey found the failure of many companies to well consider supply chain and operations input often leads to decisions that ultimately do not deliver expected results.
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Despite all the information and articles on supply chain strategy and execution, there seems to actually be very little information about the decision-making process itself.
The consultants at McKinsey recently conducted research to look at decision-making processes – and results – from an overall business perspective, but the insights provided are spot on for supply chain decision-making as well. Perhaps even more important, the survey found that the failure of many companies to well consider supply chain and operations input often leads to decisions that ultimately do not deliver expected results.
The survey found that the most common type of “corporate-level” decision was to expand into a new product area, service business, or geography. That was followed by decisions related to the company’s overall organizational structure. Both these two areas, of course, can have significant ties to the supply chain.
McKinsey found that only 30% of major organizational decisions occurred as an offshoot of the company’s annual planning process. The vast majority occurred at other times, based on the priorities of the CEO or outside influences that forces a decision inflection point. We would expect the percentages are not much different for supply chain decisions as well.
The analysis that McKinsey offers on what makes a good decision at the corporate level should also resonate with supply chain executives and managers.
- Decisions initiated and approved by the same person generate the worst results: A robust and open discussion among the team simply results in generally better decisions.
- At a corporate level, operations/supply chain input is critical: Of the “unsuccessful” decisions, operations/supply chain had significant input in only about one-third of those decision processes, “reinforcing findings from other surveys that companies frequently overlook execution when making decisions.”
(Supply Chain Trends and Issues Article - Continued Below)
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