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Supply Chain Performance Improvement: Eleven Common Themes
Supply chain performance issues can show up in a variety of places including:Profit-and-loss statements
Balance sheets
Corporate key performance indicators
Employee satisfaction surveys
Customer report cards
Market competitive reports
Analyst ratings and commentary
Ultimately, supply chain performance issues reach a point that pushes an enterprise to take action. The next question becomes: How do you take action?Leading companies in every industry have teams of skilled and motivated business managers working to build integrated supply chains. But many of these managers run into trouble; projects stall and valuable initiatives get scrapped. That doesn't have to be the case. SCOR offers a step-by-step engineering approach that can help you to analyze, design, and improve supply chain performance. Its framework is both rigorous and flexible, allowing it to work in any industry and for any supply chain issue.In more than thirty projects I've done with SCOR, eleven general business issues have been identified, which seem to cover just about any circumstance. Some of these issues are rare, while others are present in almost every company. Because you have come far enough in your thinking about supply chain management to be reading this book, you'll see yourself and your company in at least a few of the following scenarios.
Scenario One: Building a Technology Investment Plan
A chief information officer deflected pressure to install an enterprise resource planning (ERP) system before 2000—making the case that simply being Y2K compliant was not a good enough reason to put her entire company into the kind of upheaval that such implementations create. Even after Y2K, as she watched the rapid evolution of web-based applications and robust advanced planning systems, she found herself without a technology investment plan that supported the company's business strategy.
Scenario Two: In Search of Return on Investment (ROI)
A company bought its ERP package during the vendor's end-of-quarter push to meet sales goals. The deal included all the latest add-ons—things like customer relationship management, transactional processing, advanced supply chain planning, and web portals providing self-service for customers and suppliers. Now the executive team is looking for an answer to a deceptively difficult question: When will a return on investment start to show up in the earnings statement?
Scenario Three: Creating a Supply Chain Strategy
Three executive vice presidents—for sales, marketing, and operations—assembled their own well-articulated strategies for developing supply chain competence within their departments. Then they invested in application technology, manufacturing processes, and product development—all with measurable success. Now what's missing is a comprehensive blueprint that combines their individual efforts to drive profit and performance across the entire company.
Scenario Four: Implementing a Supply Chain Strategy
The company's top executive for supply chain management assembled a dozen of his brightest managers for a structured brainstorming process—resulting in a list of forty-five high-priority projects. But when the managers began implementation, the results were not encouraging. General managers were being asked to support multiple initiatives with many of the same financial, human, and technical resources. Goals seemed in conflict. They needed to align their objectives and prioritize projects to make good use of the available resources.
Scenario Five: Improving Sales and Operations Planning
The vice president of operations had serious cash-to-cash problems and declining customer satisfaction—all resulting from raw materials shortages, mismatched capacity, poor forecasting, and inventory build-up. The challenge was to address the planning and forecasting issues and put the balance sheet back in shape.
Scenario Six: Meeting Financial Commitments
The CEO promised the board of directors that he would improve earnings per share. An analysis of competitors' balance sheets and income statements indicated the company's direct and indirect costs were out of line, and that its cash-to-cash cycle was too long. The leadership was charged with identifying the right mix of improvements to obtain a predictable result that would satisfy shareholders. The CEO's credibility was now at stake.
Scenario Seven: Building Support and Competence
The director of a new supply chain solutions team needed a proven method for evaluating and implementing projects. That meant being able to show documented examples of its use and evidence that it was both scalable and repeatable. Then she would have to sell the method throughout the organization— which would require executive references and easy, low-cost access to the method itself. Finally, she would have to develop a team that could use the model to deliver early successes.
Scenario Eight: Optimizing Enterprise Resource Planning
As the ERP implementation wore on and business processes were increasingly automated, things suddenly started to go wrong at one organization. The project leader had a pretty good idea why: The company was organized in rigid, vertical functions that directed AS IS practices. But the ERP system was essentially horizontal, organized by transaction flow for purchase orders, sales orders, forecasts, master data, and so on. How could the corporate culture shift from functional management to process management?
Scenario Nine: Maximizing Use of Existing Technology
The vice president of administration was being pressured by her colleagues to replace a two-year-old transactional system with a new, name-brand system offering advanced supply chain planning. But the ROI analysis just wasn't adding up. A more detailed investigation revealed that not all of the business leaders were complaining. In fact, the vice president found a direct correlation between a business leader's satisfaction and the effort he or she had exerted to learn the system. Those who were least satisfied didn't handle implementation very well and as a consequence were utilizing few of the available modules. The challenge was to motivate business leaders to use existing functionality better.
Scenario Ten: Achieving Operational Excellence
The executive team achieved consensus that it would differentiate the company through a strategy of operational excellence. The other choices had been customer intimacy and product innovation. Now that the decision was made, the team had to define—at more tactical levels—the characteristics of an operationally excellent supply chain.
Scenario Eleven: Mergers and Acquisitions
The executive teams from the acquiring and purchased companies needed the acquisition to go smoothly and yield short-term synergies. The challenge was how to leverage efficiencies in material flow, technology platforms, work and information flow, and capacity in the due diligence, integration, and stabilization stages of the merger.A common thread connects these situations. In every case, SCOR helped define supply chains, measure the size of the issues, and identify necessary changes to improve performance. But beyond the tactical focus, SCOR helped transform organizational behavior from event-driven reflexes to strategic, integrated team behaviors that put more focus on customers. It helped these companies to achieve a core competency in solving supply chain problems and achieving goals.
