In Search of the Illusive Supply Chain Strategy

What the Illusive Supply Chain Strategy Looks Like

Start simple, keep it simple. Too many organizations hire high price consultancies to help them develop a strategy. These consultants create a complex, multi-volume strategy that company executives and managers do not know how to apply to everyday supply chain business issues. If line supply chain management cannot read and understand how to apply the strategy, it’s too complex to implement.

If a five-year planning horizon is too long, shorten it to three years. Create a supply chain vision first. Nothing too complex, 5 bullet points, or a few paragraphs. Make sure it describes what the end state looks like when the vision becomes reality. Have all levels of the supply chain organization review and comment on it. Make is sensible to everyone. Get other business functions viewpoints- Sales, Marketing, Finance, IT. Visions are not chiseled in stone, they can evolve over time, but you need an end target.Using the three-year planning horizon, plan one improvement program/project for each supply chain function for each year.

For example, if a distribution program/project has a two-year duration, the distribution function only gets two programs/projects in three years. Too many projects kill new strategic plans by trying to do too much too fast and ultimately cause increased business risk. When an unintended business risk occurs, companies stop planning and executing improvement projects.

Make sure that the programs/projects you choose provide integration and optimization across all the supply chain functions. We see too many supply chain projects optimizing their processes at the expense of other supply chain functions. Many times, non-aligned projects just shift the cost from one supply chain function to another and claim it has optimized the supply chain. If cost reduction is the goal, real cost reduction must be realized, not shifted.

Schedule and coordinate quarterly and annual updates to the strategic plan. Companies that meet quarterly can sustain the ongoing development of the strategic plans. There is no end to the development of the strategic plan.

When to Start

Start now. Do not wait until the next calendar or fiscal year. Supply Chain integration and optimization will be severely limited without a strategic plan. It is going to take some time to get good at strategic planning, so if you don’t start the journey, you are never going to get there.