Supply Chain – How Much Strategy and Investment

SupplyChainStrat_optimizedSupply Chains can be expensive, but underappreciated as value-creators.

Supply Chain Strategies. They can be elusive. If they exist at all, they typically emanate from the overall business strategy. So much of what drives the supply chain can be the “issue of the moment,” – keeping things afloat, staying ahead of excellent demand, adjusting to a consolidation, reaction to a merger or some other decision. Oftentimes, the direction of a supply chain strategy is more “plan” than strategy. It’s something to get to the next hurdle, but doesn’t exist in competitive or customer-centric context.

Paul Dittman of the University of Tennessee detailed his thoughts on Supply Chain Strategies in an issue of Supply Chain Digest. There, and in his book, Dittman defines a Supply Chain Strategy as “a formal written plan that details what actions the organization is going to take over a multiyear horizon.” Pretty simple, right? Yes, and no. Easy to read about – not so easy to execute. In fact, Dittman found that less than 20% of the organizations in one survey had a supply chain strategy. Too often, expediency or the urgency of the moment interfered with strategic supply chain planning.

In his book, “Supply Chain Transformation,” Dittman outlines a 9-step plan for building a supply-chain strategy. The base of the plan is this: Start with the customer. Begin with thinking that comes from their perspective. At the endpoint, look for the business case and customer buy-in, then execution. There are points in-between. In a slightly more simplified model, Hernan David Perez, in Supply Chain Quarterly, outlines four elements as part of his development of a “Supply Chain Roadmap.” What he found were four interrelated elements (the summaries, ours):

  1. Industry framework – “What’s the business category look like?”
  2. Unique Value Proposal – “Where does the company fit in the ‘buying mind’ of the customer/prospect?”
  3. Managerial Focus – “How is the company living out its UVP and supply chain strategy execution?”
  4. Internal Processes – “How does the work get done to satisfy all customers…what are the push and the pull of it?”
  5. These elements fit within various supply chain models related to speed, efficiency, agility, flexibility and the like.

From Distributors perspective, this type of attention to process and strategy is useful – it’s what we do. It’s also understandable if the resources of your time, attention or expertise do not permit you or your company to give its full attention to them. In many regards, that’s why Distributors exists – organizations are (rightly) focused on their customers, their business strategy and/or the day-to-day of their dynamic business. Distributors makes it our business to be more than warehousing space. We strive to be a strategic problem-solver in the area of logistics. For decades, that’s what we’ve been. If you’d like to know more about our value-added services, give us a shout. We’d love to hear your story and take your supply chain to the next level.