Nine out of ten supply chain companies have difficulties improving inventory, cost and customer service performance. Yet the few that do sustain supply chain performance excellence aren’t doing anything which should prove difficult, impractical, or impossible for any organisation, provided a robust supply chain strategy is developed and adhered to.
The leading players though, do share a few particular qualities, traits, and characteristics in common. When these characteristics are combined, they provide an environment conducive to continuous performance improvement. Here are five of those qualities which your company too, can develop and leverage for excellence in supply chain performance.
1. Strong Leadership and Vision
Companies that achieve supply chain performance excellence typically have a strong leader, often one who has held the position for a considerable time. The leader of a top-performing supply chain organisation is normally one who has created a vision and used it to inspire passion among the workforce—a vision which embraces change and a commitment to improve step-by-step.
2. Proactive Use of Data and Analytics
Top performers in the supply chain arena have developed the expertise and technology to make their data work for them. They utilise advanced analytics to look deeply into their supply chains for ways to improve efficiencies and reduce costs. They may also have shifted from reactive data use, to a more predictive approach involving modeling and hypothesis testing.
3. Mastery of Inventory Optimization
Supply chain companies with higher than average performance will have a firm grip on inventory management. They will have learned how to optimize inventory to drive profitability improvements and raise service standards. Examples of companies that have succeeded in this regard include:
- Proctor & Gamble: reduced inventory levels in their beauty division by $100 million.
- Hewlett Packard: went on a drive to reduce inventory costs and achieved savings of $130 million.
- Tractor Manufacturer Case New Holland: reduced inventory by 20% through the implementation of a postponement strategy.
4. Focus on Cross-functional Processes
If your company (or the one that you work for) manages processes by function, a change will definitely do it good. To achieve supply chain performance excellence, a horizontal perspective on processes will be needed. Top-performing organisations focus on activities such as sales & operations planning, supplier performance management, corporate social responsibility and cost-to-serve analyses. These are all initiatives which promote cross-functional alignment and disintegration of silos within the business.
5. Active in Supply Chain Design
While it might seem something like a no-brainer that a company would consciously design its supply chain, the reality is that only a few actually do so. In many companies, the supply chain is something which just kind of … evolves.
On the other hand, companies achieving supply chain performance excellence do so as a result of meticulous planning. These organisations review supply chain strategy and design frequently to ensure it continues to support overall business objectives and customer needs.
Supply Chain Performance Excellence: An Achievable Goal
As you’ve hopefully noted, none of the qualities highlighted in this post require a magic wand. Your enterprise can attain them all; perhaps not all at once, but you don’t need to have them all to begin improving supply chain performance. As all the top-performing supply chain organisations have discovered, the journey to excellence is one that takes place step-by-step.
Your company probably already has one or two of the above characteristics, so a good place to start might be to look at the ones you’re missing and pick one or two to work towards. If you do that, you will already have taken the first steps to excellence in supply chain performance.