Overcoming Supply Chain Complexities
The Question: What are the leading issues that will face global supply chains in the next two years?
Steve Bowen: As we discussed in a recent joint webinar, with the Global Supply Chain Institute, there are four key challenges facing supply chain organizations over the next two years. They are: keeping the supply chain sustainable, overcoming a rise in supply chain complexity, keeping up with the explosion in data and managing cost-savings fatigue.
The challenge with supply chain sustainability is that it's largely driven by external forces such as consumer, customer, and governmental expectations. Meaning, not only does your supply chain need to be optimized, but it needs to be agile too. Some of the drivers for the rise in supply chain complexity are digitalization, acquisition pace, new product introduction (NPI) pace, regulation increases, globalization, failed management, etc. The sharp rise in the amount of data and information is a growing concern if you don't have improved information for decision making to go along with it. Technology is sharply increasing the amount of data and information available, but supply chains are still searching for information that can speed up and enhance the quality of decision making. Lastly, cost-saving fatigue is the relentless process to identify and eliminate all non-value-added materials, equipment, processes, systems and resources as evidenced by recent research from the Global Supply Chain Institute*.
The Question: Competitive advantage is at the top of the Global Supply Chain Institute's (GSCI) supply chain improvement model*. What if a client's business doesn't expect its supply chain to create a competitive advantage?
Steve Bowen: Competitive advantage is at the top of the model because it's the key focus if you want to have the best supply chain possible. I am a strong believer to become the best, you not only need to be better than your competitors, you must also create the highest value for your customers and, thereby, your business. True competitive advantage in your customer markets is the real goal.
The Question: What's the difference between collaboration and integration in the GSCI supply chain improvement model?
Mike Burnette: Integration is how supply chain activities communicate with each other in order to be successful. Collaboration enhances the impact of integration, synchronization, digitization, waste elimination, and platform management on competitive advantage. It does this by facilitating improved economies of scale and scope in utilizing end-to-end system resources, knowledge, or creativity*. Optimization and integration of procurement, operations, and logistics provides important insights into improving results through collaboration.
The Question: The Maine Pointe TVO Pyramid focuses on logistics, procurement and operations supported by data analytics and leader & organization improvement. Can you explain how collaboration between these functions has a positive impact both internally and with external partners?
Steve Bowen: Driving excellence in procurement, operations and logistics -- and then integrating through leader and organization improvement and insightful data analytics -- creates frameworks that help companies break down functional silos and drive measurable value across the end-to-end supply chain. Effective synchronization between logistics, procurement and operations means breaking down organizational silos and working collaboratively both within the organization and with external partners. This becomes a new “company way“ as the organization reaches maturity level 4 and 5 on the TVO Pyramid. The benefits of achieving TVO are significant in terms of cost, cash and growth performance. For example, improving cross-functional alignment has helped one global chemicals company realize $112M of benefits, with more to come as it continues its transformational journey.
The Question: Can you talk more about the role of the supply chain leader in collaboration?
Mike Burnette: The last few decades have witnessed significant changes in the supply chain leader's role. Exponential growth in supply chain complexity has heightened the importance of supply chain leaders' understanding of a broader view of the supply system, as well as their ability to influence other business functions to achieve greater value creation*.
I believe having these leaders in place is imperative to success. Without exception, the benchmark companies interviewed for our GSCI paper strongly believe collaboration cannot exist in a meaningful manner without good supply chain leadership. This means communicating clear collaboration expectations, reviewing results driven by collaboration, and personal role modeling. The best supply chain leaders help drive their organizations to collaborate effectively across the business, with important, strategic suppliers, customers, and carriers and improve results through investment in collaboration.
The Question: The GSCI paper concludes that supply chain complexities can be successfully overcome through better end-to-end-collaboration and identifies this as a largely untapped area for competitive advantage. How can executives ensure they don't miss out on this opportunity?
Mike Burnette: The first step is to ask yourself a very simple question. How confident are you that your supply chain and manufacturing operation is set up to respond to growth opportunities? If your confidence is low, I would like to suggest that it may be time to assess your procurement, manufacturing and logistics functions to identify potential bottlenecks, release cash, reduce costs and capitalize on growth. As a first step, an in-depth TVO Analysis will help uncover the value improvement potential across your supply chain.
*Global Supply Chain Institute, University of Tennessee, End to End Supply Chain Best Practices, Dec 2017
Maine Pointe is a global implementation-focused consulting firm trusted by many chief executives and private equity firms to drive compelling economic returns for their companies. We achieve this by delivering accelerated, sustainable improvements in both EBITDA and cash across their procurement, logistics and operations to enable growth. Our hands-on implementation experts work with executives and their teams to rapidly break through functional silos and transform the buy-make-move-fulfill supply chain to deliver the greatest value to customers and investors at the lowest cost to business. We call this Total Value Optimization (TVO)™.
Maine Pointe's engagements are results-driven and deliver between 3.5:1-12:1 ROI. We are so confident in our work and our processes that we provide a unique 100% guarantee of engagement fees based on annualized savings. www.mainepointe.com.