Supply chains don’t get neatly designed—they happen over time. Depending on your company’s industry, products, market challenges, and risks, customers’ demands, and company goals, you develop different approaches toward your supply chain, service, and inventory strategies.
Changes occur over time that impact efficiency. Volatile energy or commodity costs impact the cost of goods sold. Products proliferate driving up complexity and cost. Many well-intentioned but locally made decisions become ad hoc policies, and over time, get companies out of sync. Then it becomes important to take stock of where you are and create more chain-wide, multi-echeloned approaches, aligning and calibrating the business to achieve significant performance improvements.
Today’s business executives understand they are competing via their supply chains. Yet many times, they do not have adequate views of the business or the techniques to tune the supply chain to improve performance outcomes. Organizations have not instilled supply chain thinking across the business, and often supply chain professionals are not included in C-Suite strategy discussions. Supply chain, inventory, production, and sourcing people are buried within the organization, the plants, or in stove-piped organizations, when what is needed is a corporate-wide supply chain executive reporting to the top.1 Individual managers look at each site from a cost perspective and each manager is rated on individual metrics, rather than a holistic view.
Therefore, alternatives may not be seen or evaluated in a harmonious way. Opportunities to increase sales and achieve higher levels of customer service are missed. Each internal organization focuses on its own contribution, rather than optimizing the goals of the company. We just are not doing as well as we could!