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How Can You Disrupt Your Own Supply Chain?

Director of Supply Chain Integration, Caterpillar Inc.

Thursday January 11, 2018


Today’s supply chain leaders face a common dilemma. Production shortages, customer backorders, supplier issues, and other burning problems command focus on short term objectives. Yet succeeding in today’s rapidly changing world often requires transformational improvement. Examples of transformational change include acquisition integration, new technology implementation, new product launches, major cost reduction program execution, market expansion, etc. How can supply chain leaders use their end-to-end perspective to disrupt and transform their own business? 

The first question supply chain leaders must ask themselves is, “Is this transformation needed for my business to win?”  If not, move on; if so, begin NOW using these five steps:

1. Supply Chain Strategy. We have all seen business strategies which are too long, too complex, and too ambiguous. Strategies need not be complex or verbose, but rather a simple expression of:  i) The problem or opportunity; ii) The goal; and iii) Why it needs to be pursued. Remember Sir Winston Churchill’s famous remark during WWII: “We shall fight them on the beaches.” Not, “We will engage hostilities with the enemy on our coastal perimeter.”

Keys to developing an effective strategy include

  • using an external focus
  • taking an end-to-end perspective
  • and, making the strategy clear and compelling.

2. Business Case. All businesses have more ideas than money to invest; view your business case as a “loan application” for approval of capital, resources, and time -- it expresses your supply chain strategy in financial terms. Supply chain leaders must be skilled at creating business proposals grounded in good economics that provide a compelling financial case for executive approval.

 Keys to success include

  • getting the numbers right
  • applying Total Cost of Ownership to your supply chain design
  • and communicating benefits in terms of business or shareholder value.

3. Disciplined Execution. Jamie Dimon, CEO of JP Morgan Chase, said, “I would rather have a first-rate execution and a second-rate strategy any time, than a brilliant idea and mediocre management.”  A supply chain manager’s ability to execute is vital to their business transformation project, and critical to their reputation. The scope of an effective execution plan includes people, processes, systems, data, and governance.

Keys to success include

  • securing a visible and committed executive sponsor
  • selecting the right team
  • implementing an effective project management cadence
  • and establishing a collaborative work climate.

4. Sustainment. Maintaining change is extremely challenging; over time or at the first sign of difficulty, people tend to revert to the original state because it is more comfortable.  It is the responsibility of the supply chain leader to continue the forward motion necessary to maintain a successful supply chain transformation.

Keys to success include

  • recognizing and celebrating improvement
  • establishing effective program governance (leadership, metrics, and project plans)
  • and implementing a clear change management plan, including who, why and how to transition from the current state to the future state.

5. Leadership. The most critical element of any business transformation is the leader. Supply chain leaders are uniquely qualified because their end-to-end perspective enables them to be change agents.  

Keys elements include

  • providing direction – where the team needs to go, and why
  • specifying connection – defining the role of each individual and how it is critical to the plan           
  • providing a positive climate – a productive environment where the team can innovate, recognize, and thrive.

Leading a successful transformation requires the supply chain manager to make a significant personal commitment and sacrifice, and they may ask “why bother?”  The answer is simple: the two key responsibilities of any supply chain leader are to leave the business better than you found it and to leave it in more capable hands. The journey to develop, implement, and sustain a supply chain transformation will improve your business and develop your team.

In making this commitment, supply chain leaders can consider the riddle of five frogs on a log:  there are five frogs on a log, and four decide to jump off. How many are left? The answer, of course, is five -- because there is a difference between deciding and doing. I encourage supply chain leaders to recognize and embrace their unique role to take action, and by doing so, help their organizations win.

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