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The Four Supply Chain Enablers
The Four Supply Chain Enablers
Chain Enablers
Edward J. Marien
To create your plan for a successful SCM strategy, you need to know what specific
things to concentrate on. This article by yearbook co-editor Ed Marien lays out the
four key enablers that are central to SCM effectiveness. It’s based on a survey of sup-
ply chain professionals and includes sidebars detailing the comments of four of these
professionals. As the author reminds us, “Companies that recognize the scope of the
supply chain management enablers—and the resulting barriers that can form in their
absence—position themselves for business success.”
Reprinted with permission from Supply Chain Management Review, March/April 2000. Copyright © 2000 by
Cahners Business Information. All rights reserved.
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2 The Supply Chain Yearbook, 2001 Edition
Research Design
Working in conjunction with a select group of industry practitioners, a University of
Wisconsin team of graduate and undergraduate students in the fall of 1998 set out to iden-
tify the key enablers of effective supply chain management. The effort proceeded along
these steps:
1. Search secondary sources of information—journals, magazines, newspapers, the
Internet, promotional materials for educational offerings, company advertisements.
2. Analyze secondary search information obtained in Step 1.
3. Determine the primary research needed to aid practitioners in implementing supply
chain management initiatives.
4. Conduct the primary research among practitioners, their logistics services providers,
and other supply chain members.
4.00
3.44
3.00
2.14 2.07 2.05
2.00
1.00
0.00
Organizational Technology Strategic Human
Infrastructure Alliances Resources
Management
Identify Define SCM Establish SCM Establish Select SCM Redesign Select trading Implement Monitor for
corporate mission, performance process for processes for SCM partners and pilot and performance.
vision, vision, and requirements. implementing improvement. process(es) and allied services award the
mission, identify SCM address to implement. business.
leadership. improvement improve- enablers
opportunities. ments.
1.1 Corpor- 2.1 Define 3.1 Recog- 4.1 Identify 5.1 Docu- 6.1 Design 7.1 Develop 8.1 Imple- 9.1 Monitor
ate mission/ SCM process nize interfac- alternative ment opera- system list of third- ment and test customer
vision sets the vision/mission ing, relation- SCM tional specifications. party pilot. satisfaction
direction for to meet ship manage- processes. processes. 6.2 Select providers. 8.2 Report on and SCM
SCM mission. management ment 4.2 Develop 5.2 Consider ERP and 7.2 Screen results of processes.
1.2 Ensure goals. processes. an assessment benchmarking other related and call pilot. 9.2 Imple-
that SCM 2.2 Under- 3.2 Define cost-of-quality selected technology to companies 8.3 Celebrate. ment control
contributes to stand current/ SCM mea- process for processes. implement together to 8.4 Roll out charting and
corporate future cus- sures of measuring 5.3 Establish SCM process. deliver/mail full imple- reporting on
mission. tomer and/or performance. SCM im- priorities for 6.3 Effect RFPs. mentation service, costs,
1.3 Develop/ supplier 3.3 Define provements. process im- other 7.3 Analyze plan. and asset
implement a requirements. methods of 4.3 Establish provements. enabling and select management.
change 2.3 Conduct measuring goals to 5.4 Organize architectures. logistics 9.3 Hold
leadership gap analysis. customer measure and cross- 6.4 Select partners. quarterly
program. 2.4 Identify satisfaction. report im- functional pilot to 7.4 Sell leadership team
1.4 Select improvement provements. redesign implement. leadership meetings to
core team opportunities. teams. team on new ensure criteria
leader and SCM and services
sponsor. approach. are being
1.5 Organize 7.5 Organize met.
"analysis" cross- 9.4 Recog-
team. functional nize
implementa- performance.
tion teams. 9.5 Do it all
over again.
Communication and feedback loops for reporting process improvement results and ensuring alignment with mission and resource commitments.
5
6 The Supply Chain Yearbook, 2001 Edition
in implementing initiatives if top management does not understand the supply chain
opportunity and appoint a leader to capitalize on that opportunity.
A Practitioner Speaks
John C. Kenny, vice president, worldwide distribution, 3Com:
Clearly, organizational infrastructure is the number one enabler needed to imple-
ment supply chain management strategies. You can do all the assessments and redesign
of supply chain processes you want. But if your top management doesn’t recognize how
improvements in supply chain processes are part of the business’s key strategic plans,
your chances of success are diminished greatly. You need to mobilize their efforts with
the establishment of a top management leadership team committed to solving supply
chain problems.
Another key point is that if you don’t have in place a supply chain process-improve-
ment model similar to that developed by the University of Wisconsin in collaboration
with 3M, then, again, your probability of failure increases. Supply chain improvement
is similar to many other reengineering activities. Top management and the functional
units must have common goals and a shared vision to address supply chain challenges.
If supply chain thinking is shared, then the full-time resources will be committed for
changing critical processes.
As strategies are implemented that truly go beyond the firm and internal function-
al units to include external suppliers, customers, and third-party providers, executive
leadership becomes even more critical. Common goals and shared visions can now
include trading partners. Trust-based strategic alliances that are often “open book” must
be developed to address organizational, accounting, and information technology issues.
… The consultants will often paint the supply chain picture as an IT solution. Yet no
matter how beautiful the slides and the presentations, what it really boils down to are
top management and trading partner commitment and shared visions.
More than half of the respondents said that the ready availability of coordinated inter-
nal data on operations, marketing, and logistics (attributes 1 and 2) was the key IT attrib-
ute in implementing supply chain initiatives. The ability to link those systems to the busi-
ness partners was considered the next most important attribute.
From these responses and follow-on research, it became clear that companies needed
to define their SCM data and system performance requirements before selecting their soft-
ware solution. Another key finding was that they needed to first integrate their systems
internally before attempting systems integration with their partners.
Manufacturing and Materials-Management Technology. The other side of technolo-
gy relates to how products are manufactured and handled as they move through the sup-
ply chain—that is, the “physical” technological influences. The study team categorized
these as follows:
1. Basic research and development—How to design products and services for flow-
through supply chain efficiency.
8 The Supply Chain Yearbook, 2001 Edition
2. Process research and development—How to make the right volume to meet customer
needs. How postponement and modular manufacturing can be used to speed up the
processes to meet customer requirements while keeping inventories low.
3. Logistics process flows—How to move products between links in supply chains.
4. Aftermarket flows—How to manage the flow of parts and returned goods, including
possible use of returnable containers.
With an understanding of these categories, respondents were asked to rate the impor-
tance of the following materials-management attributes to SCM implementation. Their
rankings are shown below:
Technology—Manufacturing and Materials-Handling Enabling Attributes
53% Having products (including materials, parts, components, and features) designed
for production flow-through and inventory velocity.
23% Having physical production processes (including equipment design, layout, and
automation) designed to facilitate SCM initiatives.
12% Having products designed for state-of-the-art packaging, unitizing, and materials
handling to facilitate flow-through inventory velocity.
12% Having products designed and unitized for manufacturing efficiencies.
Overall, respondents showed considerably less awareness and recognition of these
technologies than they did of the information technologies. Yet among those attributes
considered, the design of products and physical processes for supply chain efficiencies
topped the list. Perhaps these results would have been different if respondents were pri-
marily located in manufacturing, or if we had drawn our survey sample from the APICS
membership. Had the survey sample been different, we possibly could have measured
concepts such as lean manufacturing and ergonomic and environmental design in support
of SCM. Similarly, had we had more multinational companies, transnational manufactur-
ing issues might have been addressed as well.
A Practitioner Speaks
Robert K. Withrow, general manager, supply chain management, Eastman Kodak:
At Kodak, we are organizing around integrated supply chain excellence and mov-
ing away from a functional focus. … I report to the corporate VP, United States and
Canada, who is responsible for shared services across regions. We are the stewards of
achieving supply chain excellence. I agree that organizational infrastructure is the most
important factor affecting supply chain implementation. Our present organizational
structure and the impact of technology are forcing us to rethink how we are doing busi-
ness.
Technology has been a key enabler of supply chain management at Kodak. One of
the biggest areas of impact has been our implementation of SAP. We are in our third year
of global implementation. For demand and supply management, we chose Manugistics
software and interfaced it with SAP’s order management and manufacturing modules.
Technology also is going to enable the internal and strategic relationships to devel-
op in this new environment. Human resources and line management will play a big role
in “re-skilling” our employees in how they do their jobs. We are on a journey that is just
beginning.
A Practitioner Speaks
Steve Lauderbaugh, corporate supply chain manager, 3M:
First, it is imperative that a SCM organizational structure be established at the high-
est executive level possible to provide a corporate umbrella for the SCM initiative. The
SCM initiative should be one of the top three to five corporate initiatives designated and
sponsored by the CEO or senior VP. Reengineering your business processes for effective
SCM is very difficult and painful—particularly at the middle- to upper-management
levels. Thus, there will be a lot of resistance to making the radical changes necessary to
compete in a rapidly changing marketplace. This will require top executive leadership
to overcome this resistance.
Because of the many roadblocks to successfully reengineering and implementing
supply chain processes, it is necessary to follow a formal implementation process that
covers all phases of the effort. … This process should include feedback loops to ensure
alignment with mission and resource commitments. Also, communications and feedback
capabilities for reporting process-improvement results should be established. A “change
leadership” program for all management personnel, including all company executives,
should be developed and implemented. It really helps to have an outside consultant facil-
itate this effort to be able to answer the question “Why should we do this?”
New skills, training, career paths, and incentives also are required to support the
supply chain vision. Research has shown that implementing reengineered supply chain
processes without making human-resources-related changes in job structures, roles,
and responsibilities is a formula for disaster. It’s important that new measures and
incentives be developed. Skill training must include both deep functional knowledge as
well as broad process/business knowledge. Career paths based on roles within the
process team need to be defined. 3M is moving toward a “Process-Center Organization”
with a pilot in one of our major business units. We think this will be the business struc-
ture for the future. A process-centered organization aligns people’s jobs along the hori-
zontal axis toward the customer. The functions remain in a vertical position, becoming
Centers of Excellence. They are responsible for developing the expertise in equipment,
systems, and products of the future and providing the skilled people to work in the
process-centered organization.
Once the company is organized and is being managed for supply chain improvement,
it can then address the other enabling forces. Existing processes need to be documented
as a baseline. They then can be redesigned, and the appropriate enabling IT and commu-
nications technology evaluated and selected. Along the way, strategic alliances need to be
formed—not only to execute the supply chain operations but also to plan collaboratively
for greater efficiencies. Finally, companies must remember the human-resources manage-
ment component. When asked to participate in the cross-functional activities of integrat-
ed supply chain management, people sometimes respond that “It’s not my job.” Job
12 The Supply Chain Yearbook, 2001 Edition
A Practitioner Speaks
Larry M. Sur, executive vice president, Schneider Logistics:
Very early in the process of starting Schneider’s contract logistics business, we
learned the importance of a mutually agreed upon set of expectations. A statement of
expectations (SOE) is a formal document that results from a two-way exchange of the
needs of each party—the customer and the contract logistics provider. An SOE must
contain detail about each objective to be accomplished and serve as a guidepost for
implementation and day-to-day management. It sets the foundation for a trusting rela-
tionship and establishes the base for a metric of performance.
Often, it is necessary to develop an alliance with another logistics provider in order
to deliver a complete solution for a customer. In these instances, you need to be specif-
ic about the roles, responsibilities, and the interfaces of the parties. Schneider has sev-
eral customers that require layers of logistics companies. We have found the SOE
process is the key to making these relationships work in a seamless manner. The lead
integrator must be clearly identified. And here, again, an SOE can be used as the tool.
In general, the more parties that are involved, the tougher it is to achieve a successful
outcome. Very few providers, if any, can do the entire global logistics job. Therefore, you
need to have a lead logistics provider who can successfully manage the duties of each
subprovider.
This article, which originally appeared in Supply Chain Management Review is reprinted
from The Supply Chain Yearbook, 2001 Edition, edited by John A. Woods and Edward J.
Marien and published by McGraw-Hill. For more information, go to www.cwlpub.com/
scm01.htm.