The state of supply chain management in 2017
It is time to turn our thoughts to where we are and where we are going for the next year. The turn of the year, with the prospect of a fresh start, is always exciting, and we intend to make the best of it.
So, what is new for us in supply chain management? Well, we would say the "new" is related to tools and technology, based on the advances in those areas. But our long-standing view of business in general is that Strategy drives People, Process and Tools, in that order. So, playing with new toys is not necessarily the right priority.
Our experience in Thailand and the rest of Southeast Asia is that most supply chains still struggle with the basics and are not in any position to realise benefits from new tools and technologies. This can be seen even in the local operations of some multinational companies.
Strategy: We continue to see many cases where brief documentation of goals is viewed as a strategy. That's not enough. One must be clear about the approach, the means to the end, to achieve those goals. One could develop a Balanced Scorecard-style Strategy Map, for example, detailing what has to be done, when, and by whom. This can then be interpreted to develop functional "strategic plans" of specific initiatives.
People: How do you get everyone to buy in to what you are trying to do, what you must do to progress or even survive in business? How do you educate them in the whys and wherefores? How do you set performance goals and measurements?
Process: This is the easiest one to implement if you have your strategy and people aspects adequately taken care of. Our main point here is that one must be clear about the Process aspects before beginning to play with the tools, not the other way around.
Tools: Generally, this covers all kinds of tools, not only IT. For example, material handling equipment and production facilities are also important. But, for supply chain management (SCM), IT is a major component of planning and monitoring tools.
We keep hearing about leading-edge technologies, continuous sales and operation planning (S&OP) and so on. What we experience, however, is that many people are still learning the basics. Thus we still see a need to teach the basics, develop disciplines, even come to grips with a process view of a business and, from there, to understand SCM and what to do to improve. "Walk before you run" kind of stuff.
Yet we are still amazed by the naivety of seasoned executives who think that SCM, formality, continuous improvement and the like are "fluff". These are people who live and work in a world of chaos and think that is the way it ought to be.
Having said all of the above, our "grab bag" of interesting points for the coming year includes the following:
Data integrity is still the foundation to being able to manage supply chains well. However, it is more evident that it is always going to be an elusive "holy grail".
We remember when John Hines of Verizon wrote that B2B was becoming B2B2C. The digital-based realities are greatly compressing the time allowed to satisfy demands, no matter what the product and industry. People expect things to be available on demand at any stage of the chain and this is driving a profound change in our SCM thinking.
Risk management: We wrote last year that this has really come to the fore, but the disparity is very pronounced because we see many companies just not choosing to get around to it. How can we stay ahead of the variety of risks about which we are now so conscious?
Integrated business planning or S&OP has become mainstream but there are still varying views about what constitutes S&OP, not to mention the ability to implement the basic disciplines.
Performance measurement and management: This will ever fall off the list, because so many organisations stubbornly refuse to address the need to give each and every level of the organisation meaningful, achievable, relevant measures that are aligned from bottom to top with the business strategy.
Strategic procurement: We are so pleased to see this floating back to the surface. In shore, it means more focus on value and security of supply, less on labour unit cost.
Sustainable continuous improvement: More and more operational people are realising that project-based improvements do not stick. This is because specific problems are tackled almost in isolation and, therefore, as soon as the project is finished, the natural forces come to bear to return things to the former state.
If nothing else, we hope that people will examine their performance measures, so that they can come to know the state of their own nation. If that happens, the rest will flow. Best wishes for 2017!
The Link is coordinated by Barry Elliott and Chris Catto-Smith as an interactive forum for industry professionals. We welcome all input, questions, feedback and news at: BJElliott@ABf1Consulting.com, email@example.com