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Over the past 20 years, I have advised more than 120 companies of various sizes and corporate cultures in different industry sectors. As a consultant in supply chain management, I’ve had a privileged vantage point from which to observe their business.
But what exactly is supply chain management?
Simply put, it’s the management of the end-to-end activities, systems, information flow and processes that culminate in a demand being fulfilled. For example, think of all the physicalactions that take place from picking a tomato off a vine through to buying a can of tomato soup at the grocery store. You can call that the end-to-end supply chain of tomato soup.
Any industry that makes, buys, moves, assembles, distributes and sells products to an end customer has a supply chain. Naturally, retailers, distributors and manufacturers come to mind – but even industries as diverse as oil and gas companies, nuclear power utilities, mining companies, banks, municipal governments and nearly all businesses and organizations have one, too.
Over the years, I have learned five key principles of business:
1. Leadership sets the tone for success – or failure – of an enterprise
If there is dysfunction in the way an enterprise operates, if morale is poor, if communication and clarity of purpose is absent, point to the top of the house – the chief executive officer and his or her executive team.
The CEO must create the conditions that motivate and inspire or conversely, disconnect and discourage, a company’s highest-valued assets and resources, its people.
2. The company’s strategy must be clear and easily understood
General mission or strategy charters that include language such as “We will be the best” or “We will achieve high growth” are not effective.
Amazon’s vision is a good example of articulating scale, scope and vision: “We seek to be Earth’s most customer-centric company for four primary customer sets: consumers, sellers, enterprises and content creators.”
3. Communicate an integrated view of how your company adds value
In many cases, there is a lack of understanding of how all the activities that take place in a company or organization are linked or interdependent with each other.
It’s fascinating to be conducting a workshop in a company where people have worked together for many years, only to find out there was a task or work routine that didn’t need to be performed, or could have been changed to make the next step more efficient.
Engage and encourage employees so they know what they do can to help others in the company.
4. Key performance indicators should drive wanted behaviour
Key performance indicators are required in every business to be able to “unemotionally” track performance, but they need to be aligned with customers’ measurement and make sense to people in the business.
We once worked in a company that had over 50 indicators. When we investigated further we found they did not line up to their customers’ tracking statistics, the effort to compile the measurements was taking two full-time people, and senior management didn’t necessarily believe or utilize them.
Design believable and accurate measurements to drive results and behaviour. Less is more.
5. Business systems must help your people, not slow them down
In spite of technological advances over the past 30 years, you would be shocked at how many companies – even large global brands – have spent millions of dollars on technology and business systems and are underutilizing their investment. This is usually seen where, in trying to get the job done, people create workarounds and “shadow systems,” standalone and non-integrated spreadsheets, time-wasting routines, and multiple system entries.
The root cause in many instances is that the system and interdependent processes were never designed properly to help the users. Typically, after the project goes live, resources to help drive better performance, training and continued improvement are cut from the budget.
As basic and pragmatic as these principles may be, keeping an approach simple and easy to understand is also critical. As in the words of Leonardo Da Vinci: “Simplicity is the ultimate sophistication.”
Mike Croza (@mike_croza) is a managing partner with Supply Chain Alliance Partners, a supply-chain consulting firm based in Markham, Ont.