With contributions from Charles Trimarco
Today, the topic of Supply Chain Transformation continues to be in focus across all vertical markets. Supply chain transformation is one way companies can gain a competitive edge over their industry peers. The idea in many ways is not new. However, companies are rethinking their strategies due to improvements in the economy, new technologies, growing global customer bases, and increasingly complex business models. Transforming a supply chain can occur in many ways. The reasons are multifaceted with organizations needing to increase value added services to their customer base; provide timely and cost effective products and services to market; and improve the flow of information throughout their customer and supplier network.
Supply chain transformation can be an overwhelming task for any organization to undertake. In order for a company to be successful, a structured approach must be executed to achieve identified benefits. Objectives may include the reorganization of a supply chain organization; the reduction of overall operating costs, and the development of a strategy for future growth. In order to meet such objectives, a company must begin by conducting a supply chain assessment, which includes interviews, analysis of spend and performance data, and a review of process documentation. Typically, an assessment will reveal several gaps in current processes and opportunities to reduce operating costs while improving service to their customer base. Once the assessment is complete, a roadmap to developing a future state design is created. This may include the prioritization of several initiatives based on the impact to the business and ease of implementation. The final step is to group the opportunities into program workstreams and create a detailed program implementation plan. A selection of a technology may also be included in the plan. For example, Pfizer, the global pharmaceuticals company spent 18 months transforming their complex supply chain by moving their information into the cloud. One of the keys to success was Pfizer’s ability to require each partner to adapt to a common platform. Prior to the transformation, Pfizer was operating their own systems and proprietary data. As a result, the company has a virtual view of their transportation network which in turn gives the company complete traceability of their products across the globe.
In most cases, an organization will structure the transformation plan as a program with a Program Management Office (PMO) that includes a Change Management component. Different workstreams are created depending on the initiatives identified. Examples include Procure to Pay, Distribution & Logistics, Customer to Cash, Master Data Management, Plan to Report, and Human Resources. Each workstream contains dedicated resources and subject matter advisors to meet the objectives of the program.
The transformation of a supply chain should be seen as an integrated program structured to meet the strategic objectives of the company. Support from all levels of the organization is a critical factor to the overall success of the program. Since organizations are different, the journey to achieving the identified goals is based on the plan created during the assessment. If successful, a company will not only achieve their objectives of the program but gain the competitive edge they strategically planned on.