Aligning Supply Chain Strategy to Drive Transformation and Gain True Competitive Advantage

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In today’s fast-paced and customer-oriented business environment, superior supply chain performance is a prerequisite to getting and staying competitive. In the past, the “to be” of transformation, the transformed enterprise, had a life expectancy of a few years. Today, the Digital Enterprise is a moving target. Two years of significant advantage based on a single competency […]

In today’s fast-paced and customer-oriented business environment, superior supply chain performance is a prerequisite to getting and staying competitive. In the past, the “to be” of transformation, the transformed enterprise, had a life expectancy of a few years. Today, the Digital Enterprise is a moving target. Two years of significant advantage based on a single competency is now a nearly unattainable goal. Sustaining competitive advantage is not about fanatical and single-minded implementation of a “killer app.” The key is a total commitment to continuous improvement, coupled with the adoption of a dynamic strategy (based on a compelling vision for the company’s future) that emphasizes best practices – and the assessment of and adaptation to – constant changes in the marketplace. 
 
Greater and more intense competition among global organizations and global value chains are leading to substantial shifts in what is expected of the supply chain function. Currently, business leaders are demanding more from their supply chains, most predominantly — competitive advantage.
 
These shifts in expectation force supply chain managers to focus on the entire value chain (because the chain is only as strong as the weakest link). It has also led to supply chains becoming a regular topic of conversation at the CEO and board level, with supply chain managers expected to deliver on a much wider set of metrics beyond the traditional cost and working capital. Gone are the days when the popular grails of supply chain management meant simply managing logistics and warehousing. The ability to put in place best-in-class planning processes compounded with the ability to respond to changes on the execution front rapidly is becoming more and more critical.
 
Irrespective of the industry one operates in, there are so many day-to-day operations that have to be taken care of if the supply chain is to run smoothly. Thus, supply chain professionals become focused on the daily operations and tend to fall back to business as usual. Many strategic sourcing / supply chain organizations are burdened by the task at hand and thus, lose sight of the bigger picture. This is a more significant tendency in organizations where people tend to identify more with their function, rather than with their company’s goals to improve the competitiveness and profitability of the end product.
 
It seems simple, but aligning goals with the company’s overall direction has always been critical to the success of a supply chain. In the best circumstances, supply chains that have developed a competitive advantage actually work to create their company’s vision and direction, not just respond to it.
 
For example, Amazon continually redefines the retail industry and shapes consumer expectations.  Starting with its disruptions to the book industry and electronics retailers, today, Amazon continues to expand and remain pro-consumer. And with the proliferation of the Amazon effect, consumers now expect free shipping, next day delivery, best prices and large selections from both online and in-store channels. In fact, if we are seriously talking about transformation driving competitive advantage, we must acknowledge that Amazon owes much of its well-documented competitive success not only to its enhancements to the online shopping experience, but also and more importantly, its innovation on supply chain and fulfillment capabilities. 
 
Why is Strategic Supply Chain Alignment So Hard?
 
If companies with supply chain operations tightly aligned with business strategy are more successful, why do so few actually try to implement this holistic alignment?
 
Perhaps supply chain professionals are often too busy with day-to-day demands to worry about big picture issues such as strategy alignment. Moreover, they may not be intimately familiar with the company’s strategic course. The goalposts shift with major changes such as mergers and acquisitions, or the latest top-level thinking may not have filtered down through the ranks.
 
Knowing this, then how can we, as service providers, work in collaboration with our clients to support them in moving to the desired level of alignment and obtaining a true competitive advantage?
 
First and foremost, we have to identify what the challenges are and the business benefits that will be gained. Our customers and we – as partners – need to realize that we cannot transform everything at once. Instead, we must figure out the priorities, and it has been my experience that our customers gain the most business value when we focus on process-led transformation aligned to strategic priorities aided by the right fit technology.
 
It is important to understand that this is a journey moving from one area in the supply chain to another, deriving benefits all through this process. For example, if an organization is focused on ‘Customer’ as a strategic priority and is having challenges in providing the right level of customer service, customer order orchestration processes could be a great starting point to begin the transformation journey. Once the best-in-class process and right fit technology have been deployed and significant benefits gained in On Time In Full (OTIF), cycle time and end customer satisfaction, it might be a good time to start reviewing upstream supply chain planning processes.  This enables organizations to identify opportunities for transformation and how best these can aid the downstream order orchestration processes to further deliver customer delight at the right levels of inventory and optimal costs.
 
No company can truly align its business strategy with its supply chain solely through best-in-class processes and technology. We need to include talent in the balance. After all, an efficient supply chain requires the people to implement, understand, customize and extract competitive advantage. We also need to inculcate a data driven approach to decision making, which in turn can help drive transformation and competitive advantage for the organization.

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