In the Winter 2010 issue of the MIT Sloan Management Review, professors from Michigan State University and the University of Virginia authored an article, “Supply Chain: Managing for Multiple Outcomes,” which outlines the advantages of “outcome-driven supply chains.” The professors point out the morphing of the traditional view of linear supply chains needs to morph to take into consider a multi-factor layered approach to include ‘ cost reduction, responsiveness, security, sustainability, resilience, and innovation’ to get the best perspective of today’s supply chains.
Although a few years old, we at Interos have this same conversation with our clients every day. It is difficult to understand how to increase variables in your supply chain without this baseline. If nothing else, point solutions are stove piped, drive costs up, and negate a holistic approach to security. Taking the time to define the end-to-end lifecycle of the supply chain, and putting in constraints as to what you want to affect and improve, will ensure you achieve the outcomes you are driving towards.
Supply chain mapping should take into consideration all critical business functions and stakeholders in the entire lifecycle of whatever product – or process – we’re seeking to better understand. Functions may include:
- origin sourcing;
- vendor compliance
- standards or standardization;
- transportation; and
Important stakeholders or departments to include in this analysis are the following folks, given they are agile in their thought process. We need people at the table that know how we do things today, as well as have the ability to understand the vision of where the company needs to go and are willing to do what it takes to get there:
- CEO – to set the vision for an outcome-driven supply chain, ensuring we’re focusing on the right corporate strengths and weaknesses to get the company to where it needs to be.
- CFO/controller – who makes the financial decisions.
- COO – who understands how the business actually runs though is flexible in their thinking so adapt to the needed change.
- CIO – who understand the technology within the business and can ‘think big’ to support the business in its initiatives.
- Purchasing – who makes the buying decisions and/or manages the folks that do.
- Customers – Key customers can provide valuable feedback to ensure we don’t miss what the market needs from us
- Marketing – Ensuring we capture the right brand identity as an organization.
In short, supply chain mapping is the first step in creating an “outcome-driven supply chain.” The process identifies the change that will differentiate an organization from its competition, serve a client base with a prosperous value proposition, reduce internal cost, drive profitability, and provide a holistic approach to security in today’s world.