When Supply Chain Confusion Can Kill Business

HOW SUPPLY CHAIN CONFUSION CAN KILL BUSINESS

When Supply Chain Confusion Can Kill Business

by chiefstaff

September 3, 2013

Supply Chain Confusion – Have you Encountered It?

What is Supply Chain Confusion all about?

I am a very social person and I tend to go and visit my alumni meetings for IMD, for Harvard, for Australian Graduate School of Management, Chartered Financial Analyst and many other institutes that I am a member of.

And, often the question that is asked when I meet someone for the first time is “What do you do?”

When I explain to them that I ran a company called Global Supply Chain Group and I help companies improve their supply chain management, most of the people I meet still do not fully understand what supply chain management is, including those in the alumni of my business schools or Chartered Financial Analyst Institute or Law school.

So much so that occasionally I even get asked questions such as “So what kind of chains do you supply to the businesses?” At a more informed level, many people confuse supply chain management with “supply” or procurement or ‘strategic sourcing’.

The most common misconception is, however, between logistics and supply chains, and frequently I explain the difference between these two.

This confusion is exacerbated by trucking companies who have painted over their old trucks from XYZ Trucking/Transport to XYZ Logistics to XYZ Supply Chain Solutions without any material change in their capabilities or service offerings.

Moreover, many supply chain managers, directors and vice-presidents who come from logistics, 3PL or such companies exacerbate this confusion by not expanding their skill-set. They rely on CEO’s (and other stakeholders’) lack of differentiation capability between logistics and supply chain to narrowly define their role and stay well within their comfort zone.

I answer the question about what we do saying that we help create profitable business transformations using supply chain management as a very effective and balanced tool-kit, contrasting such business transformations against purely soft-skills based transformations (such as culture change) that rarely stick in rough and tumble of real life companies, and against purely hard-skill based transformations (such as process re-engineering) which cause a lot of angst.

I show them a simple diagram such as the figure below to explain the progression of supply chains from a lower level of sophistication to a higher plane of profitability.

supply chain management

This starts a discussion on the various generations of SCM (supply chain management) and how they grow in sophistication over each succeeding generation. Those are the type of questions I can illustrate easily with case examples and real life stories. There will be a lot of these stories in my book UNCHAIN YOUR CORPORATION.

I make it more real to people by explaining to them that we help companies configure business-to-business networks in a much better manner than they have done in the past.

It used to be the case, or even still is now, that business-to-business networks are configured in an ad hoc manner on an as-needed basis.

In most cases, these relationships are never formalized and fine-tuned to an extent where companies would create robust collaborative working environments to help develop new products, or create pipeline of products, to optimize profitability or to help manage the cash-to-cash cycles in the most productive manner.

key values of unchain your cooperation

The difference between a well-functioning business-to-business network and suboptimal one is a nearly 5 times difference in profitability. Now that is something that will easily intrigue most CEOs and business school graduates.

When people hear that a good business-to-business network can increase profitability by up to 5 times by improving the cash-to-cash cycle, by improving the transactional optimization of profitability, by helping create new products faster and better, and by outsourcing better, most people are very interested to clear the confusion about how current generation supply chain management works.

For second part of this article – click here


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Notes:

  1. These ideas and concepts will be usually expressed by our thought leaders in multiple forums - conferences, speeches, books, reports, workshops, videos and training. The date shown above the article refers to the day when this website was last reformatted. This blog post or article may have been written anytime prior to that date. 
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chiefstaff

MORE INTERESTING READING
  • Can You Identify Risk in Your Supply Chain?

    My Views- Central to reducing the risk of being exposed to such challenges is having sight of who suppliers are and where they are located. When the Bangladesh Rana Plaza textile manufacturing complex collapsed in 2013, killing 1,130 workers, the scandal of poor health and safety standards on site was only part of the story. Many companies found themselves caught up in a story of supply chain negligence without even realizing that their products were made at Rana Plaza.

    Increasingly, organizations are making use of software platforms to map their supply chain hotspots. By assessing and analyzing data streams to better understand where assets are located, how many employees are working there and associated ‘risk score’ for regions in which the asset is located, supplier engagement or auditing efforts can be prioritized accordingly, helping to avoid the next disruption or risk exposure.

    • Do you mean the names? Logistics tends to mean more specific operations related to warehousing and transportation. Supply chain, a newer term, is about looking at the end to end processes – typically from raw materials to customer.

      • No- No, you explain the difference between logistics & Supply chain management and my view to show risk in Supply Chain. I hope now you get right meaning of above message.

  • While it is crucial for businesses to understand how they are sourcing materials and to manage to spend effectively, it turns out there is a lot of confusion around the procurement process, according to a recent Google survey conducted by AmeriQuest Business Services.

    There is no doubt in the statement of Mr. Sood He always makes his efforts to solve each and every problem of the supply chain “I make it more real to people by explaining to them that we help companies configure business-to-business networks in a much better manner than they have done in the past.”

    It’s really nice and meaningful. it’s a really cool blog. Linking is very useful thing.you have really helped lots of people who visit a blog and provide them useful information.

    • Within the supply chain if you’re not improving then you’re losing. After each project, they must have KPIs in place that allows them to track and measure where they’re winning and where they’re falling short. That way they know what areas need to be worked on the next time it comes around.

      These are just my thoughts.

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