Not much mind has ever been paid to having a great supply chain strategy, according to Supply Chain Digest's Dan Gilmore. As an example, he said Dr. Paul Dittman, a former industry executive, led a presentation recently at the Global Supply Chain Forum at the University of Tennessee based off his most recent book. Dittman said only 18 percent of major companies surveyed reported having a strategy in place. With supply chain management systems, data collection and other technology now widely available, organizations need to make sure they have a workable strategy to take advantage of new technological innovations.
Gilmore said while the 18 percent figure seemed low to him, he wondered how many of these companies' strategies would pass a review. The only passable strategies he has seen have been from companies embarking on major transformations, but even these have looked more like project plans.
A proper strategy should start with the customer, Dittman said. Customer needs must be predicted and properly met over time. The supply chain plan should closely mirror what the business itself is doing, Gilmore said, as the business and supply chain functions usually go hand-in-hand. Not every department will have a strategy, but he believes two things: The supply chain is different, as it accounts for many of the business costs, and generally serves the rest of the enterprise.
"With those two thoughts, it also seems to me that if a company as a whole has a formal, multi-year strategy document, then it makes perfect sense the supply chain have one that mirrors the corporate plan," Gilmore wrote. "The strategic document can be the key tool that helps keep the supply aligned with the business."
Stages of Forming a Strategy
The Hackett Group said adopting a supply chain strategy cannot happen immediately. Influence within the company and the value to the enterprise will grow as the strategy matures, but it must be carried out in stages starting with the first evolution of going from reactive to planned. This is where the supply chain management is built out so that it can go from short-term to long-term effectiveness. After this, it must move into alignment with the business strategies of the organization to help reduce costs and create efficiencies.
After this point, the supply chain can become more strategic. The group said this is where the procurement function becomes a full partner across the enterprise and helps the company capitalize on changes and innovations within the supply chain itself.
"Prominent here is procurement taking a proactive role in advising senior management on issues of strategic sourcing, including insourcing vs. outsourcing, onshoring vs. offshoring, and so on," the Hackett Group said.
Gilmore stated that the question of crafting a supply chain strategy should not wait, as Dittman wrote in his book that without a good one in place, a company will continuously get caught up in new trends and flavors of the month. Instead, they should be staying the course and find success where they can to avoid becoming "a ship without a rudder."