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Wednesday, August 27, 2014

The Requirements of Successful Supply Chain Operations [Book]

A company’s supply chain strategy must align with its business strategy as a holistic entity to maximize financial performance. It has to fully consider customer needs and be capable of rapidly adapting to market volatility and supply disruptions, too, e.g., having redundant manufacturing at different locations. Organizations must also be capable of developing and hiring professionals with information-handling skills to meet today’s supply chain demands.

These points were made by authors Shoshanah Cohen, director of the Global Supply Chain Forum at Stanford University, and Joseph Roussel of PricewaterhouseCoopers, in the second edition of their book Strategic Supply Chain Management (McGraw-Hill, 336 pp.).

The authors discuss five attributes that successful companies have when managing supply chains. These are strategy, organization, process, collaboration, and performance measurement. Roussel explains that successful companies look at these attributes holistically and develop them concurrently; in other words, as they develop one they understand the impact it has on the others.

Roussel also points out that successful supply chain management (SCM) addresses issues that are integral to performance and returns. One of these is “customer in,” which focuses on customer needs and how these can be applied to supply chain operations.

This promotes ongoing dialogue between departments such as procurement and sales and marketing, which aligns stakeholder interests.

Successful companies are also resilient and flexible in the management of supply chains. They invest more in SCM than average companies, Cohen and Roussel state, including development of redundant manufacturing facilities. This way, if it becomes necessary to shift manufacturing to a different location for whatever reason (including a natural disaster), there is little potential for disruption and customer commitments will be maintained.

Recruiting supply chain talent is critical for successful companies, since for the past decade the skill set is shifting from a focus on execution (e.g., sourcing, delivery, distribution) to “information activities,” Roussel says. These include demand forecasting, analytical abilities, risk and performance management, documenting and managing processes, and relationship-based activities.

These abilities require different skill sets that are difficult for average companies to develop. Average companies also get crowded out in the search for this type of talent. The migration of portfolio skills puts pressure on many organizations, Roussel points out. If an organization does not already excel in these areas, why would someone with such skills want to join it?

As the business of SCM becomes more critical, and failure to optimize operations means companies are passing up significant amounts of revenue, books such as Strategic Supply Chain Management will become more valuable for procurement and supply professionals, as well as for chief procurement officers and others who are looking to establish or revitalize best practices in supply chain operations.

The book lists for $60 but is available on Amazon, for $40.44 and as a Kindle download for $34.49.

 

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