Putting Supply Chain Back Into the Business: A Nuanced and Critically Important Argument

- January 2, 2014 6:37 AM
Categories: Commentary, Supply Chain Management | Tags: ,

Kudos to Lora Cecere, who in the Forbes article Don’t Make Supply Chain a Dirty Word! makes a truly nuanced argument for the need to break down supply chain walls by putting the function into the business between functions. It’s as simple and thought-out an argument as essayists such as Christopher Hitchens or George Orwell were both famous for making on topics of more political and personal importance.

Yes, it’s that good and distilled. And you should read it. Lora frames her argument that when it comes to the supply chain, most companies are not performing well and that as evidence to this effect, “only consumer packaged goods and consumer electronics companies have improved operating margin over the period of 2000-2012.”

The facts she shares speak for themselves. These include the notion that  “only 1% of the Fortune 500 companies have a manager that is focusing on end-to-end opportunities.” Here’s another: “While companies want to reduce costs and improve margin, only 24% of supply chain executives can easily get to cost information to drive the best answers for profitability.” Or take a classic retail challenge: trade promotion. Here, “companies spend 18-31% of revenue on trade promotions, but only 59% of trade promotions are ever evaluated, and most are based on history not based on current costs to execute the promotion.”

I sincerely hope Lora’s few hundred words resonate with at least a handful of business executives who might not otherwise hear the argument for a new type of emphasis on supply chain management and procurement in the business, across functions rather than in operations, purchasing, and other silos. Alas, solving for this need is about as complicated as business activities can get. But if some of us can, in Lora’s words, “redefine the term supply chain to fulfill its original goal of defining processes from the customer’s customer to the supplier’s supplier” we will no doubt not just change companies, but change whole industries. It can be done!

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