A New Lens for Supply Chain Roadmaps
Enterprise-wide supply chain transformations begin with a clear articulation of business objectives that the program is expected to achieve. They expand into an analysis of revenue-accruing & cost-optimizing functions, and result in the identification of capabilities that the organization aspires to develop or enhance. Distillation of such capabilities leads to the establishment of the right solution set (package or custom solution) through an evaluation of alternatives. Finally, a phased roadmap is laid out that sequences the timelines and roll-out of identified solutions. After spending nearly a year to narrow down the roadmap and solution set, the execution phase begins with the actual implementation and roll-out of the identified solutions in a phased manner. This structured approach has been followed for a long time with very good results. And when results turn out not so good, 'execution' gets blamed.
But isn't execution a very wide brushstroke? Was everything prior to execution correct? Are poor results only attributable to the usual suspects such as 'weak change control board', 'less than ideal program management', 'schedule/cost overruns', 'poor definition of requirements' etc?
I have often wondered whether the seeds to less-impactful programs (I prefer not to use the word 'failed programs' because successful programs can also be less impactful) are sown prior to execution when organizations do not have the right cross-functional team to assess current state, define future capabilities and perform gap analysis. Even though we acknowledge that today's supply chains are more integrated than ever, there is a tendency to view supply chain problems primarily through the prism of organizational functions. Interconnectedness gets missed when such problems are analyzed within organizational silos and not from an end to end perspective. Compounding the issue is the sudden realization within an organization that it has spent nearly a year in 'discussions', and that it is now time for 'action'. The result is usually a supply chain roadmap that is more functional than operational, and aligned to 'getting quick wins' and 'plucking low hanging fruit'.
Let us take an initiative such as Inventory Optimization as an example. Somewhere along the year-long journey of cataloging requirements and assessing gaps, inventory optimization takes a SKU rationalization flavor and the goal turns to the avoidance of SKU proliferation. The resulting solution set focuses on master data management, demand planning and replenishment management systems, and the sequence in which they must be implemented. The low hanging fruit has been plucked and everyone is happy.
But what has been lost is an opportunity to look at inventory optimization through the lens of revenue generation and cost optimization. A cross-functional team would have correctly diagnosed that SKU rationalization requires both SKU reduction (to streamline supply chain costs) and SKU addition (to fulfill untapped demand). It would have institutionalized online strategies to capture customer preferences to tailor revenue-enhancing online offerings. It would have evaluated Analytics to derive insight on future home-runs. It would have changed warehouse operations to create an agile value-added services organization. And once it had a handle on the final SKU list along with its demand, it would have negotiated much better price agreements with LTL and parcel carriers.
What you now have is a broader solution set to address the same problem encompassing Master Data Management, Demand Planning, Replenishment Management, Web Analytics, Order Capture, Warehouse Management Systems, and Transportation Management Systems. You can also be assured that the resulting phased roadmap will be more comprehensive than the one defined earlier.
Enterprise transformations are a multi-year exercise in the making. While it is perfectly understandable to be itching for the actual implementation to begin after months of meetings and conferences, it may be equally worthwhile to use the right lens early in the process to validate that supply chain roadmaps remain multi-disciplinary. After all, execution is not the only culprit in less-impactful supply chain transformations.