Get the complete supply chain picture

By William C Copacino -- Logistics Management, 11/1/1998

I have found that many companies have not thought comprehensively about the design of their supply chains. Often, their attempts to achieve excellence have been focused on perhaps one or two supply chain building blocks--and not, as they should be, on all of the dimensions required for world-class performance.

The framework below outlines the five key dimensions of supply chain management that are required to achieve superior performance. These areas must be addressed iteratively and, generally, in a hierarchical fashion. Consider which of these areas provide opportunities for you:

1. Strategy--specifically, the alignment of supply chain strategies with the overall business direction. Key decision points for managers here include:

c What is required to align the supply chain with the business strategy?

c What level of customer service must we provide to each customer segment to compete effectively?

c Which channels of distribution best meet our goals and our customers' needs?

2. Infrastructure, which affects cost-service performance and establishes the boundaries within which the supply chain must operate. Pertinent questions include:

c How must the physical network of plants and distribution be structured?

c Can we rationalize our current network?

c Can we use contract manufacturing or third-party logistics capabilities?

c What transportation services can best link together the network of facilities?

c Which activities should we outsource?

3. Process--the drive to achieve functional excellence and integration across all major processes. Managers must ask themselves the following:

c What are the core supply chain processes driving the business?

c How can we adapt best-in-class approaches to our core processes (e.g., manufacturing, integrated demand planning, procurement, cycle-time compression, dynamic deployment)?

c How can we build linkages with our suppliers and customers?

4. Organization--providing the critical success factors of cohesion, harmony, and integration across organization entities. Questions to consider include:

c What level of cross-functional integration is required to manage core processes effectively?

c How can we leverage cross-company skills and abilities?

c What performance-measurement and reporting structure can best help us achieve our objectives?

5. Technology, which empowers the supply chain to operate on a new level of performance and is creating clear competitive advantages for those companies able to harness it. Companies should address the following points:

* Do our IT platform and core applications software support world-class supply chain management?

* Where will advanced decision-support capabilities have the greatest impact on business performance?

* What data are required to manage the core business processes outlined above?

* How can we capitalize on advanced communications (e.g., intranets and the Internet) in managing the supply chain?

* How can we leverage enhanced visibility of customer demand and other key operating parameters?

William C. Copacino is managing partner of Andersen Consulting's Strategic Services Practice for the Americas. A frequent speaker before business and professional groups, Mr. Copacino has a number of publications to his credit, including the book Supply Chain Management: The Basics and Beyond (The St. Lucie Press, 1997). He is based in Andersen Consulting's Boston office, 100 William St., Wellesley, MA 02181. Phone (617) 454-4480.