Last month we examined the connection between supply chain mastery and marketplace performance. In that column, we explained how recent Accenture research demonstrated that supply chain excellence is being rewarded—that supply chain leaders in areas such as inventory returns and cost of goods sold (COGS) are likely to also lead their peers in market-cap compound average growth rate (CAGR).

That conversation, however, stopped short of explaining how companies actually become supply chain leaders. Naturally, there is no such thing as a supply chain leadership template. Yet our research clearly showed that, when companies invest in supply chain improvement initiatives, a critical step is often missing. That step is the development of an integrated operating model that links detailed process designs to a company's broad corporate strategy.

Integrated operating models basically are bridges that connect operations with a company's strategic objectives. Their mission is to help the company balance supply and demand, and maximize marketplace performance by articulating the role of supply chain management in areas such as:

• Channel relationships, channel and network strategies, product flow, and degree of integration with channel partners;
• Inventory and service approaches across the extended supply chain;
• Linkages with pricing and product/customer development; and
• Collaborative relationships with third parties and other companies with complementary missions.

Nokia is one example of a company that has developed an effective integrated operating model. One of Nokia's core strategies is to use exceptionally rapid new-product introductions that reflect consumers' fast-changing cell phone preferences to ensure a marketplace advantage. The company's integrated operating model helps make this happen by utilizing supply chain strategies that emphasize rapid-response manufacturing, quick-ship logistics, and a "global supply web" that links Nokia's plants and suppliers. The model also supports vendor-managed inventory (VMI) and collaborative planning. Moreover, Nokia drives process excellence with market-driven processes that begin with the customer and extend back through internal functions. These capabilities have contributed to 20-percent margins, a 35-percent market share, and an average cost to make and sell cellular phones that is 18 percent lower than that of its rivals.

The research also demonstrated that transforming supply chain operations can have a startling impact on a company's market-cap growth. Here are 10 behaviors that often characterize companies that gain the most from supply chain transformation programs:

1. They focus on a comprehensive business case detailing how operations will help boost the company's competitive advantage—for example, with financial models of total supply chain costs for major channels and product categories.
2. They recognize the importance of individualized channel relationships. And they follow through with unambiguous channel, network, and outsourcing strategies; well-diagrammed product flows; and specific ideas for integrating operations with channel partners.
3. They relentlessly shorten their supply chains to reduce costs and enhance profits An example of a successful practitioner in this area is the European retailer Zara, which is able to bring 11,000 new fashions to market each year, often with just a three-week lead time.
4. They develop methods of linking product-pricing and customer-development decisions to product life-cycle considerations and available supply These activities help define how targeted customers and channels can be integrated into the overall operating model.
5. They formulate clear supply and service strategies, including the setting of channel inventory- and service-level definitions across the supply chain, and network stock positioning of materials, parts, and finished products.
6. They hold discussions and negotiations with senior executives and functional groups to define how best to work together in an integrated operating model environment.
7. They flawlessly execute supply chain capabilities internally and with external partners Dell, for example, has eliminated inventory echelons and reduced supply chain costs by investing in close partnerships with its suppliers.
8. They incorporate strategies for leveraging leading practices and technologies These investments support key elements of their operating models. Taiwan Semiconductor Manufacturing Co. (TSMC), for example, has Web-enabled linkages with its suppliers and customers. This minimizes supply chain surprises and maximizes customer value.
9. They apply metrics that focus on improving the operating model rather than individual functional areas They understand the need for operating data that span the entire enterprise, so they position metrics management at the corporate level.
10. They continuously modify strategies and operating models in anticipation of new market conditions Seven-Eleven Japan makes as many as eight store deliveries per day to match shifting consumer desires. Those deliveries are coupled with new product and service offerings built on efficient supply chain models.

These behaviors ought to be the strategic cornerstones of virtually any company's supply chain transformation agenda. Of course, no two companies will follow an identical transition path. But the ones that succeed most completely are certain to have constructed operating models that support short, flexible supply chains that are fundamentally collaborative and are tightly aligned with their business missions.