The Supply Chain Top 25: Raising the bar
September 01, 2012 - LM Editorial
Characteristics of Leaders
At Gartner, we’ve been researching and writing about the importance of being demand-driven since 2003. Since that time, we’ve published hundreds of pieces on the transformation to a demand-driven value network. We continue to research these concepts and advise companies as they recognize the value of becoming a demand-driven organization.
While every supply chain organization develops unique strategies and focuses on differentiated initiatives, we’ve found in our research that there are certain key characteristics that define the leaders. We have talked about some of these in past articles, and they remain important foundational elements to being demand-driven. But they are not easy to attain, and what differentiates the leaders in the Top 25 is that they are further along the journey than others. Demand-driven leaders go beyond best practices to build a foundation for growth and continual learning that constitutes an engine for superior competition.
These are among the key characteristics of the leaders we’ve observed:
Outside-in Focus. The concept of developing and maintaining an outside-in focus is almost synonymous with the phrase “demand driven.” The galvanizing principle here is to design the supply chain starting with the customer experience, and work back upstream through the supply chain. While the concept is relatively simple, its implementation is anything but. It requires a fundamental re-orientation not only in mindset, but in the way groups are measured and in the way networks and business processes are designed. An outside-in focus is not synonymous with a customer focus: companies can be—and often are—focused on the customer from the inside-out, as witnessed in service metrics such as on-time shipments or fill rates.
Embedded Innovation in Supply Chain. In our Demand Driven Value Network model, first published in 2004, the inclusion of a “product” circle to accompany supply and demand carried an explicit message about the importance of connecting traditional notions of supply chain with the new product development and launch process. The point is to ensure that new products are brought to market that satisfy the total customer experience profitably and effectively. Leaders understand the balance between operational excellence and innovation excellence (see Exhibit 2). Supply chain considerations must be taken into account early on in the new product development and launch process. And the fact that new products require different supply chain strategies than existing products must be taken into account in the supply chain design process.
Extended Supply Chains as Networks. Leaders take the notion of the organization as value chain one step further, designing and managing their supply chains as the extended networks of trading partners—customers’ customers, suppliers’ suppliers, logistics providers, contract manufacturers, third-party warehouses, etc. —that they really are. What they’re doing is orchestrating a set of activities across the network, aligning goals based on each player’s value proposition that will result in the desired outcome from that network—the profitable delivery of final product to a customer.
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