The Pressure to Perform
March 01, 2010 - SCMR Editorial
Business today is unrelenting. Just as you've finished up a dynamite promotion campaign or launched a superefficient distribution center, the market has a tendency of saying, “Not bad, but what have you done for me lately?” That's cold!
It's exactly because of that competitive reality that companies today need to constantly fine tune and update every aspect of their performance. Naturally, we're particularly concerned about that part of the business called supply chain management.
One thing we know for certain about SCM performance—there is a definite payback in consistently excelling. Most of us likely could have figured that out intuitively. But now the researchers at Michigan State University have the data to back up the intuition. In studying the financials of the top supply chain companies vs. comparable competitors, the MSU research team discovered some eye-opening differences between the two groups. Specifically, the top SCM companies overall had 50 percent higher net margins, 20 percent lower operating costs, and 12 percent lower average inventories. And that was just the beginning.
Looking for specific ways to excel in supply chain management while at the same time boosting your business? Supply management executive Justin Reaume of Magna Electronics offers six procurement actions companies can take to achieve those dual objectives. The great thing about these suggested initiatives is that they are proven and practical, based on the author's real-world experience as a supply chain practitioner.
It is not enough, by the way, that your own supply chain organization run at peak performance. You need your key suppliers operating at the top of their game as well. But how do you know if your suppliers are operating on all eight cylinders? And if they're not, how do you bring them up to speed? The answers, writes Robert Trent, lie in a comprehensive supplier scorecard. The Lehigh University educator details the essential characteristics of a supplier scorecard that can lead directly to enhanced performance.
Importantly, you have to accomplish all of the performance-enhancing activities in a safe and secure supply chain environment. That's where our interview with Gary Lynch of Marsh Inc., should help. The risk management expert and author of Single Point of Failure tells how to make risk management a priority with your executive management—and then how to go about building a risk management program that helps assure supply chain continuity.
So while the pressure to perform doesn't promise to let up anytime soon, continued supply chain improvement is not an impossible task. We hope that the collective insights from our March/April issue will help you pull it off.
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