For the past nine months, I have been doing a lot of webcasts and presentations talking to C-Level executives about their supply chain issues. When I highlight the fact that, for most companies, their supply chain activities consume anywhere from 12%-to-20% of their sales dollar, many executives are surprised. They have never viewed their supply chain as representing that large a portion of their company’s sales.
As part of my presentations, I ask the audience to stand up—or if done virtually, raise their hand—if their supply chain is critically important to the success of their company. Every single CEO stands up, raises their hand, and asserts that their supply chain is important.
Then I ask everyone to rate their supply chain on a five-point scale with five being an excellent supply chain, and a one being a “third world” or very weak supply chain. A three would represent an average supply chain. When I ask the audience to remain standing or keep their hands raised if their supply chains are a three or higher, fewer than 15% do so.
Think about that! Only 85% have even average supply chains!
Mediocre supply chains can cause operational and financial challenges, as companies deal with allocations of critical supplies or managing skyrocketing freight and accessorial charges.
Several companies are now asking these types of questions:
“What’s wrong with our supply chain?”
“How do we fix our supply chain issues?”
“Do we have the right people?”
But a company should first ask, “Are we managing our supply chain/transportation activities in a transactional or strategic manner?”
What’s the difference between transactional and strategic?
Transactional supply chains tend to be:
Strategic supply chains:
When C-Level executives tell me they are acting strategically, I respond directly: “Don’t tell me; show me!” Companies that are truly strategic about managing their supply chain activities can answer, “Yes” when I ask them if they have:
How would you and your company answer these questions? If the answer to all of the above is “No,” then you can either fix the issues or accept the fact that your supply chain will continue to have problems.
And that is why I conclude my message with the following points:
Last year when I served as a panelist at a global supply chain conference for C-Level executives, the moderator had us address this statement: “Companies don’t compete, supply chains compete.” A fellow panelist noted that with the extreme volatility in the transportation marketplace, your supply chain can be an asset or liability that can either help you beat your competitors or cause you to be beaten by those who have superior supply chains.
So don’t tell me how you hope your supply chain will magically get better. Show me that your company is committed to building a great supply chain.