Focus on customers. While this outside-looking-in approach might be disruptive to companies that are more decentralized and siloed by nature, organizing a supply chain around end goals should make the company more flexible and better equipped to handle future challenges, and more profitable in the long run.
If customers value reliability of delivery more than specific end products or solutions, and companies are not aware of those desires, they are not serving the customer optimally, nor are they utilizing their own resources most effectively. Clear communication across both customer and internal channels is just as important as the execution of services. Once customers’ objectives are clearer and aligned across the company, key supply chain decisions become easier.
Companies do need to consider that not all customers have the same supply chain performance requirements. They can differ significantly even within the same industry, according to the supply chain sophistication of the customer. Not meeting individual requirements can mean losing the customer, or losing top-supplier status.
Aligning verticals and horizontal layers. Leading companies in this economy are addressing the need to structure multi-vertical improvement programs – in which customer requirements and trade-off tiebreakers need to be fleshed out through different verticals of an organization, such as manufacturing, logistics, fulfillment, procurement and customer operations. Each vertical must work toward the ultimate value proposition for the end customer, which sometimes will play against a vertical’s traditional natural inclination. In addition, opportunities for increased alignment with the marketplace need to be guaranteed from a horizontal perspective; in other words, customer requirements must be guaranteed from the strategic layer down to execution through all medium- and short-term integrated planning processes. A company that dynamically aligns its supply chain horizontally and vertically achieves higher market accomplishments.
The methods by which a company goes about this integration, however, may not necessarily be seamless. Various departments of an organization have inherently different value offerings and internal cultures that may not mix well outside of their domain, especially in cross-border situations. Companies must implement changes carefully and take a comprehensive approach when it comes to market strategy, capital investments, and people and organizational capabilities.
Beyond the purely technical side of this internal integration, individual ambitions of managers or political power plays yield influence within the organization. It is therefore a key requirement for supply chain executives to act as internal diplomats, working with the involved executives on setting common goals.
Once companies have engaged all parties internally across functional responsibilities, there exists great opportunity for potential earnings before interest, taxes, depreciation and amortization savings that they may not have realized previously. Organizing in this way allows companies to aggregate shared services and operational infrastructure that might have been overlooked, leading to greater efficiency and, ultimately, margin enhancement.
While the customer-centric philosophy behind global supply chain synchronization and its eventual outcomes should be aligned to companies’ bottom lines, getting to the desired end result is not an easy task. In 2014 companies will feel pressure to fully adapt to this new paradigm. One area gaining broader attention is forecast enhancements along the chain. Several companies might use improvements in – and related benefits from – demand-sensing and E2E collaboration technologies to influence the C-suite agenda.