Executive Briefings

Redefining Supply Chain Management for Today's Reality

Managing the multiple relationships in today's supply chains requires a new level of cross-functional business processes, says Doug Lambert, director of the Global Supply Chain Forum at Ohio State. He identifies eight critical processes and explains methods for implementing them.

Supply chain management today needs to be horizontal, but most organizations have a vertical model, says Lambert, Mason chair in transportation and logistics and director of the Global Supply Chain Forum at Ohio State University. Moreover, performance goals in each vertical often conflict with one another and make it harder to reach overall corporate goals, he says.

Through its research with corporate members, the Global Supply Chain Forum has identified eight cross-functional business processes that, if followed, would allow all segments of the supply chain to work as a team.

Anchoring these eight processes are customer relationship management and supplier relationship management, says Lambert. Within each, customers and suppliers are segmented according to how important they are to corporate success. The most crucial are assigned a cross-functional team and the less important are serviced by traditional sales or purchasing agents.  Cross-functional teams assigned to the most important customers and suppliers would negotiate mutually beneficial cost and service agreements, Lambert says.

The other six cross-functional processes, which would be coordinated through the CRM/SRM linkage, are: customer service management, demand management, order fulfillment, manufacturing flow management, product development and commercialization/returns management.

“Each of these processes has a strategic component, where the structure is put in place, and an operational component with a set of sub-processes, where the actual implementation takes place,” Lambert says. With CRM, for example, the process owner should be the CEO and strategic team members should be vice presidents of the related business functions. On the operations side, a sales manager would act as account manager, with team members from logistics, purchasing and finance.

Having people from different functions working together on a team creates greater understanding, Lambert says. “For example, if the vice president of finance took ownership of the manufacturing flow process, he would see that revenue opportunities were being lost because of insufficient manufacturing capacity and would become more willing to allocate resources to increase capacity.”

In related research, the Forum worked with member companies to develop an implementation process. This involves bringing customers and suppliers together for a few days to define the type of partnership they want to have, which will drive the level of interaction. These partners share their expectations and set joint objectives. “We have found that disappointment in relationships are often due to one or both parties having unrealistic expectations going in, or maybe they just didn’t clearly explain what they expect,” says Lambert. “As a result, they didn’t develop the right plan and didn’t get the results they wanted. This process gets both sides to clearly articulate what they expect from one another.”

To view the video in its entirety, click here

Supply chain management today needs to be horizontal, but most organizations have a vertical model, says Lambert, Mason chair in transportation and logistics and director of the Global Supply Chain Forum at Ohio State University. Moreover, performance goals in each vertical often conflict with one another and make it harder to reach overall corporate goals, he says.

Through its research with corporate members, the Global Supply Chain Forum has identified eight cross-functional business processes that, if followed, would allow all segments of the supply chain to work as a team.

Anchoring these eight processes are customer relationship management and supplier relationship management, says Lambert. Within each, customers and suppliers are segmented according to how important they are to corporate success. The most crucial are assigned a cross-functional team and the less important are serviced by traditional sales or purchasing agents.  Cross-functional teams assigned to the most important customers and suppliers would negotiate mutually beneficial cost and service agreements, Lambert says.

The other six cross-functional processes, which would be coordinated through the CRM/SRM linkage, are: customer service management, demand management, order fulfillment, manufacturing flow management, product development and commercialization/returns management.

“Each of these processes has a strategic component, where the structure is put in place, and an operational component with a set of sub-processes, where the actual implementation takes place,” Lambert says. With CRM, for example, the process owner should be the CEO and strategic team members should be vice presidents of the related business functions. On the operations side, a sales manager would act as account manager, with team members from logistics, purchasing and finance.

Having people from different functions working together on a team creates greater understanding, Lambert says. “For example, if the vice president of finance took ownership of the manufacturing flow process, he would see that revenue opportunities were being lost because of insufficient manufacturing capacity and would become more willing to allocate resources to increase capacity.”

In related research, the Forum worked with member companies to develop an implementation process. This involves bringing customers and suppliers together for a few days to define the type of partnership they want to have, which will drive the level of interaction. These partners share their expectations and set joint objectives. “We have found that disappointment in relationships are often due to one or both parties having unrealistic expectations going in, or maybe they just didn’t clearly explain what they expect,” says Lambert. “As a result, they didn’t develop the right plan and didn’t get the results they wanted. This process gets both sides to clearly articulate what they expect from one another.”

To view the video in its entirety, click here