Top Supply Chains Have Top-Level Support

June 29, 2010
The supply chain function is now widely recognized as an important part of the business, and two-thirds of the companies in a recent poll have senior supply chain representation in the boardroom.

Alignment with corporate strategy and customer service were identified as the leading functional drivers of supply chain strategy. The most important supply chain performance drivers were found to be cost focus, customer lead-time and customer quality.

Cranfield School of Management and consulting firm Solving Efeso recently surveyed over 180 senior global supply chain professionals at some of the world's leading organizations.

According to Professor Richard Wilding from Cranfield's Centre for Logistics and Supply Chain Management, "It is clear that in some organizations, supply chain management is still perceived as a means of reducing cost; not as a means of achieving competitive advantage. Supply chain strategies should not be developed by individuals in isolation. Other departments, such as Marketing, IT and Finance, need to be held accountable, rather than just consulted, in the development and delivery of a firm's supply chain strategy. "

The report highlights that the supply chain strategy review process is highly cross-functional and in many cases a continuous process with regular monitoring and continuous adaptation, according to circumstances. Within organizations that do not have a continuous strategic planning and review process, customer service and cost were identified as the main triggers for a supply chain strategy review.

Alan Waller, visiting professor at Cranfield and vice president of supply chain innovation at Solving Efeso, adds, "Only 2% of respondents confirmed that their supply chain strategy implementation ran smoothly and on-time and on-budget. The three main causes of implementation failure are: company culture, lack of leadership and poor supply chain visibility. Barriers to strategic success are predominantly people-related, rather than due to technical barriers. "

The report concludes that implementations that are successful have top-level support and use vision-led, quantitative modelling and risk management techniques. Success was also found to be higher when Finance, Marketing and IT departments are actively involved and accountable in the strategy development process.