Ten Timeless Truths of Supply Chain
1. Supply chain is physical – Although this is not absolutely unique among business functions (R&D, for example, deals in materials), few businesspeople really grasp the possibilities and limits of matter. Marketing, sales, finance and IT tend to assume away things like melting points, cubic volumes, mold-flow rates and so on. Supply chain professionals must own the problem of making physical things happen, in volume, and at costs low enough to make profit.
2. Supply chain is quantitative – This is certainly true for finance and engineering, but no one else in business is as comfortable with serious analytical methods as supply chain. Even more challenging is quantitative analysis in supply chain, which often requires the creation of completely new algorithms based on squirrely data. Plus, the proof is always borne out in reality. There is no hiding from your mistakes.
3. Supply chain is the ultimate cross-functional role – For better or worse, supply chain is defined by its accountability for the flow of materials, money and time through the business. This means working with engineering on inbound materials, with marketing on product launch, with sales on order fulfilment, and with finance on scorekeeping for everything. The best among us are also adept at working with both suppliers and customers.
4. “S&OP is a journey” – This truism is so familiar that it’s nearly a cliché. Maintaining a credible basis for reconciling conflicts between sales guys promising the world, and finance guys clamping down on budgets, is indeed a journey. But it’s one with no end, so just keep going.
5. Perfection equals silence – It is an unfortunate reality of supply chain that the work tends to be noticed only when something goes wrong. Sales is quick to take credit for closing the big deal. Engineering and R&D get kudos for inventions and patents. Supply chain, meanwhile, gets a cursory thanks and tighter goals next time. Missing a shipment, being short on parts, or suffering a quality breakdown, however, makes big news. Excellence is a private affair.
6. Supply chain owns sustainability – Everyone likes to talk about social and environmental responsibility, and CSR reporting gets pretty glossy, but almost all real impact rolls straight up into supply chain. We buy the raw materials, turn on the big machines, burn the fuel, employ the labor and dispatch the trucks. It is innate in our culture to seek efficiency, so we’ve been thinking sustainably since long before it became fashionable.
7. We hate the name – “Supply chain” has a decidedly ho-hum ring to it. For years we’ve debated terminology with minimal success. Alternatives tend to be too broad (value chain), too clever (demand chain), or insufficiently descriptive (operations). Plus, since everyone wants something snazzier, we end up with dozens of different formal titles intended to mean Chief Supply Chain Officer. We crave the clarity and gravitas of titles like “CFO.”
8. Matrix management is a must – As an inherently cross-functional role, supply chain does not lend itself to command and control. Dotted-line reporting, center of excellence structures and other organizational design quirks are a fact of life in supply chain. This is probably why communication and influence are the top skill required for the job.
9. We need more women in supply chain – At entry level, women comprise a third of all supply chain practitioners. This thins out to around 5% at the C-level. For a function that demands so much collaboration, lateral thinking and practicality it is a shame how little diversity we have at the top. With luck, this truth will not be timeless.
10. Supply chain is never boring – This is a bit of semantic trickery, but I say it because true supply chain, which involves dynamic adjustment, cannot be repetitive. The paradox of supply chain is that we constantly try to remove variability even as we embrace change. If supply chain becomes boring it means you’ve found something – a process, task, job, or just about anything else – that can be automated, and it’s time to move on. The learning should never stop.