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Creating Innovation in Supply Chain Management

By Philip Franz September 19, 2018 by Phil Franz

Current State PerspectiveINNOVATION

Supply Chain Management is alive and well in 2018.  Large and small enterprises that only a few years ago that did not have a formal Supply Chain Management organization have one today.  Why?  Effectively managing your supply chain has become increasingly important as customers expect better and faster service at a lower price. Meeting or exceeding this expectation is often the difference between retaining a customer or losing them to a competitor that can meet or exceed their expectations.  Example, Amazon vs. Any Major Big Box Retailer.

Faster and cheaper supply chain service coupled with anextended global supply chain makes the challenge of meeting and exceeding customer expectation a daunting task for all companies.

Strategic Goal Obtainment

Many companies we speak to today believe they have a multiple supply chain initiative that they believe will increase customer service and decrease cost. Often times, these initiatives optimize a component of the supply chain but add additional time cost to other components, thereby not improving supply chain efficiency.  How does this happen?    I have written multiple Reveal blogs describing supply chain strategy development or lack of development in many companies.  Without an integrated supply chain business and technology strategy, companies launch improvement projects that they hope will improve their supply chain performance.  Many of these projects follow a “launch and pray” approach that most time misses the target.  Developing strategic goals with metrics first and then creating initiatives and projects which are enablers to the strategic goals often have a far greater chance of creating real supply chain improvements.

Integration vs. Innovation

I became involved in my first Supply Chain Integration initiative in 1989.  With the dawn of the ERP solutions such as SAP and Oracle, many supply chain management professionals believed that system integration would naturally lead to supply chain functional integration.  Unfortunately, supply chain business users designed and implemented their ERP solutions based upon individual business functions needs and did not put emphasis on integrating the supply chain business functions.  ERP functions and Master Data were not aligned around a common business goal.  The net result is that system integration did not naturally lead to business integration in the supply chain. Business integration only is achieved if it is done in a business-centric purposeful manner.

At Reveal we understand the value of innovation in the supply chain, but we also understand that supply chain integration is the precursor to supply chain innovation in most companies. Without supply chain integration, new innovations will tend to follow the traditional launch project first approach and optimize only a few components of the supply chain.  Starting with integration and following with innovation is the roadmap that most companies need to follow.  Innovation done improperly tends to be an expensive experiment.

Future State Perspective – New Supply Chain Management Professionals

Many of us have come to Supply Chain Management positions from other business disciplines and outside business discipline and careers.  Most of us were not educated in formal supply chain management disciplines and we have learned supply chain management on the job.  Many of our clients at all management levels within their Supply Chain organization have come from Sales, Marketing, Finance, and Operations.

Our clients are realizing that their new Supply Chain employees need to come from the best university Supply Chain Management programs.  They are realizing that they cannot properly and quickly train people based on their companies’ specific needs unless they have a supply chain management education as a foundation.  Supply Chain Management student today are schooled in best practices, data analysis, and innovation.  These student/new employees have the foundational understanding that allows organizations to leverage their education to create strategic plans, manage supply chain integration and create innovative solutions for the future.  The future of Supply Chain Management is bright as new Supply Chain Management professionals enter the workplace and begin to manage the supply chain in new and innovative ways.

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