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9 New Year’s Resolutions for Supply Chain Professionals

After a great holiday break and a fully packed schedule of social activities where we discussed the latest supply chain topics and trends, we wanted to share our list of New Year’s resolutions that every supply chain professional should have on his or her list for 2011.

  1. Start using financial information in your supply chain:
  2. Supply chain processes, specifically sales and operations planning (S&OP), are increasingly becoming powerful mechanisms to help drive financial results in organizations. We’re not talking about tracking factory overtime costs or expedited freight costs, which are certainly important to understand, but rather the complete financial performance of the business. Supply chains and S&OP processes are faced with so many tradeoff decisions, so why not start using financial information to make those decisions?

  3. Stop using Excel as a supply chain application:
  4. This resolution is one that’s probably been on everyone’s list for years — and one that needs very little explanation. Make this the year you get your core supply chain processes off Excel and into a proper tool. Excel absolutely has its place in the supply chain, but it can’t be the backbone of the business. Technology has come a long way over the past few years; why not use it?

  5. Continue developing the supply chain skills of your teams:
  6. We’ve found that leading supply chain organizations focus a lot of time and resources on skill development. This is not the bland and boring system training that gets squeezed in right before a go-live or the optional training class on how to use some tool. The skill development we are referring to here should be called “learning.” Some roles and positions in supply chains are certainly “administrative” in nature, but many are “thinking” roles and require business skills. Call me crazy, but if I ever require brain surgery, I’d like to know my doctor is current on the latest capabilities and industry trends, and has even brushed up on some of the fundamentals. Wouldn’t you?

  7. Stop using a one-size-fits-all model for your supply chain:
  8. We see it all the time, and it simply no longer works, so this is the year to finally fix it. Supply chain processes that treat all products, customers, channels, or geographies the same are inherently just average and sub-optimized. Supply chains must be segmented — as an example, to manage electronic parts, cables, or accessories differently than how you would for a laptop, server, or router. Unless your supply chain is incredibly flexible and responsive, a “fit for purpose” model is more appropriate — and after last month’s posting, didn’t everyone go out and contact Craig’s custom suit tailor in Singapore? Really, he does good work. (See: Finding the Right Production Shore Is Tricky.)

  9. Shake, not break, your supplier’s hand:
  10. Many a high-tech OEM has cut its cost basis by a fairly ruthless approach to supplier selection and negotiation: “You won’t lower your prices? Fine, you’re a commodity; I’ll find it somewhere else.” Yet as original design manufacturers, contract manufacturers, third-party logistics services providers, and Tier 1 suppliers move beyond manufacturing and into design and even services, price shouldn’t be the only object of negotiations. There’s a fair amount of security in supply, quality, and even value-added capabilities out there for the taking for those willing to move beyond price and start looking for opportunities to work with a more stable and collaborative pool of suppliers across multiple aspects of the supply chain.

  11. Remember that links in a chain are oval, not linear:
  12. In other words, what goes around comes around. How I design influences how I sell, deliver, use, recover, and repair. As high-tech companies move beyond selling the laptop, or the router, or the set-top box to selling bundled solutions of hardware, software, and services, the feedback from the field into design and integration becomes even more important. As solution selling makes the servicing of some high-tech offerings analogous to complex “integration” industries like aerospace and industrial equipment, skills such as knowing the “as maintained” bill of material for a customer asset will become increasingly important.

  13. Bring home baked, not store-bought, cookies to your holiday dinner:
  14. First, because no family should have to bear the slings and arrows of store-bought cookies and second because we wanted to make sure you were still paying attention.

  15. Understand the time and place for outsourcing:
  16. Outsourcing is about so much more than saving money. Outsourcing is about finding the right opportunities to obtain better supply chain capabilities. Those capabilities may not be in the areas that we usually look to outsource. You might be a terrific block-and-tackle supply chain organization but have horrid forecast accuracy, yet look to outsource logistics while retaining planning. Given the growing variety in supply chain business process outsourcing offerings in the marketplace, supply chain organizations have better information than they ever had for evaluating when outsourcing is the right (and wrong) decision.

  17. Use your supply chain to expand your business, not just move stuff:
  18. Major high-tech companies have developed extensive supply chain networks and relationships across the globe. From sourcing, to transportation, to site construction, major high-tech firms have likely seen it and seen it done many times over. Yet at the same time, a significant amount of growth comes from new, smaller, and innovative companies. These companies have terrific products and software, but not complex supply chain organizations. This is but one opportunity for mature high-tech companies to use their supply chains as revenue centers, in this case by renting supply chain capacity and supporting capabilities to younger companies. Companies have invested significantly in their supply chains. Shouldn’t they get something back?

Happy 2011 to everyone and may it be filled with products getting to the right place at the right time (not to mention the right quantity — Steve ).

— Craig and Steve

14 comments on “9 New Year’s Resolutions for Supply Chain Professionals

  1. Ariella
    January 19, 2011

    What's you particular beef with Excel?  You don't name anything else here that you recommend to take its place.  What do you recommend and why?

  2. Ashu001
    January 19, 2011

    Craig and Steve,

    Awesome work on this report.

    I have saved it and will be reading it again and again whenever I need a refresher course in Supply Chain management[Have also printed a copy for my Team].

    The best parts of the report which I liked was the

    Stop using Excel as a supply chain application

    & Use your supply chain to expand your business, not just move stuff

    We Supply chain execs really have to stop using Excel as aggressively as we do today.Its just not worth the problems it creates in the long run.

    As for the second point-Business expansion today is key but very,very difficult.But more often than not we have pointers within our organizations itself on what can and can't be done(to expand),these lie in many areas but especially in all the Supply Chain data.

    Great stuff!!

    Keep up the good work.

    Ashish.



     

  3. Barbara Jorgensen
    January 19, 2011

    Hi Ariella,

    I don't want to step on Craig and Steve's toes, but I do know there are tools out there that are more flexible and user-friendly than Excel. Arrow Electronics has a bill-of-materials (BOM) tool that can be customized so the data fields include your part numbers, contract prices, cross references, and can be set to flag you with problems or parts shortages or delays…it has a bunch of supply chain bells and whistles that Excel doesn't have. It can be shared as well, but rather than uploading or downloading a spreadsheet it can be done in one spot and then updated for everyone. (I actually know more about this stuff than excel which I never mastered).

    There are also some Web-based solutions that are easier to use than Excel, again, for electronics supply chain purposes. I would imagine as a basic spreadsheet Excel still rocks, but for electronics BOMs, there are better solutions for their specific purposes.

  4. Ariella
    January 19, 2011

    Thanks, Barbara.

  5. Steve Puricelli
    January 19, 2011

    Ariella:

    Thanks for the reply and great question.  I hate to give you the consulting “it depends” answer, but candidly, it really does depend.  It depends on a company's industry, capability requirements, etc.  Over the past five or so years, a lot of interesting solutions have emerged which operate like web-based versions of Excel – with a lot more horespower.

    This blog is not the proper format to debate the merits of these different supply chain solutions (as each one has its fit in the market), but I will say there are a lot of solutions available that can help companies get off Excel.

    Thanks,

    Steve

  6. Steve Puricelli
    January 19, 2011

    Ashish:

    Thanks for your comments!

    Steve

  7. Craig Gottlieb
    January 19, 2011

    Thanks for the great conversation everyone!  I would simply add that I have fond memories of managing daily requirements planning for a multi-billion dollar consumer electronics company in Excel.  I'm also glad that I don't have to do it anymore.  It's a terrific tool and will always have a place in supporting thought experiments and helping move from proof of concept to actual system implementation.  Indeed, the issue perhaps isn't even with Excel but rather that having folks manage key operational and supply chain data locally risks all kinds of data quality and work flow challenges that could take up an entirely new blog post.

  8. Barbara Jorgensen
    January 19, 2011

    Can we debate the merits of store-bought vs. homes baked cookies?

    (see, I was paying attention)

    🙂

     

  9. Mydesign
    January 20, 2011

         Dear Craig and steve, the nine points you mentioned through this blog is very much valid, especially in related to supply chain management. I agree that there are many open source and free tools are available in market and over web, which can use in lue of Excel. But still many of the supply chain professionals are much relayed on Excel than any other tools, why?

        In my opinion nobody wants to think or experience the things in a different way, everybody wants to think and do their work in a tradition way. Even though they are aware about the other tools and they are more reliable, still they are dependable on Excel. This is because of the confidence they had build over years with MS and Excel. More over I don’t think it’s so easy for them to switch immediate; it may take months and even years for a rethinking.

  10. hwong
    January 21, 2011

    While I agree that all of the above 9 resolutions are clearly important for the success, the singlehandedly most critical piece has to be Change Management. Most of the time the hardest problem to overcome is people. If employees are not aligned with the right incentives, they are not willing to change. It's only common for most of us to be content with the way things are because it is much easier to do. SO in order to accomplish the above, management needs to think about sending out the right message and right motivation for employees to do all the great things that will improve the financial bottomline

  11. Ms. Daisy
    January 22, 2011

    Hwong:

    Yes, there is need for organizational change to get the type of result that Craig and Steve discussed.

    Resoultions #3 and #8 empphasizes these changes that needs to occur both wiithin the organizations and in the organization's relationships with all its external audiences. To make change happen, skill development has to be the focus of the oragnization. Each new employees' skill and experience level must be matched with the supervisor's directive and supportive behaviors to model the change desired. 

    You are right about the need for the management to get it, and to send out the right messages, but those by themselves will not motivate  the  employees. Helping the employees develop business skills, capabilities, and hands on experience on new and creative ways of doing business builds  their confidence. This is what creates a positive work environment and a motivated work force. 

  12. Eldredge
    January 24, 2011

    Good advice. I've found it's best if my wife makes the cookies, not me!

  13. t.alex
    February 6, 2011

    What's wrong with Excel? If a simple tool can do the job, let it be.

  14. Mydesign
    February 7, 2011

        Nothing wrong Alex, it have its own popularity and majority of supply chain professionals are using Excel in a good way. Even though there are many other free and paid tools are available, we (myself) didn’t even tried to use the other. That means, am that much comfortable with Excel and moreover didn’t want to move away from my comfortable zone. I think majority of supply chain professionals are thinking in similar line.

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