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When Is Excellence Not Enough?

Contrary to what you might expect in a fragile global economy, there won't be much talk about, or activism on, how top companies will rely even more on their supply chain to beat the competition in 2013. This year, manufacturers will be very focused on maximizing innovation and using their design chains to introduce new, share-winning products.

In other words, they will rely more upon their supply chain systems but talk less about its efficiencies.

That's my forecast for 2013, but you might be right in questioning that assumption, so let me explain. First, I am not implying that an efficient supply chain will become less important to manufacturers. Far from it. In fact, manufacturers and services companies will rely even more on the efficiencies and competitive advantages they can squeeze from their supply chains.

They need more, though, to win, because leading companies already have, or are in the process of setting up, first class supply chains as the baseline for their manufacturing operations.

The harsh reality of today's manufacturing environment dictates that supply chain departments deliver expertise as a fundamental part of their operations. In other words, the vice president or director of a supply chain must — at a minimum — provide market-matching/beating efficiencies and agility.

It would, of course, be preferable if they leverage supply chain resources to create competitive advantages for the enterprise, but even this will be seen as a “must-have” in the future by companies, rather than a system for which anyone should be given an award.

Much as we take for granted certain fundamental rights and necessities in life, a functional and well-executed supply chain management system is now seen by top executives as integral to operational excellence. As a result, companies are no longer willing to settle for a lesser system.

There are good reasons for this development. The supply chain evolved first as a support structure for businesses, and was then refined as a center of excellence for driving cost efficiencies.

Since then, the emergence of a hotter-than-usual competitive environment in certain high-visibility, economic sectors — for example, consumer electronic products such as PCs, smartphones, and gaming devices — have driven home a new reality for companies: Winning can no longer be secured by merely having prompt, efficient, and cost-effective production and deliveries (the cornerstone of the most agile supply chains), but especially through design, sales, and marketing excellence. Customers — whether ordinary consumers or enterprises — expect to pay the lowest possible price and promptly receive products. They also expect these products to work at the highest efficiency level.

Manufacturers that have prospered on the basis of having the most cost-efficient supply chains will find themselves in 2013 deprived of some of the advantages such systems gave them in the past. Supply chains will still be expected to perform at peak levels, and winning companies will still need this to win, but if that's all you expect to deliver as a supply chain executive in 2013, you should rethink this strategy.

In 2013, supply chain executives will need to work even more closely with their counterparts in design, distribution, sales, and marketing. This teamwork is what top executives need to deliver winning products — not just a supply chain structure that prides itself on being agile and cost-effective.

Is your supply chain primed for this?

10 comments on “When Is Excellence Not Enough?

  1. kilamna
    January 17, 2013

    Years ago when we instituted the relative grading in annual reviews there was an uprising when people were graded as average on ANY attribute. Just like everyone's child is above average, every worker also thinks he-she is above average. The word 'average' has been so degraded, and the word 'excellent' so overused that neither really makes sense any more.

    Usually 'excellence' is 'far above average', or perhaps the 2nd or 3rd SD above average. But the refernce point is unknown. WHAT is 'excellent'? Relative to 'best practices'. But by the time the best practices are recognized as such, they are already NOT best practice, and have become the 'average'.

    Aiming for 'best practices' as a goal is a guarantee for failure. Organizations need to establish their own metrics, and aim for continuous improvement to 'perfection'. Of course much easier said than done, but better than sitting on the laurels of having achieved-met the best-practices metrics.

     

  2. ITempire
    January 18, 2013

    Bolaji, I agree with your point that there is no level of performance by supply chain that can satisfy executives. However, supply chain staff, esp the ones responsible for distributing the end-product to the market, are often complaining about the product quality and the specifications required by the market which are not in the company's product which makes it difficult for them to market the product. The point is teamwork is important no matter what the trends say.

  3. bolaji ojo
    January 18, 2013

    Incredible analysis AzmatMalik. I like the way you expressed the comments and can't agree more. What is excellence in any case and how can a company surpass excellence once achieve? Perhaps continuous improvement is a far better target. Some years ago I wrote an article in which I stressed that Dell would be in danger of losing its market leadership once competitors figured out a way to match its supply chain “excellence.” It has since happened!

  4. ITempire
    January 18, 2013

    @ Azmatmalik

    “The word 'average' has been so degraded, and the word 'excellent' so overused that neither really makes sense any more.”

    So true. Mostly the executive management doesn't prefer appreciating the staff too much so that they don't become over-confident. However, staff member can analyze his or her important when it comes to pay rise or promotions. Also, some functions in the some organizations are just considered 'hygeine factors'. If they aren't performing well, they are a problem and if they performing well, they  had to be that way, nothing to appreciate or be glad about. Unfortunately, supply chain and finance are often classified in that category.

  5. bolaji ojo
    January 18, 2013

    WaqasAltaf, Sometimes a department gets engrossed in its own goals and forgets that the corporate success is more important than the unit's achievement of its own objectives. As you noted, it's critical that the units of the company collaborate and aim for “perfection” together.

  6. kilamna
    January 18, 2013

    The farther you are from the front lines the less recognition you will get .. true in the military, true in most business organization, and perhaps true in education.

    The soldiers (more likely their commander) get credit for capturing enemy territory. The sales (and perhaps marketing) will get credit for a big order, or a new customer. The teacher may-will get credit for an outstanding student. Everyone (barring outliers) of these have to have a strong-excellent support-infrastructure: the infantry couldnt capture the hill without a very well greased supply chain; the salesteam would not capture the customer without a great product and assurance of operation-supply etc (and continuity of supply guaranteed by an outstanding supply chain team), the teacher (generally) couldnot develop an outstanding student without the support of many others (including parents)

    So, do not despair. Supply chain, even if not recognized DOES play a critical role in an organization. If you want extreme recognition, perhaps you should either be in sales or an actor … you succeed with great fanfare, and also fail when you do not perform.

     

  7. FLYINGSCOT
    January 18, 2013

    I see this very often, people from all different groups trading ideas and making compromise to deliver the best products and services.  All groups in a company need to work together to find the optimum solution.

  8. SunitaT
    January 21, 2013

    However, staff member can analyze his or her important when it comes to pay rise or promotions

    @WaqasAltaf, Pay rise and promotions doen't necessarily reflect the importance of the employee. Many a times pay rise and promotions depends mostly on the manager under which the employee is working. I have seen many of friends who were important team player in the project quitting their jobs because they didnt get enough pay-hike.

  9. Anna Young
    January 22, 2013

     'Teamwork is what top executives need to deliver winning products – not just a supply chain structure that prides itself on being agile and cost – effective'

    Bolaji I agree. Teamwork represents a roadmap for realizing steps toward optimum supply chain performance.

  10. ITempire
    January 23, 2013

    @ tirlapur

    Well I would reiterate that importance of the employee to the organization is reflected in the pay revision and promotions as it shows that immediate manager and the organization wants to retain the employee. It is the performance evaluation that is dependant on the manager's discretion who may turn out bias.

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