Strategy - TRACC

Strategy
“Businesses are taking a refreshed view of supply chain strategy. The result is an end-to-end
business capability that’s prioritised to sense and translate demand into the supply network.”
WGLL Journal Volume 2 © CCI info@etracc.net www.etracc.net

Strategy
CHANGING FACE
Supply chain and manufacturing thinking is changing fundamentally — not only
in Europe and the United States, but in emerging markets as well.
Roddy is senior vice president, Global Supply Chain for CCI Inc. Previously he
was senior vice president and a distinguished analyst at AMR Research. Roddy has
over 27 years of industry experience, most recently at South African Breweries, where
he was also appointed to lead a portion of the SAB Performance Management
Intervention. He travels, presents and advises global industry leaders on
supply chain best practices, supply chain strategies and manufacturing
change management.
RODDY MARTIN
Supply chain, manufacturing strategy and performance improvement used to be an
‘inside-out’ supply-focused discussion among logistics and manufacturing leaders.
But spurred by recent economic challenges driven by structural demand changes, this
is changing to an end-to-end, ‘outside-in’ discussion with the focus on sensing true
demand accurately and responding profitably across the end-to-end business network.
Leading companies have moved the priority to making balanced trade-offs in managing
growth, productivity and assets across the business.
Of course the prioritised ‘outside-in’ customer-focused supply chain discussion doesn’t
make ‘inside-out’ performance any less important; in fact, it puts even more pressure on
reliable and repeatable product supply from manufacturing and supply operations.
The goal is to make exactly what’s needed and deliver perfect orders and services.
Fundamentally this is the crux of the business capability of sensing and responding
profitably to demand, or demand–driven value networks, as the strategy is called in
many companies.
The change is so significant that in leading companies across various industries the
supply chain strategy has become the business operating strategy. It’s spearheading
major transformation in the way companies manage sales and marketing, manufacturing,
deliver products and services, sourcing, procurement and innovation.
To drive this focus and execution, global manufacturers have appointed chief supply
chain officers at executive level, and are prioritising development of new business
leadership talent and capabilities to support the change.
New end-to-end supply chain strategy
Every business cares about growth, profitability and productive asset use. In the past
many supply chain decisions were classically made from cost-to-deliver rather than
end-to-end costs-to-serve information. This resulted in unbalanced operations
trade-offs and one-sided decisions. As a result of cost-to-deliver priorities, supply chain
and manufacturing leaders concentrated on waste reduction and cycle times inside
plants but not on reducing variability from manufacturing operations in response to true
market demand changes.
However, with the global economic scenario of the last two years, traditional supply
chain and manufacturing efficiency paradigms were challenged in their contribution to
business value. This was because of the lack of end-to-end cash and demand visibility,
and poor collaboration processes across the business.
Weak visibility and process management across the business led to inadequate working
capital management and organisational effectiveness, as well as ineffective organisational
structures and asset utilisation focused on the wrong goals.
WGLL Journal Volume 2 © CCI info@etracc.net www.etracc.net

Strategy - CHANGING FACE
Manufacturing, incentivised to utilise assets efficiently, continued to churn out product
even after true demand had fallen away dramatically and consequently locked in business
working capital that needed to be flushed. In turn, the business was disconnected in the
way it managed product portfolios and innovation. The business battled to operationalise
innovation at the heart of growth.
Even the billions spent on enterprise IT investments to improve transaction efficiency didn’t
yield the expected returns. Reasons were: IT investments were made in application and
functional silos and information wasn’t available to support the end-to-end processes and
continuous improvement of supply chain and manufacturing performance aligned with
market demand.
Thus today’s transformation and change-leadership focus, for both leading medium-sized
and large global companies, is to build and continuously improve end-to-end demanddriven
value network capabilities.
It starts at the source of real demand (the actual buyer) and includes translating that
demand into value and the trade-offs that must be made across the operational supply
network. This has profound implications on continuous improvement strategies,
performance metrics, change leadership and the use of enabling IT. Variability in supply
response is the enemy — in any form.
Because the main concern of transforming the end-to-end supply chain has been elevated
to such a strategic level, it’s now being led and prioritised by the highest level business
leadership team. This has forced the leadership team to understand the end-to-end
business operation. While traditional supply chain and manufacturing efficiency has
been important and dominated performance discussions in the past, it’s now
acknowledged that costs alone aren’t crucial business growth differentiators and the
business can’t simply ‘save’ its way to growth.
A business must determine what these new critical capabilities are that must be
developed across the end-to-end business. To explore and discover that capability, the
leadership team is now tasked with challenging cross-functional discussions:
• Defining and aligning buy and make side segments
• Reducing non-value-adding complexity
• Using end-to-end information visibility to improve growth and productivity across
the business
• Using core processes such as sales and operations planning to translate demand and
make balanced trade-offs
• A distributed organisational structure and competency model that supports organisational
effectiveness across globally developed and emerging markets
Continuous improvement priorities have changed
To achieve and maintain balanced excellence, organisations should look at all
interdependent aspects of the end-to-end business and its processes differently.
Traditional supply chain performance and efficiency metrics that preoccupied continuous
improvement discussions, now require more upstream and downstream context to
contribute to end-to-end business performance improvement.
Thus today’s performance improvement agenda includes developing and improving new
capabilities and processes. These include using demand data and insights to advance
forecast accuracy and defining segments, based on buying and manufacturing behaviours,
to address different characteristics in each segment appropriately.
Even individual site manufacturing priorities have changed. Sites must operate as a
global product supply network that includes suppliers and design partners. Local site
charters must ensure that capabilities are in place to support matching supply to
demand segments.
Traditional continuous improvement approaches, such as Lean, Total Quality and Six
Sigma, simply aren’t enough on their own to improve customer-facing performance and
support growth and productivity across the end-to-end business.
Conclusion
Businesses are taking a refreshed view of supply chain strategy. The result is an end-to-end
business capability that’s prioritised to sense and translate demand into the supply
network. To support the refocus, changes are taking place in leadership and execution
priorities, organisational design, developing leadership talent, and priorities in the
enabling IT Strategy.
WGLL Journal Volume 2 © CCI info@etracc.net www.etracc.net