Strategic Supply Chain Management - Supply Chain Online

122 Strategic Supply Chain Management
decentralized organization operating at the site level to a central body
headed by a senior-level executive. The company combined all of Dial’s
purchasing and put commodity experts in charge of buying raw materials.
The chemical buyer, for instance, is a trained chemist who understands the
details of chemical composition. Dial also simplified its supply base,
working closely with a smaller number of key suppliers and consolidating
its buying power across different business units. Finally, the company
developed a system for implementing innovative cost-savings ideas. What
was the combined result of these actions Total savings of $100 million
over five years. 9
Dial is an excellent example of how to build core competencies
while developing a supply chain organization. Management saw the need
for commodity experts with deep technical knowledge of the properties
and characteristics of the materials for which they were responsible.
Procurement expertise was identified as an area in which thinning was
unacceptable.
To apply a similar approach in your own company, start with a list
of key supply chain processes and the core competencies needed to execute
those processes. Use your company’s longer-term strategy as a guide
to establish this list of proficiencies. Summarize the skills that will be
needed to create or defend competitive advantage, to help grow the business,
and to ensure customer satisfaction. Next, identify any gaps between
the skills needed and those already in place. Finally, get consensus on
whether to develop these skills in-house through training and targeted hiring
or to use supply chain partners to fill the gaps.
GAINING RESPECT FOR THE SUPPLY CHAIN DISCIPLINE
To establish the supply chain as a strategic asset, the leader of the supply
chain organization must be accorded status on a par with other members
of the executive management team. Many companies remain locked in
a traditional paradigm in which sales, marketing, and development are
considered the architects of the company’s strategic direction, whereas
purchasing, manufacturing, and distribution are thought of as tactical executers.
While bemoaning high inventories, late shipments, or missed revenue
opportunities, few companies see the potential value that effective
supply chain management can deliver or view supply chain management
as a critical area of expertise. Without the support of the executive team
and a clear mandate for the supply chain leader to champion improvement
efforts, major business-impacting opportunities are left underexploited.