Strategic Supply Chain Management - Supply Chain Online

CHAPTER 2 Core Discipline 2: Develop an End-to-End Process Architecture 55
While numerous practices can support your chosen strategy effectively,
we caution you to avoid the trap of choosing costly leading-edge
practices that provide only marginal support. Analyze the contribution that
new business practices actually will make, letting your supply chain strategy
determine best-practice priorities. These are the practices that you
should focus on optimizing.
You know that your architecture has met the test of strategic fit when
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The value of new practices is quantified before they are integrated
into the supply chain architecture.
New business practices are prioritized based on their ability to
drive forward the supply chain strategy.
The supply chain architecture is reviewed regularly to ensure
alignment with current strategic direction.
End-to-End Focus
A supply chain architecture with an end-to-end focus identifies where
integration—both internal and external—can create value for the company
as a whole. By integration, we mean shared goals and alignment of the
processes, systems, and organizations needed to achieve those goals.
One of our clients, a global manufacturer of computer peripherals,
had poor delivery performance relative to its competitors despite maintaining
high levels of inventory. The management team did not understand
this dichotomy. The company had invested in a costly, worldwide enterprise
resource planning (ERP) system to better manage orders, manufacturing,
procurement, and accounting and had completed a number of
supply chain improvement projects. Despite all this, it still had poor performance
and wondered what was accounting for it.
A close look at operating practices revealed that areas such as
purchasing, manufacturing, logistics, and sales were focused on achieving
their functional objectives—at the expense of enterprise-level outcomes.
For example, manufacturing had redesigned its production
facilities, set up just-in-time (JIT) supplier deliveries, and boosted production
quality with impressive results. Total production time, for
instance, had been cut to less than four hours, best in class for the industry.
Similarly, the company’s logistics department had achieved industryleading
transportation costs by putting in place such practices as allowing
only full truckloads to move product from manufacturing facilities to distribution
centers.