Cross-functional supply chain

Integrating each different functional area (e.g., manufacturing and logistics) inside the supply chain department and also with all other areas inside the organization (e.g., commercial, finance) is a critical and difficult task, but extremely necessary. To achieve this objective, it is required to set cross-functional metrics that impact each functional area and forces the organization to work as a one integrated entity. Examples of cross-function supply chain metrics ... 

Merge-in-Transit/Hub consolidation Merge-in-Transit is a practice to combine items from multiple sources into a single customer shipment. This includes items on stock in the distribution center, from which the shipment is sent, items on stock in other distribution centers, items on stock elsewhere (e.g. at a plant or a supplier) as well as make-to-order items. The items to be merged are cross-docked from inbound receipt to outbound shipping. Merging is usually performed in a shipper s distribution center (DC) or in a carrier s terminal 6-Functional supply chain processes (source and deliver) X 0... 

As mentioned above, one other big lever is to optimize product and information flows, taking a cross-functional view of the entire supply chain from the original supplier to the end customer. This can reduce inventory levels substantially, as well as smoothing out production instability and its associated costs. It also often helps to improve levels of customer service, such as on-time delivery, and capacity utilization. 

One company formed a cross-functional team to use the tool to help evaluate corporate SD status. Some gaps were identified (e.g., supply chain management and some stakeholder communication topics) that helped to develop corresponding programs. In addition, one of the key benefits of the approach was that it enabled learning and productive discussion within the crossfunctional team that enhanced everyone s understanding of the SD issue and its importance for the company. 

A prerequisite for successful SCM is to coordinate activities within the firm. One way to do this is to identify the key business processes and manage them using cross-functional teams. In some cases the internal business processes have been extended to suppliers and managed to some extent between the two firms involved. This may imply that when a leadership role is taken, a firm s internal business processes can become the supply chain business processes. The obvious advantage when this is possible is that each member of the band is playing the same tune. 

Most companies understand that supply chains have complex processes. They also know all too well that the underlying processes are growing more complex. They live it every day. However, what most companies fail to realize is that supply chains are complex systems with finite trade-offs. These choices happen up and down the supply chain. Leaders make them consciously while laggards make them by default. They are both horizontal (cross-functional) and vertical (within a function). They are also intra-enterprise (within the company) and inter-enterprise (external to the company within a trading network). 

Understand the impact of business complexity on cost and supply chain drivers. Implement cross-functional processes to evaluate product and customer complexity. 

From 1990 to 1998, in the early phase of supply chain evolution, the supply chain pioneers focus was on the development of vertical processes. It was a zealous focus on optimizing vertical silo processes of make, source, and deliver. As a result, there was little cross-functional overlap and as a consequence, there was no way to orchestrate tradeoffs in supply chain execution. In the last five years, the focus on planning processes has shifted from vertical to horizontal. In addition, from an inside-out (within the organization) to an outside-in (from the external markets in to the organization) focus. Both of these shifts are fundamental to the building of market-driven value networks. 

Report to the chief operating officer. Horizontal processes will not be successful reporting to a single function. They require leadership. To maximize success, charter the development of cross-functional processes through the supply chain center of excellence reporting to the chief operating officer. 

Train. Supply chains are complex systems composed of complex processes with growing complexity. To understand the true dynamics of the supply chain in horizontal processes, invest in simulation activities so that cross-functional groups can understand the trade-offs of this complex system that is called a supply chain. 

As supply chains focus on the design of outside-in processes, and sensing demand and customer sentiment, processes will evolve to listen to the customer holistically and cross-functionally to better serve the channel. Today, this is aspirational but within two years, it will become a reality for early adopters. The fastest adoption will happen in high-tech and electronics, media and entertainment, and consumer durables. 

To make this transition, leadership teams need to move from a marketing-driven approach (where the message is yelled) to a market-driven approach where customer sentiment is welcomed and used in the supply chain by cross-functional teams. Listening becomes the foundation of horizontal processes. The first step is unlocking the data that is often tightly controlled by marketing. 

Throughout the first three decades of supply chain leadership, the greatest advancements in business results were made by companies that could invest in process innovation holistically and cross-function-ally. As we get ready to run the race for Supply Chain 2020, we are at a juncture where process innovation is needed. There is more unknown than known. New data, new technologies, and market changes make process innovation an important element of readiness to run the race. 

While these future road map views will vary by adoption rates, they also may vary by other factors. This includes the industry, the design of the supply chain strategy, and the number of supply chains. Using these inputs, leadership teams should project their view of what they believe the rate of change will be for their supply chain. The highest success happens when this road map is cross-functional with a forward-looking duration of at least three years. 

Slowly, supply chains will be transformed by many layers of compliance. Success will only come when teams work the evolution sys-temically. Getting ready will be a multiyear journey. The team will need to be thorough and aligned cross-functionally as the legislation transforms the supply chain bit by bit. 

In big data supply chains, data increases in velocity, variety, and variability. The architectures to use this influx of new and very valuable data have names that the supply chain team is just now learning. Start with a cross-functional team to understand its importance and grow from there. 

To prepare for this tipping point, companies must list all of the critical devices and inputs in their supply chain. Business leaders have to postulate on how mobility and the Internet of Things can change the face and future of their supply chain, and then they can form a cross-functional team to work the most actionable use cases. 

The SCOR process reference model was established by the Supply Chain Council (SCC) in 1996 for standardization purposes. The model describes, characterizes, and evaluates acomplex management process. Such a model builds on the concepts of business process reengineering (BPR), benchmarking, and process measurement by integrating these techniques into a cross-functional framework. 

In the functional organization, strong department heads sponsor change projects. Cross-talk in pursuit of interdepartmental process improvement is minimal. Information systems also center on the needs of the departments. Projects may or may not improve the supply chain as a whole. In fact, a local optimum can be injurious to the whole, yet department heads take credit for their savings. Where the functional viewpoint prevails, the actual impact of improvement projects on the total supply chain is not measured. 

The third level of strategy is functional. The business unit strategy should drive the functional area strategies such as Marketing Sales, R D, Finance, Distribution, and Manufacturing. In this model, the supply chain is an anomaly. It is neither a function nor a business unit. In fact, it rises above both. It is a collection of cross-functional processes that extends beyond the borders of the business unit. 

What is new about supply chain management is the idea that it is a chain of multiple companies that delivers products and services, not chains of individual departments. To avoid one department or trading partner reducing its own costs at the expense of another, it is particularly important that cost reduction be a cross-functional and cross-company initiative. This discipline also addresses the way numbers are collected, allocated, and reported. So, Finance should be an important contributor to task execution. 

Enable processes might be the most important of the SCOR processes. Many supply chain failures can be traced to the absence of one or more of these processes. Enable processes are the backbone of any supply chain because they cross all company functions involved in SOURCE, MAKE, and DELIVER. Without an adequate backbone, supply chain performance can go only so far. 

Figure 24.6 combines a number of useful bottom-up tools for flowcharting physical flow in the supply chain. First, it relies on industrial engineering symbols for Operation, Transport, Inspection, Storage, and Delay process steps. Second, the format uses what is called the swim lane or cross-functional presentation to show the roles of multiple supply chain... 

The emphasis of ABC on cross-functional processes is the reason for its importance in single-company applications. Its potential rises when talking about supply chains. In the supply chain world, any one company s operations are part of a flow from incoming (or upstream) partners to outgoing (or downstream) partners. Activities in a company and the way we account for them should no longer be viewed as stand-alone and isolated from the chain. ABC is a way to reinforce this view. 

Under the leadership of the General Manager, the Supply Chain and Operations Area had embraced the principles of lean thinking developed by Toyota (Liker, 2004) and applied them. Within 12 months the operational sections had been reconfigured into 7 value streams that represented the company s major product lines cross-functional teams had been established to eliminate sources of inefficiency such as waste, non-conformance and duplication communication channels had been unblocked and individuals had been empowered. 

Cain buy-in from plant floor through crosses functional collaboration. In order to drive the vision of the executive, collaboration amongst the functional groups is critical EH S, quality, safety, manufacturing engineering production, and even the supply chain. Without regular sharing of vision and effort, it becomes far more difficult to achieve the performance benefits of the Leaders. 

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