Strategic contribution

Infrastmcture 2. Cost Reduction 3. Collaboration 4. Strategic Contribution... 

Task Name 1. Dysfunctional II. Infrastructure III. Cost Reduction IV. Collaboration V strategic Contribution... 

The consequence is that there is no fit of projects in terms of reaching the destination shown in Figure 13.1. In fact, projects form out of a haphazard process, have no strategic contribution whatsoever, and shoufd be discontinued. In general, a strategic project will implement the vision and alter in some way the competitive landscape. This is different from projects that keep the company in the game but do not affect the competitive balance. 

Although it has never been required in the past. Acme s president has asked for an assessment of the strategic contribution from each project. The manufacturing director has prepared the analysis of Project A. The engineering director prepared the Project B analysis. The marketing manager prepared the analysis of Project C. A notation in the description of each project categorizes them. Table 26.1 summarizes the result. 

There are a number of factors that will enter into situations similar to Acme s. The conditions just described are common. Instead of focusing entirely on the cost reduction benefit, an equivalent amount of time should be spent on strategic contributions. This avoids the trap described at the beginning of this chapter — having all cost reduction projects settle into the lower left-hand corner as shown in Figure 26.1. Such an analysis might also point to additional areas for financial benefits. 

Earlier, we described the types of supply chain projects an organization might imdertake. In our model, there were six categories depending on strategic contribution and scope. Figure 10.2 below repeats the six categories. 

Strategic direction comes from a vision of where the organization needs to go. The vision provides a yardstick to determine what is strategic and what is not. In fact, we often find that many projects form out of a haphazard process, have no strategic contribution at all, and should be discontinued. Robert expands on this need. ... 

This is often unfortunate. The decision-maker should formally consider strategic contributions from any cost-reduction project. This judgment should determine whether the project is "above the line" in our model shown as Figure 24.1 — that is, strategic — or below the line — nonstrategic. 

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