Supply chain management excellence

It will be clear that one of the key ingredients of supply chain management excellence is a high level of collaboration across the network. 

Christoph Schmitz is a consultant in McKinsey s Frankfurt office. He is a member of the global energy and materials practice and has worked in various fields of the process sector with a particular focus on the chemical and pharmaceutical industries. His main areas of emphasis are supply chain management, total operational excellence, and sourcing. He holds a Dipl.-Chem. and a PhD in chemistry from the University of Bayreuth. 

This material is adapted from D. M. Lambert, L. C. Guinipero, and G. Ridenhower, Supply Chain Management A Key to Achieving Business Excellence in the 21st Century, manuscript. All rights reserved. 

Schmidt, M., and Aschkenase, S. The Building Blocks of Service Excellence. Supply Chain Management Review, July—August 34—40, 2004. 

The supply chain failures grab headlines. Success in the supply chain happens slowly over many years, but when a leader stumbles the impact on the balance sheet is pervasive. Much of the public understanding of supply chain management comes from reading about the failures. When companies with names like Apple, Boeing, Cisco Systems, Coca-Cola, CoirAgra, Hershey, Johnson Johnson, Ericsson, Mattel, Nestle, Nike, PepsiCo, Sainsbury s, and Western Digital make headline news due to supply chain failure, it is hard to not pay attention. Each time these premier brands stumbled, failed, and learned new lessons, the bar on supply chain excellence was raised. 

The big lesson for us was that the role of supply chain management goes beyond operational excellence and cost efficiencies. 

To be effective at market sensing, companies have to build strong horizontal processes to connect downstream and upstream data. Traditionally, supply chain processes have evolved from vertical processes. These functional silos—source, make, and deliver—gave birth to supply chain management. However, this silo approach, and a focus on vertical excellence, is both a barrier and an enabler to maximize value and build strong networks. It is a conundrum. Companies need to build strong vertical silos to deliver operational excellence but at some point in their maturity, they must "break the glass" and shift their focus to build horizontal excellence. 

Leaders are still seeking a clear definition of supply chain excellence. Despite 30 years of investment in supply chain management, the definition is not clear, ft remains a holy grail. In interviews, we asked, "What company defines supply chain excellence "... 

Senior management does not understand, support or value S OP as a management tool towards supply chain operational excellence. 

DMIAC Define, Measure, Analyze, Improve, and Control. A process for implementing supply chain changes associated with the Six Sigma improvement process. (A foundation for operational excellence, Supply Chain Management Review, March/April 2003)... 

Demand chain excellence A tale of two retailers. Supply Chain Management Rev. 5 40-46. 

Moreover, failure to excel in supply chain management can negatively affect a company s stock price. Hendricks and Singhal (2005) found this to be true in a study of 885 supply chain disruptions reported by publicly traded companies during 1989-2000. The list of companies included small, medium, and large companies with respect to market capitalization and covered both manufacturing and IT industries. Hendricks and Singhal... 

Regardless of how proficiency criteria are determined, all the above models present the road to excellence understood as the fulfilment of supply chain management principles. The levels of excellence most frequently pertain to selected supply chain processes or resources. Less often, they relate to conditions that should come with improvements. Issues related to the circumstances (background) of process and resources excellence are very important, as the low effectiveness and unsatisfactory efficiency of measures imdertaken in this area is often caused by ignorance on the part of the entities initiating and implementing SCM principles. 

Maturity level Qualities 1 Enterprise integration II Internal supply chain management (corporate excellence) III Collaboration with selected partners IV V Collaborative supply Supply network chain management connectivity (value adding)... 

The conclusions presented above are confirmed by the answer to another question how do the respondents perceive supply chain management Most responses pertained to internal process excellence or directly (apparently in relation to the very name of the concepts) to customer supplies. Table 2.9 presents how the researched companies interpreted the SCM notion. 

Internal supply chain management (corporate excellence)... 

UK National Health Service Excellence in supply chain management... 

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