Supply chain potency

We like the term potency to describe the effectiveness of projects to change the supply chain. How potent are these projects How do we define potency Potency is the power or strength of the project in terms of improving the ability to compete. We have to look beyond the measures mentioned above. Any of these measures — world class, quality, financial, or integration — are means to an end. Potent projects increase sales, market share, customer satisfaction, and cost effectiveness. 

Here and in Section 5.1, we develop a framework for supply chain improvement projects in terms of potency. To help us begin and gain an understanding of contributions already available to us, we visit recent and not-so-recent thinking on strategy and operations. The models are useful in tracing how we have come to this point in our thinking about supply chains. In the next chapter we offer our version — a synthesis of these models — to help evaluate our supply chain potential for improvement. 

The model shown in Table 4.2 has application to supply chain thinking. Applying this model to the idea of potency. Stage 4 manufacturing — or supply chain — strategies would be the most "potent" in terms of supporting... 

The model of supply chain stage progression doesn t address the issue of potency in terms of competitive improvement. It implies that stage 4 companies will be potent competitors. However, we can envision that a stage 4 company could be only at parity competitively if its products are behind in the marketplace or if no distinctive competence has been developed. 

One s supply chain strategy will depend on grid placement. Table 5.1, also published earlier, has examples of how supply chain thinking can apply to define a general strategy that fits each box. High-potency projects are those that will help the company accomplish the intent shown in the table. 

A. Excellent product and supply chain High-potency projects will continuously improve both... 

We have talked about "potency" in terms of supply chain projects. Potent supply chain projects will change the basis for competing in the marketplace. Most improvement projects we encounter aren t "potent" in this sense. They may help the company stay even with the competition, but may not help them get ahead. We ll use Figure 5.3 throughout the book as a reference for classifying supply chain improvement projects. 

There are many techniques to design supply chains for more competitive potency. Rich Karlgaard points to three in explaining the price spread between the BMW and the Honda. These are ideas and craftsmanship, the ability to reproduce the car at a consistent level of quality, and the "mystique" that makes the buyer willing to pay so much. 

---