Moving the Needle on Supply Chain Excellence: From Incremental Improvement to Exponential Value

Supply Chain Excellence - cropped

Before supply chains were called supply chains, the motto of any good supply chain leader was simple: “Don’t f*%! it up.” If you took cost out of the supply chain, you got a bonus; if you shut the line down, you got fired.

Not to say that supply chain excellence has been as simple as that. In the 20 years I’ve been part of the growth in supply chain and its role in the business of manufacturing, the definition has evolved.

Fresh from MIT’s Leaders for Manufacturing program, I worked at HP, a company known at the time for leadership in supply chain innovation. Many of our core strategies were built around the concept of design-for-manufacturing (DFM). That meant that the best place (and the biggest lever) to impact the cost, assembly, testing and source-ability for a set of products was during the design phase. Once a product had been introduced, one’s ability to impact the architecture of the product and process, the selection of suppliers and the matching of design specs to the process capabilities of suppliers was more limited. So when it came to supply chain strategy, design was where it was at. It was good.

When I begin working with innovative software solutions for improving supply chain performance, reducing cost and DFX remained a priority. The strategies changed, however: there was lean supply chain, focused on eliminating waste; supply chain design and optimization where technology enabled better service AND lower inventories through better placement and sizing of safety stocks in multi-echelon supply chains. Then, the focus shifted to mitigating the risk that had become inherent in the design of the modern supply chain – not just supplier risk, but also geopolitical risk, brand risk, the risk caused by Mother Nature and more. Also good.

Today, though, manufacturing is undergoing a transformation and as manufacturing strategies change, so then must the definition of supply chain excellence. The improvements in supply chain strategy have been good, but if I’m honest, I’d say they’ve been incremental at best. What manufacturing needs today are supply chains that deliver breakthrough change.

When I started at HP, many industries could get away with building a single SKU, millions of times over and consumers would buy. That’s not true now. Whether customers are buying a tablet or a BMW, they’re looking for a customized solution. At the same, innovation is measured not in years, but in months. That means that the rigid, one-size-fits-all supply chains of today have to evolve.

Manufacturers, like my customer John Dulchinos at Jabil, are looking to shorten the distance between innovation and production so that new products can get to market more quickly. They’re looking to establish production facilities closer to end markets so that products better reflect customer needs and reach customers quickly, reliably and cost-effectively. Mercedes-Benz recently announced that they’re deploying a new breed of robots specifically to help the blue-chip brand accelerate product innovation.

The visions articulated by Jabil, Mercedes and others make me think that we’ve reached a point when the definition of supply chain excellence will evolve again. Most certainly, the Industrial Internet of Things (IIoT) is going to play a big role in what that looks like. The supply chains that support the models and strategies of the world-class leaders in manufacturing, retail and distribution will rely much more heavily on real-time data – about supply, demand and product performance in the field. Fed by advanced analytics and artificial intelligence, those supply chains will be flexible, resilient and cost-effective, and will learn over time – in other words, more than good – they will be excellent.

Originally published on Beet Fusion.