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Analyst Insight: Making the case to integrate supply chains with other internal organizations can be a tough sell. However, today’s supply chain organizations that resist necessary integration ultimately struggle to keep up with demand. But, it doesn’t have to be this way. The solution is strategic alignment across the entire organization, and embracing change to help enterprises better prepare for the future and better perform in delivering product.
Supply chain leaders concentrate on minimizing costs, increasing service levels, and delivering on time, while business leaders focus on increased revenue, expanding market share, and profitability. Let’s look at what this means, and how one might achieve the benefits of all organizations strategically operating toward one common goal.
Many companies have established world-class supply chain organizations. Problems occur when these processes are run in a silo, disconnected from the organization’s broader objectives. Supply chains striving to meet their own key performance indicators may be counterproductive to other organizations, resulting in less-than-optimal outcomes across the board.
Technology and business process improvement deployments can further increase this divide. In many instances, tools are only deployed tactically, insular to one organization. Without an intentional charter that drives alignment with strategic objectives, these investments create data fragmentation rather than integration. The result is a supply chain that can perform well in a business-as-usual environment, but struggles when the volatility, disruptions, and business priorities rapidly shift. It becomes much more difficult to flex and adapt to social, geopolitical, and economic shifts.
So, how do we get started down the path of integration? Recognize the value and benefits of integration, and build your integration around a few key principles. First, reimagine the entire value chain of each organization and how the supply chain fits in. Then, embed your supply chain in the corporate strategy development process, and build integrated planning capabilities through processes like sales and operations planning and integrated business planning. Finally, invest in technology that creates data transparency throughout the entire organization.
Be prepared for plenty of obstacles too. It’s human nature to fight change, and a strong change-management system will mitigate this issue. A reactionary response to solve what’s in front of you may appear easier right now, but longer-term strategic thinking is the better approach. Supply chains will also need to think outside of the execution box, combine analytics with business acumen and strategic thinking, and identify required data.
Our ongoing technological revolution can provide a big assist in solving many of these challenges. As supply chain’s digital ecosystems evolve, the interconnectivity of real-time data across internal organizations, customers, and multi-tier partners will also improve. Artificial intelligence and machine learning give organizations faster, better decision-making capability that aligns with corporate goals. The result will be a more resilient and agile supply chain.
Incorporating integration will allow for continuous improvement, and the hard boundaries between strategy and supply chain can dissolve and eventually disappear. The supply chain will become an integral partner in the end-to-end decision-making of your organization.
Resource Link: https://chainsequence.com
Outlook: There’s no business that is the specimen of perfect health when it comes to true strategic alignment between supply chain management and the organization’s business objectives. But there’s plenty of room for improvement to close the gap. It will require a concerted effort on the part of the entire organization, and is not only achievable, but absolutely necessary.
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