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(SCLead)www.sc-lead.cnAligntheOrganizationforImprovedSupplyChainPerformance——DellBobCarboVPMarketingVPSalesVPOperationsVPEngineeringVPPurchasingVPManufacturingMaterialsDirectorCEOCIOSupplychainscannotbeoptimizedinavacuum–completealignmentoftheorganization,fromanalysistoexecutiontooperations,needstobefocusedonachievingbestperformance.IntroductionToday'smanufacturingandlogisticscompaniesarechallengedtoincreaseprofitmarginsamidstincreasinglycomplexenvironments.Industryanalystsandsupplychainpunditspointtomoreeffectivesupplyanddemandplanning,management,andexecutionasthemeanstounlockingsignificantgainsinmargins.However,oftenoverlookedistheneedtoaligntheorganizationfromthetopdowntosucceedinachievingbreakthroughgainsinsupplychainperformance.ThejourneybeginsbyestablishinganexecutiveteamcalledtheSupplyChainExecutiveCouncil(SCEC),whichischarteredwithorganizingandmanagingtheentiresupply-demandsystem.TheSCECwillleadtheorganizationonajourneyofcontinuousimprovementinsupplychainperformance.Thefollowingstepsarearoadmapforconductingsuchajourneyinanyorganization:————SupplyChainExecutiveCouncil/SCECSCECzEstablishtheSCECzGatherinformation;settheperformancebaseline;contrastwithcompetitorszSCECz(SCLead)www.sc-lead.cnzBuildametricframeworkformanagingthesupply-demandsystemzSetpoliciesandauto-responserulestoempowerfrontlineemployeestopreventproblemsandmanageday-to-dayoperationszMonitorandadjust-metrics-andpolicieszzzFigure1-Thefoundationforimprovedsupplychainperformance.1SettingtheFoundation—EstablishtheSupplyChainExecutiveCouncil——JustasTotalQualityManagementgurusDeming,Juran,andCrosbydefinedqualityasajourney,notagoal,soitiswitheffectiveSupplyChainManagement.Asmanyorganizationslearnedinthe1990s,implementationofMRP,MRPII,ERP,andsupplychainoptimizationsystemsbythemselvesweren'tenoughtoachievebreakthroughperformanceinthesupplychain.Rather,thetopmanagementteammustgetinvolvedandleadtheorganizationtoestablisheffectivepolicies,businessprocesses,andsystems.Cross-functionalleadershipisrequisitetobalancingsupplyanddemandbecausesomanypartsoftheorganizationaffecteithersideofthesupply-demandsystem.DemingJuranCrosby90MRPMRP2ERPCross-functionalSupplymanagementgroupscannotbetheback-endoftheorganization'svaluechainandstillachieveindustry-leadingresultsinconversioncosts,cycletimes,inventory(SCLead)www.sc-lead.cnturnover,andsoon.Demandmustbemanagedjustaseffectivelyassupply,whichrequiresaccountabilitybythehead(s)ofmarketingand/orsalestoownmanagingdemandwithinagreedconstraints.Also,informationsystemsarecentralenablerstoprovidinginsightintothesupplyanddemandrelatedoperations.Marketingparticipationiskey,sothatthesupplychainstrategyisbuilttobestachievethecompany'sdifferentiationstrategy.Productdesignandsupplychaincomplexityareintertwinedaswell.ThefirststepistoestablishateamofseniorexecutivesastheSCEC,chargedwiththefollowingroles:SCECzSupplyManagementzDemandManagementzInformationSystemszStrategicMarketingzDesignEngineeringzzzzzFigure2-Establishthesupplychainexecutivecouncilwithcross-functionalexecutives.—2SCECTheorganizationchartinFigure2givesanexampleofwherethemembersoftheSCECmightresideinanorganization.Thekeyistomaketheteamjustlargeenoughtoowntheentiresupply-demandsystembutnotsolargethattheteamcannotmakerapiddecisions.It'seasiertostartsmallandaddfunctionslaterthantohaveeveryfunctionalgroupintheorganizationaffectingsupplyordemand.ThecoreSCECteamshouldremainintactforthelongterm.2SCECSCECSCEC(SCLead)www.sc-lead.cnLackofOrganizationofSupply-DemandAccountabilityIntheearly1990s,thepersonalcomputerindustrywasinhyper-growthmode,withseveralfirmsleadingthenewcomputingrevolution.Growthwassofastthatfactorieswerebeingbuiltallovertheworldbythesefirmstokeeppacewithdemand.Infact,newmodelswerealmostalwayssoldoutasdemandoutstrippedsupplyofinternalcomponents,suchasprocessorsandmemorychips.Intheseearlydaystherewerefewvariationsofcomputersavailableandcomplexitywasminimal.Firmsrarelyturnedawayormodifiedorderstoimprovemargins,andeventuallybeganturningtocontractmanufacturerstosupplementtheirproductioncapacitiesandspeedtimetomarket.Thisgrowthperiodenabledcompaniestoacceptordersandbuildhugeinventorieswithoutmuchregardforprocessessurroundingsupplyanddemandmanagement.However,severalyearsintothegrowthperiod,thenumberofmodels,differentconfigurationofeachmodel,andthecomplexityofbillsofmaterialshadgrownexponentially,causingchaosinthesupplyanddemandareasintheseorganizations.90ContractManufacturersHowdidtheygetintosuchaposition?Asthecomplexityofofferingsgrewfromtheproliferationofnewtechnologies,shortenedproductlifecycles,andincreasedcompetition,salessuddenlyfoundthattheyhadtooffercustomersanexactconfigurationinordertobeassuredofgettingtheorder.Thesupplysideoftheseorganizationsfoundthemselveslookingnervouslyatever-changingsalesforecastsandorderpipelines,andrapidlyescalatinginventoriesassalescontinuedtoacceptorderswithoutregardforwhatinventorywasonhandorcouldbeexpeditedfromsuppliers.Finallyinthelate1990s,severalofthesefirmshadinventorieswhichhadballoonedintothebillions90(SCLead)www.sc-lead