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Ju st W ha t is a Su pp ly Ch ai n St ra te gy ?

Supply chain strategy - sounds like a good thing, doesn't it? But what really defines a supply chain strategy? Does your company have one? Does it need one? In 10 years, I've written about almost every subject possible, but I do not believe ever about supply chain strategy. I've come close to doing so a couple of times, but something else always got in t he way. The reality is the subject has not been written about much by anybody in the supply chain at a detailed level. I was reminded of my omission when I saw presentation at the Material Handling and Logistics conference in early September by Dr. Paul Dittmann, a former supply chain industry executive (Whirlpool) who now leads the Global Supply Chain Forum at the University of Tennessee. Gilmore Says:

or more like a project plan? A little of both.. So. In that research. multi-year strategy is needed.a goals and objective document. which generally involve big capital expenditures and expenses for closing facilities. Dittmann thought. Goals and objectives Click Here to See Reader Feedback . do you need a supply chain strategy? That is really the question. then of course a written.if their companies had supply chain strategies. Among Forum members. for example." He said there that not long ago. with one major exception. but with a plan that has some resiliency built-in for the inevitable storms the ship will encounter along the way. a supply chain strategy is defined as a formal written plan that details what actions the organization is going to take over a multi-year horizon." importantly sub-titled"Building and Executing an Integrated Supply Chain Strategy. But is that really a strategy . well-known firms . only about 15% of companies had a formal supply chain strategy. if you are not preparing for such a major transformation. and many more. A supply chain strategy involves adding a new rudder. so they conducted a survey among a larger group of companies. In those situations. etc. To Dittmann. What Do You Say? Click Here to Send Us Your Comments That may seem low to some but not to me. he asked members of the Forum . I have rarely seen a company with multi-year supply chain strategy. that would include companies such as Home Depot. In recent years.mostly large. especially if that transformation involves significant changes to the physical network. Kimberly-Clark. Hershey Foods. That seemed surprisingly low.It was based on his new book "Supply Chain Transformation. something like 18% had such a strategy. That is for companies that have embarked on a major supply chain transformation. with a captain and a crew that know exactly how to get to their destination. I wonder how many of the "strategies" among the companies claiming to have one would really pass muster upon a review. A lot of things get confused as being strategies when they are something else . promises to Wall Street about cost reduction expectations when the transformation is complete.

its stock price soaring over that period as well. Now. Kathleen Shafer." he said. but they are not a strategy by themselves. but not as important as ensuring goods were on the shelf. director of supply chain transformation at Walgreens' rival CVS. who worked with Dittmann at Whirlpool and has co-written books and articles with him. That in turn resulted in 25 separate projects to upgrade Walgreens' supply chain to achieve those capabilities. because it provides a prescriptive model relative to how to build a supply chain strategy a company like that apparel retailer could easily follow. that strategy should start with the customer. that the job of the supply chain was really just to support that growth. A forward-looking view of Walgreens' customer needs identified 11 new supply chain capabilities that would be required over the next few years. and how should it get there? "We need a supply chain strategy. That is in fact an exercise that Walgreens has recently gone through under the relatively new supply chain leadership of Reuben Slone. A supply chain strategy . I met an executive of a then fast growing women's apparel chain in about 2007.likely are a necessary part of a strategy. however. Not sure if that is pure coincidence or not. and we later exchanged a couple of emails.) So. and that new stores opened on schedule at a breakneck pace.by definition a forwardlooking document . but I never really heard how that exercise turned out. growth was inevitably slowing what was the supply chain's mission now. And like most things in business. back to the question of whether we all need a documented supply chain . I wish I had Dittmann's new book to recommend then. Cost were important. where he related to me what I think is a not unusual scenario: the chain had been growing so fast for many years. gave an interesting presentation on how it was using a very similar process to upgrade its supply chain. Well. (Interestingly.should anticipate changing customer needs and define how the supply chain is going to evolve to meet those new requirements. Could I provide any help? I offered a few thoughts then and there. at last Spring's WERC conference. Dittmann says.

Marketing. all have such strategies? I don't think so. there is a lot more to it than just knowing those nine steps. because technology changes and initiatives often play out over several years. Evaluate current supply chain organizational structure. with big CapEx dollars involved and major decisions about direction that need to be formalized. First. IT often does.what is new or coming out there? 6. With those two thoughts. The strategic document can be the key tool that helps keep the supply aligned with the business. Develop a business case and get buy-in Obviously. multi-year planning. in physical product companies. and metrics 9. supply chain generally operates as a services organization for the rest of the company. however. 1.risk management needs to be part of the strategy document 7. supply chain often accounts for 60-80% of total costs. HR. a huge number that therefore may be deserving of more detailed. In his book. Dittmann lays out a nine-step plan for building a supply chain strategy. so look for a part 2 on this soon . Deal with supply chain risk . then it makes perfect sense the supply chain have one that mirrors the corporate plan. people.strategy: Do Finance. An easy example would be plans to roll-out robust S&OP capabilities across the globe over a multi-year span. Start with customers' current and future needs (as discussed above) 2. Survey technology .maybe with some of your comments. Assess current supply chain capabilities relative to best in class 3. multi-year strategy document. etc. and there is a lot more to say. Analyze the competition (something too few do for sure) 5. But I think supply chain is different than most other functions. and the book takes the reader through each of these steps in detail a chapter at a time. Develop new supply chain capability requirements and create a plan to get there 8. it also seems to me that if a company as a whole has a formal. I was remiss for not tackling the strategy question for so long. Second. . Evaluate supply chain "game changers" (what megatrends will impact customers and the supply chain?) 4. A strategy document can help the company's functions and executives to buy-into and thus support those supply chain strategies.

but with a plan that has some resiliency built-in for the inevitable storms the ship will encounter along the way. it sees any wind as favorable. . Dittmann writes early on in the book. with a captain and a crew that know exactly how to get to their destination." A supply chain strategy involves adding a new rudder. "Like a ship without a rudder."I often see companies without a supply chain strategy chasing the latest hot trend or flavor of the month.