People Powering

Contemporary Supply Chains

Al Ghaziano Nuzaro
Nandana Dzaky Nurrachman
Sutat Manalom Sadewa
Zalal Bakti
 Introduction

First and foremost, it is customers that drive supply chains. Whether as a single consumer or a complex corporate customer, these are the people
that set the die through the way they prefer to buy particular products and/or services. And by the way, those in the so-called service industries take
note everything I say in this chapter applies to you equally as much as to those with tangible products to sell.

Customers are in effect the ‘head of the dog’ and as such they should be wagging the tail (suppliers). But unfortunately, over the past two decades of
easy business and easy money, suppliers have been allowed to design their logistics systems and infrastructure to suit their own purposes, rather than
heeding signals coming from customers

Wrong things can only get worse if this policy is pursued, because the number of exceptions will increase exponentially, and so will the corresponding
cost-to-serve! Time to rethink and reset your supply chains. There is only one way to tackle the increasingly complex operating environment today,
and that is to go back and re-engage with customers, and let this experience guide and inform you as to how to design and manage contemporary
supply chains.
 Presentation Outline

Dynamic Alignment Control

Four Generic Supply Chains
Supply Side Alignment
Hybrid Supply Chain & Reverse Logistics
Conclusion

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 Dynamic Alignment Control
The great thing about this business model is that it is not a logistics or even supply chain model it is a multidisciplinary
business model. From research and empirical observation we found that firms that performed well on a sustainable
basis seemed to have superior alignment.

Furthermore, the firms that seemed to

perform best, in all industries, seemed to be
those where the leadership of those
enterprises had a deep understanding and
empathy for their marketplace and the
customers within. The trick is to have in
place a management team that really does
understand the marketplace

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 Dynamic Alignment Control
This is the clear and inexorable precondition for success. But as we have already hinted, any marketplace you want to consider will
have differences within it people (customers) are just not the same. They look different and are different. Just how many different
groupings or customer segments are needed to gain an adequate Is it 100? Is it 1,000 different segments? If so, then we are in
trouble because such numbers are administratively unmanageable in the workplace.
In truth, there is only one right way to segment your marketplace, and that is along behavioural lines. Look for clues to the ‘buying
behaviours that exist in your served markets. The rest will act as useful secondary filters if you want to cull your customer base, as
many leading companies are now doing. So, over two decades of empirical work and observation in a wide variety of industries
around the world we discovered the patterns we were looking for, and what these told us was as follows:
1. For any given product service category, there are never more than three or four dominant buying behaviours, which together
account for up to 80 per cent of that market.2
2. Here comes the dynamic bit customers will change their dominant buying behaviour if the situation they find themselves in is
such that they have no other choice; witness what is currently happening in markets all over the world due to the impact of the
global financial crisis (GFC).

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 Finding the behavioural
metric key to unravelling
the puzzle

The key to unravelling this puzzle lay in finding a metric that could
describe what went on at all four levels of the dynamic alignment model
market, strategy, internal culture and leadership style. Three of these
four have a common factor human behaviour, and the fourth (strategy)
can easily be described in the selected metric.
Based on this work and our own observations, we came to the
conclusion that there were up to 16 variants of human behaviour as
depicted in Figure 8.2, but never more than three or four of these were
evident in any market at any one time

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Finding the behavioural
metric key to unravelling
the puzzle

We have observed all 16 behaviours at

different times and labelled these for ease of
communication, but the most common
buying behaviours were undoubtedly the
four described in Figure 8.3.

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Finding the behavioural
metric key to unravelling
the puzzle
Now that we had established that four behavioural
segments largely describe many of the product service
markets being served, it was a short step in logic to
recognize that this in effect meant the existence of up to
four different supply chain configurations.

So, designing supply chains becomes relatively easy. All

you have to do is ‘reverse engineer’ back from an
understanding of the behavioural segments in your market.
You may even choose not to service all four that is a
judgement call you can make.

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 Finding the behavioural metric key to unravelling
the puzzle

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 Finding the behavioural metric key to unravelling
the puzzle
What we found from empirical observation is that 40–60 per cent of bestlaid plans were not implemented, and the reason
was not anything to do with competitors. It was simply a matter of people in the rump of the enterprise saying ‘No’, they
don’t want to do this or that as requested. Listed below are the 12 capability levers that we need to understand
and work with in shaping the types of sub-cultures that are required in the enterprise at any given time and situation:

• Organization structure, reporting relationships, and decision rights

• Positioning people in the organization according to their natural strengths
• Job design
• Processes
• IT systems
• Methods of internal communication
• Training and development initiatives
• Key performance indicators (KPIs)/performance metrics
• Corresponding incentive schemes or motivators
• Planning systems
• Recruitment from external sources with both the required technical skills and appropriate mindset to support planned
initiatives
• Role modelling; and leadership style of the top management team.
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 Four Generic Supply Chains

Now we have all the ingredients, it remains to describe how these all come together in each of the four
generic supply chain configurations. This is best done diagrammatically as depicted in Figures 8.6, 8.7, 8.8
and 8.9.

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 Four Generic Supply Chains

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 Four Generic Supply Chains

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 Four Generic Supply Chains

14 MM.DD.20XX
 Four Generic Supply Chains

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 Supply Side Alignment
Like demand-side alignment, supply-side alignment
is multidimensional, and takes its lead from the
market side. However, it seems that many of the
activities practiced on the supply side (strategic
sourcing; global sourcing; spend analyses; etc) have
been taking place in a relative vacuum, with little
direct reference to demand-side customer buying
patterns.

The different leadership style required for each type

of supply chain configuration is also depicted in the
same set of diagrams. Figure8.10 is a schematic that
depicts how the two sides of the business, forward
and reverse, are connected. Indeed, the whole area
of supply-side sourcing is coming back into focus
once again as the world reels from the impact of the
financial services meltdown on the real economy.

16 MM.DD.20XX
Hybrid Supply Chains Reverse Logistics
In the end, the most common situation in industry is that Finally, to round things off we must mention ‘reverse logistics’ where
different combinations of demand-side and supply-side supply the customer becomes the supplier and again we must embrace
chain elements occur. It is rare to see a pure ‘lean’ or pure ‘agile’ ‘alignment’ principles for best results. We will handle this topic by
supply chain all the way through. studying the different reverse paths that it is possible for a product to
This then brings into focus the question of organization take.
structure, which we will have to leave for another day. However,
where there is a mix of different elements, say lean on the
supply side and agile on the demand side, then the
corresponding clusters will work in a coordinated way to get the
desired alignment at both ends. This is the innovative new
aspect in supply chain management, which has the potential to
lift performance by a quantum.

17
 Conclusion
The impression that this chapter leaves you with is that there is
an enormous upside available if the customer-centric dynamic
alignment. business model is adopted in full. It applies first at
the customer end, but then naturally influences what we do
inside the enterprise and backwards to our supply base, and it
also guides and informs us as we try to design a sustainable
reverse logistics process for our products and services.

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THANK YOU!

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