barcode using vb.net Core Discipline 3: Design Your Organization for Performance in Software

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CHAPTER 3 Core Discipline 3: Design Your Organization for Performance
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ity critical to competitive advantage, business growth, customer service, or superior offerings (See Figure 3-10.) If the answer to any of these questions is yes, the activity is likely a core competency and one you should keep within your organization and grow. In general, functions such as demand planning, supply-demand balancing, and supplier development need to be nurtured as core competencies because they are so dependent on current customer requirements. Product complexity and supply-base stability also play a role in determining which core competencies should be tightly held; a complex product or an unstable supply base make the transition to a third party more difficult and risky. While outsourcing providers may offer design-for-manufacturability (DFM) services, be careful what product-development activities you outsource. DFM is a critical link between the product-development function and supply chain operations. The same is true for activities associated with new product introduction (NPI). An NPI coordinator within the supply chain organization is essential. And once these skills are lost, they are extremely hard to rebuild. In the consumer products market, product development is a critical core competency. The need for a steady steam of new products in response to fast-changing consumer tastes also places tremendous pressure on the supply chain especially the purchasing function, which must keep the company aligned with the supply base at all times. Dial, the maker of soaps and other consumer products, restructured itself to better focus on its ability to develop and deploy new products rapidly. The company s management team acknowledged that an agile procurement process was a critical piece of the restructuring. Dial redesigned its overall approach to sourcing and procurement, transforming the purchasing function from a
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F I G U R E 3 10
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Four tests of core competency.
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Is this activity critical to:
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Strategic Supply Chain Management
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decentralized organization operating at the site level to a central body headed by a senior-level executive. The company combined all of Dial s purchasing and put commodity experts in charge of buying raw materials. The chemical buyer, for instance, is a trained chemist who understands the details of chemical composition. Dial also simplified its supply base, working closely with a smaller number of key suppliers and consolidating its buying power across different business units. Finally, the company developed a system for implementing innovative cost-savings ideas. What was the combined result of these actions Total savings of $100 million over five years.9 Dial is an excellent example of how to build core competencies while developing a supply chain organization. Management saw the need for commodity experts with deep technical knowledge of the properties and characteristics of the materials for which they were responsible. Procurement expertise was identified as an area in which thinning was unacceptable. To apply a similar approach in your own company, start with a list of key supply chain processes and the core competencies needed to execute those processes. Use your company s longer-term strategy as a guide to establish this list of proficiencies. Summarize the skills that will be needed to create or defend competitive advantage, to help grow the business, and to ensure customer satisfaction. Next, identify any gaps between the skills needed and those already in place. Finally, get consensus on whether to develop these skills in-house through training and targeted hiring or to use supply chain partners to fill the gaps.
GAINING RESPECT FOR THE SUPPLY CHAIN DISCIPLINE
To establish the supply chain as a strategic asset, the leader of the supply chain organization must be accorded status on a par with other members of the executive management team. Many companies remain locked in a traditional paradigm in which sales, marketing, and development are considered the architects of the company s strategic direction, whereas purchasing, manufacturing, and distribution are thought of as tactical executers. While bemoaning high inventories, late shipments, or missed revenue opportunities, few companies see the potential value that effective supply chain management can deliver or view supply chain management as a critical area of expertise. Without the support of the executive team and a clear mandate for the supply chain leader to champion improvement efforts, major business-impacting opportunities are left underexploited.
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