DC Velocity - Tip Sheet 2012

of supply chain maturity and excellence in your particular organization. The sequence of the 10 practices, moreover, does not indicate priority or suggest a higher or lower importance ranking. It does, however, offer a systematic approach for measuring your effectiveness in building a best-in-class supply chain organization.

Some of these practices may be simple, straightforward, and familiar. Others may be new to your company. Implement them all and you will have a strong foundation for supply chain excellence.

1Establish a governing supply chain council. A governing council’s purpose is to give direction and help align supply chain strategy with the company’s overall strategy. The council’s membership should include the leader of the supply chain organization as well as corporate executives, business unit managers, and other influential company leaders. Ideally the council should hold regularly scheduled meetings. But even if it doesn’t, its mere existence will indicate that supply chain management has the endorsement and commitment of senior leadership.

We often see supply chain organizations struggling for recognition because their objectives and strategies differ from their companies’ stated objectives and strategies. A governing council can prevent that from happening by providing constant, consistent validation that the supply chain strategy directly correlates with the corporate strategy.

The council can also help to remove barriers to success that exist within the organization. Every company has such barriers—usually individuals or organizations that don’t see or accept the value that a well-managed supply chain provides. By addressing these barriers, members of the council help to ensure that the supply chain organization is given the opportunity to perform up to its potential. When it is clear that the executive leadership is fully embracing the supply chain organization, it is likely that key business-unit stakeholders will be more willing to work with and support supply chain efforts and initiatives.

Finally, the council provides an effective forum for cross-functional communication. An active governing council creates an opportunity for business unit leaders to provide the supply chain management leadership with information regarding future strategies and projects.

2Properly align and staff the supply chain organ- ization. It can be difficult to organize the supply chain function in a way that will maximize its effectiveness and bring commensurate benefits to the company. Some companies are best served by embedding proficient supply chain management professionals in various business units. For others, a more centralized operation is most effective. Many of the progressive companies we have worked with, however, have adopted a hybrid approach that combines a centralized strategy to gain consensus with decentralized execution to improve service.

Another emerging trend we have seen involves placing procurement, logistics, contract management, and forecasting/demand planning and similar management functions under the supply chain leader. This approach, depicted in Figure 1, is not appropriate for all companies, but it does give an idea of current thinking about supply chain management and the reporting structure.

Whatever structure you adopt, correctly staffing the supply chain organization is vital to success. Elevating staff members’ supply chain management skills and knowledge is always a priority, of course. But top leadership focuses more on strategy and is less concerned about transactional ability. As supply chain leaders move up to join their companies’ management teams, therefore, they must have additional characteristics. Best-in-class companies hire supply chain managers who have strong communication and relationship management skills (both internally and externally), the ability to think strategically, and a focus on value creation.