needs. Accordingly, best-in-class companies also are
placing more emphasis on demand planning and forecasting as an additional means of ensuring optimal
inventory levels.
9Establish appropriate levels of control and min- imize risk. Supply chain management policies
and procedures should follow an appropriate
sequence and structure, and it is important to review
them frequently (if not constantly) and bring them
up to date. Keeping them realistic and easy to understand and follow will help to ensure compliance.
It is certainly possible to go too far in establishing
policies and procedures, however. That is why best-in-class companies periodically review their policies and
controls to ensure that they are not creating bottlenecks. Their objective is to streamline them without
sacrificing the ability of those controls to deter theft,
fraud, and other problems.
Risk mitigation goes hand-in-hand with policies
and controls, and best-in-class supply chain organizations integrate risk-mitigation methodologies into
their sourcing decision process. This is a complicated
subject that we can touch on only briefly here, but in
short, these organizations are adopting sound
methodologies that include: ( 1) identifying all of the
risk elements, ( 2) determining the probability of the
risk event occurring, ( 3) assessing the dollar impact on
the sourcing decision if the risk event actually takes
place, and ( 4) prioritizing risks for monitoring and
prevention.
10Take “green” initiatives and social responsi- bility seriously. Reducing a supply chain’s
carbon footprint is no longer a “nice but not necessary” practice. It’s likely that a carbon-trading regime
will be established in the United States at some point.
But here’s another reason why best-in-class companies
“go green”: buyers and consumers are taking environmental impact into consideration when they choose
suppliers. That is why organizations such as Dun &
Bradstreet now produce reports that evaluate “green”
companies. We’re also seeing more and more requests
for proposal (RFPs) that ask suppliers and service
providers to provide information about their green
initiatives.
Buyers and consumers are also considering social
responsibility when making purchases. Social responsibility consists of a framework of measurable corporate policies and procedures that result in behavior
10 IDEAS FROM
BEST-IN-CLASS SUPPLY
CHAIN ORGANIZATIONS
Many leading companies have adopted these 10
best practices. Some may be familiar while others
may be new to your company. Implement them all
and you will have a strong foundation for supply
chain excellence.
1. Establish a governing supply chain council
2. Properly align and staff the supply chain
organization
3. Make technology work for you
4. Establish alliances with key suppliers
5. Engage in collaborative strategic sourcing
6. Focus on total cost of ownership, not price
7. Put contracts under the supply chain
function
8. Optimize company-owned inventory
9. Establish appropriate levels of control and
minimize risk
10. Take green initiatives and social
responsibility seriously
designed to benefit the workplace, the individual, the
organization, and the community. Social responsibility is playing an increasingly significant role in best-in-class supply management organizations’ decisions, not
just when it comes to purchasing but also in regard to
risk evaluation. A company that does not have a meaningful social responsibility program risks criticism
from workers and/or consumers.
ROADMAP FOR RELEVANCE
The 10 best practices described above do not represent
a complete list of every action that top-tier supply
chain management leaders are engaging in now. This
list does, however, provide some ideas and perhaps a
roadmap for a supply chain organization that is striving to be viewed as valued and relevant to its parent
company.
Even if you already have implemented many of these
practices, the insights and examples offered here will
serve to validate your current strategy. And if you aren’t
taking all of these steps, then adding the remaining ones
to your lineup will help you complete your transformation to a best-in-class supply chain organization. ●
