Master of Business Administration (MBA) degree; as a
result, their recommendations—no matter how technically sound—may meet opposition. Moreover, although
those serving in junior CoE roles may be technically
competent managers, they may lack business credibility
because they are perceived as not thoroughly understanding the business yet.
Finally, a strong career path is important because CoEs
can become overreliant on a single resource: the “
resident expert.” You’ll extend your CoE team’s longevity
and viability by putting a transition or succession plan
in place that ensures the center will continue to run
smoothly if your resident expert leaves the group. Keep
in mind, though, that the new resident expert will need
some time to master his or her new role.
6. Know when to call in reinforcements. Many managers assume that a center of excellence must be entirely
internal. Yet the reality for many firms is that they
lack the critical mass of work and access to talent in
very specialized areas that will enable them to support
a fully functional, exclusively internal organization.
Additionally, the demanding nature of CoE projects,
sometimes accompanied by short timelines, means that
it’s possible for almost any team to become overwhelmed
or to confront a technical challenge that’s beyond their
expertise. When a project’s demands outstrip available
capacity, or when projects are quite different than those
the CoE has previously managed, CoE leaders may want
to consider supplementing the center’s capabilities with
external resources.
In our experience, the hybrid model (that is, a blend
of internal and external resources) is the structure that
consistently delivers the highest value for most organizations. It is also the only sustainable model given the
significant challenges associated with creating and successfully maintaining a CoE, as well as the many failures
of CoEs built on internal-only models, which are often
caused by the lack of a critical mass of skills.
CAREFUL CONSIDERATION
Setting up a center of excellence is not an easy or obvious decision, and there is certainly risk involved. Some
have delivered great results, and others have performed
unsatisfactorily. In fact, the previously cited research by
Supply Chain Insights found that CoEs only work satisfactorily about 50 percent of the time.
Before embarking on the effort and expense of devel-
oping a supply chain CoE, then, you should give careful
consideration to whether you have the right culture,
work environment, business problems, sponsorship,
and developmental paths to build and maintain it. If
the answer to one or more of these questions is “no,”
then the next question is whether the deficiency is easily
correctable. If you find that the answer to this question
is also “no,” then a reasonable alternative to consider
would be either supplementing your capabilities with
external support or focusing on driving value through
improved performance in the functional supply chain
areas. Either of these alternatives is a better solution than
attempting to run a CoE that doesn’t have the backing or
resources it needs to succeed.
But if you do have the right business needs, culture,
and resources, then the potential benefits of establishing a supply chain center of excellence may well justify
the cost and effort. The opportunity to analyze metrics,
supply chain performance, total cost to serve, and other
important success factors across the entire company and
then use that analysis to help set policies and develop
the best outlook for the business as a whole is a worthy
goal. c
Note:
1. Supply Chain Insights, “Driving Supply Chain
Excellence: Insights on the Use of a Supply Chain Center
of Excellence,” June 2015, http://supplychaininsights.
com/driving-supply-chain-excellence/.
JONATHAN WHITAKER IS PRINCIPAL, MANAGED
ANALYTICS SERVICES AT THE CONSULTING FIRM
CHAINALYTICS.
Centers of excellence strengthen supply chains
by optimizing operations and inculcating enterprisewide best practices. CoE experts guide and
facilitate changes to internal processes, practices,
technologies, and strategies to optimize overall
organizational performance, providing the most
value for large companies that need to:
x Sell across multiple channels
x Serve volatile or shifting markets
x Conduct frequent contingency planning
x Develop supply chain strategies to address
e-commerce demands
x Build a unified, optimized post-merger-and-
acquisition supply chain
WHO COULD BENEFIT FROM
A COE?
