Webinar Notes: Understanding the Link between Supply Chain and Corporate Performance

Webinar Notes: Understanding the Link between Supply Chain and Corporate Performance

This week’s webinar notes are from an August 30th event hosted by Supply Chain Insights on the link between the supply chain and overall corporate performance. The webinar can be viewed on demand on their website.

On the webinar, Supply Chain Insights Founder and CEO Lora Cecere was joined by Philippe Lambotte, SVP of Supply Chain at Merck and previously SVP of Customer Service and Logistics at Kraft Foods.

Of critical importance is the ability of supply chain leaders to define with clarity the implications of supply chain operational changes. There is often a gap between business strategy and the translation of those values and priorities in practice. Since you can’t effectively change everything at once, helping decision makers understand the potential opportunity and risks of trade-offs is the key. Simplify explanations whenever possible and don’t expect to be popular and successful at the same time. In other words, be clear about what will be required in order to accomplish what the executive team is asking of you.

Inventory turns is a common driving metric, particularly when the company is concerned with freeing up cash flow to fund significant investments or acquisitions. If this is the top priority, inventory metrics should be highly visible and present in team and individual performance metrics. At the same time, service levels need to be maintained or customer satisfaction levels will fall.

When a company is growing through acquisition, particularly across geographies, the resulting complexity will put stress on the supply chain. Leaders often underestimate differences in culture and priorities and how they will affect the individual operations as well as how well they are combined to take advantage of the potential efficiencies that are often used to justify acquisitions. Major organizational changes are disruptive, forcing supply chains to flex their muscles in response.

A lack of ability to manage complexity is often the cause of eroded operating margins. Driving growth in emerging markets introduces significant complexity. Expanding into these markets is not based on a company’s ability to recreate an operation that was successful in another location but to deal with the specific complexities of the new location. The impact of local versus global focus varies by industry. Pharmaceutical companies are becoming more localized, primarily to deal with regulatory changes and approvals. Conversely, food-based companies were more localized and have had to learn to be more global.

In order to succeed, supply chain leaders must stop focusing on the differences between companies or industries and focus instead on common opportunities for improved performance. Excellence offers lessons to all other practitioners. In response to competition and changing market conditions, priorities often change from quarter to quarter which makes it difficult to implement a consistent strategy. Companies believe they can work harder to make up the difference, but it is not always possible. Supply chain visibility and representation are needed at the executive table to drive results and improvement on a monthly, quarterly, and annual basis.

Supply Chain Insights also hosted their first annual Global Summit this week in Scottsdale, AZ and they will be sharing a recap and highlights on a September 26th webinar.

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