Written by Supply Chain Executive Mike Mortson. This guest post first appeared on Mike’s industry blog, Supply Chain Game Changer.
How many parts of your company act as independent silos? How many functions in your company conduct themselves like they are islands?
One of the main problems in a functionally organized company is that those functions over time can become isolated from each other. The responsibilities, metrics, skills, strategies and mandates for each function can cause people to put their functional focus ahead of the greater company objectives.
But the Supply Chain team is uniquely positioned to bridge all of these silos and islands. Supply Chain is truly the link that can hold your company together!
Whenever I have joined a new company a common refrain that I have both heard and observed is that people are not working as well as necessary across functions. Organization lines and boxes on a piece of paper become actual boundaries and barriers to teamwork and productivity in real life.
The Finance team has their priorities, the Marketing team has their focus, the Operations team is doing their own thing, and Sales is off doing something else entirely.
When the organization is truly dysfunctional each of these functions works at cross purposes, finger pointing as to the deficiencies of other groups, and basically undermining the ability of the overall company to succeed.
There is obviously no room for this kind of behaviour in a High Performance Organization. Every individual and team must work harmoniously to achieve the company’s overall objectives. This does not mean that there is no dissent or disagreement. It does mean that High Performing teams have figured out how to address these issues, rise above them, and continue their drive forward.
The Role of the Supply Chain Team
The term “Supply Chain” is more than just the name of the group that manages materials and logistics. And “Supply Chain” is more than just a characterization of the flow between Suppliers and your company and your Customers. “Supply Chain” also reflects the leadership role that this team can and should play in unifying your company!
The Supply Chain uniquely interacts with every aspect of your organization at some point in time.
Design and Development
The creation of new products must be supported by the Supply Chain team working closely with Design and Development. Supply Chain must find and qualify suppliers, manage the introduction of new components, materials and products, and coordinate the logistics of these suppliers, raw materials and products.
The interaction between Supply Chain and Finance must be tight and harmonious in a well functioning organization. The Supply Chain team largely controls much of the biggest expenditures in many companies. The procurement of materials and goods and services, and the timing of this procurement, payment terms with suppliers, and the buildup and disposition of inventory all dramatically impact the amount of cash that a company has and uses.
The management of the Sales, Inventory and Operations Planning (SIOP) process within a company dictates the entire tactical and strategic planning of resources at all levels. And Supply Chain’s ability to negotiate costs successfully and competitively can immediately impact a company’s bottom line.
Supply Chain must work cohesively with Finance in order to keep the company running efficiently.
If your company has either in-house or outsourced Manufacturing operations those facilities are completely dependent on Supply Chain for ensuring that materials arrive on time at the specified quality levels.
Supply Chain must coordinate the flow of goods across the entire end-to-end supply chain from suppliers through to internal operations and on to customers.
Information Technology (IT)
Much of the backbone of any company is found in the IT systems which enable it to run. And the core of those systems is often found in Supply Chain. The ERP/MRP, WMS, TMS, SIOP, and other systems provide the platform for the electronic communication of information up and down the supply chain.
IT is more than just the back office function that keeps the computers running and your email functional. The Supply Chain and IT teams together create the basis for a company to deploy tools and capabilities that can provide competitive differentiation, customer satisfaction, and financial excellence.
Customer Teams/Marketing/Call Centres
Depending on your industry the Supply Chain team must have a close tie to the Customer teams. If you are delivering products to customers you need to provide that visibility to Customers and to Customer service agents. And this visibility is enabled by, and provided by, the Logistics team within your Supply Chain group.
The Supply Chain team manages the flow of goods and materials and the transportation and logistics to move those goods. Commitments on deliveries to customers most certainly require input from, if not the actual commitment, from the Supply Chain team.
No one wants to disappoint a Customer or miss a commitment to a Customer. As such it is imperative that the Supply Chain team work tightly with all customer facing groups.
The Supply Chain team interacts with virtually every part of your organization. The examples listed above are meant to be illustrative and not exhaustive. But it is clear that Supply Chain is an integral part of your company.
Many companies are less efficient than they could be because many of the functions within the organization act as silos which is highly destructive behaviour.
The Supply Chain team must recognize its unique capability to take on a leadership role which transcends it’s direct responsibilities. Supply Chain works with every part of your organization.
As such Supply Chain must work across, and break down, all silos and organizational boundaries. Supply Chain leadership is a core element of any High Performing Organization.