How Good is your Supply Chain?

When asked to discuss supply chain strategy, I am often greeted with the response “Yes of course, we have a purchasing department”. Supply Chain Management has progressed far beyond the old school purchasing mentality to become a key component of the modern business organization. We are all just pieces in the supply chain puzzle that is responsible for getting the ultimate customer’s product to market.

The fundamental concept of Supply Chain Management is based on two core principles. The first principle is that virtually every product delivered to an end customer has gone through a number of touches in a number of manufacturing and/or service organizations. These organizations are referred to collectively as that product’s supply chain. The second principle is that while supply chains have been around for thousands of years, most companies have only been concerned with what was happening “in their own sandbox. Few businesses took the time to understand, much less manage, the entire “chain” of suppliers & activities that were required to transform raw materials into finished, delivered product to the end customer. This lack of understanding often led to extremely dysfunctional supply chains, and of course, unacceptable delivery and quality performance.

A recent Chief Supply Chain Officer Survey shows just how concerned supply chain executives are about their supply chain. Respondents from 18 different market sectors participated in the survey including high tech, industrial, consumer products, automotive, aerospace & defense, and medical equipment. Interestingly, over half of the survey participants value the supply chain function as equal to sales/marketing, R&D and product development.