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When Supply Chain Confusion Can Kill Business

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Supply Chain Confusion, Hijacked Your Supply Chain

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When Supply Chain Confusion Can Kill Business

Supply Chain Confusion – Have You Encountered It?

I am a very social person and I tend to go and visit my alumni meetings for IMD, for Harvard, for Australian Graduate School of Management, Chartered Financial Analyst and many other institutes that I am a member of.

And, often the question that is asked when I meet someone for the first time is “What do you do?”

When I explain to them that I ran a company called Global Supply Chain Group and I help companies improve their supply chain management, most of the people

I meet still do not fully understand what supply chain management is, including those in the alumni of my business schools or Chartered Financial Analyst Institute or Law school.

So much so that occasionally I even get asked questions such as “So what kind of chains do you supply to the businesses?”

Learn All About Supply Chain Confusion

At a more informed level, many people confuse supply chain management with “supply” or procurement or ‘strategic sourcing’.

The most common misconception is, however, between logistics and supply chains, and frequently I explain the difference between these two.

This confusion is exacerbated by trucking companies who have painted over their old trucks from XYZ Trucking/Transport to XYZ Logistics to XYZ Supply Chain Solutions without any material change in their capabilities or service offerings.

Moreover, many supply chain managers, directors and vice-presidents who come from logistics, 3PL or such companies exacerbate this confusion by not expanding their skill-set.

They rely on CEO’s (and other stakeholders’) lack of differentiation capability between logistics and supply chain to narrowly define their role and stay well within their comfort zone.

I answer the question about what we do saying that we help create profitable business transformations using supply chain management as a very effective and balanced tool-kit.

contrasting such business transformations against purely soft-skills based transformations (such as culture change) that rarely stick in rough and tumble of real life companies,

and against purely hard-skill based transformations (such as process re-engineering) which cause a lot of angst

I show them a simple diagram such as the figure below to explain the progression of supply chains from a lower level of sophistication to a higher plane of profitability.

4 Things Your Competitors Know About Supply Chain Confusion.

Causes Supply Chain Confusion

This starts a discussion on the various generations of SCM (supply chain management) and how they grow in sophistication over each succeeding generation. Those are the type of questions I can illustrate easily with case examples and real life stories. There will be a lot of these stories in my book UNCHAIN YOUR CORPORATION.

I make it more real to people by explaining to them that we help companies configure business-to-business networks in a much better manner than they have done in the past.

It used to be the case, or even still is now, that business-to-business networks are configured in an ad hoc manner on an as-needed basis.

In most cases, these relationships are never formalized and fine-tuned to an extent where companies would create robust collaborative working environments to help develop new products,

or create pipeline of products, to optimize profitability or to help manage the cash-to-cash cycles in the most productive manner.

Value of Supply Chain Confusion

The difference between a well-functioning business-to-business network and suboptimal one is a nearly 5 times difference in profitability. Now that is something that will easily intrigue most CEOs and business school graduates.

When people hear that a good business-to-business network can increase profitability by up to 5 times by improving the cash-to-cash cycle, by improving the transactional optimization of profitability,

by helping create new products faster and better, and by outsourcing better, most people are very interested to clear the confusion about how current generation supply chain management works.

For second part of this article – click here

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Copyright - These concepts, frameworks and ideas are copyright of GLOBAL SUPPLY CHAIN GROUP from the time of their creation. Do NOT copy these without permission and proper attribution.

Notes:

1. These ideas and concepts will be usually expressed by our thought leaders in multiple forums - conferences, speeches, books, reports, workshops, webinars, videos and training. You may have heard us say the same thing before.

2. The date shown above the article refers to the day when this article was updated. This blog post or article may have been written anytime prior to that date.

3. All anecdotes are based on true stories to highlight the key points of the article - some details are changed to protect identification of the parties involved.

4. You are encouraged to comment below - your real identity and email will not be revealed when your comment is displayed. Insightful comments will be featured, and will win a copy of one of our books. Please keep the comments relevant, decorous and respectful of everyone. All comments represent opinions of the commentators.

Our Quick Notes On Five Flows Of Supply Chain Management

Part of our new “Quick Notes” series – this report answers your most pertinent questions of the topic.

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. What are the five flows of SCM?

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. What is the importance of difference between "Supply Chain" and "Value Chain"?

. What are the stellar case studies of each of the five flows?

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Table of Contents

ABOUT THE PRINCIPAL AUTHOR

Today, Vivek and his partners are among 20-30 people on the planet earth who have this deep understanding of supply chain systems, practices and tools. CEOs, COOs, executives and Boards call them in most challenging situations once they know the full potential of supply chain based transformations. Following are key milestones in Vivek's journey:

  • Started in 1983 as a merchant navy cadet at 18 years age, worked his way to qualify as a Captain – qualified to take command of any merchant ship, worldwide.
  • Earned a top tier MBA from UNSW at the top of his class.
  • Joined highly regarded strategy consulting firm Booz Allen & Hamilton, consulting to the CEOs, Boards and senior management of global corporations within Australia.
  • To learn and specialise in supply chain – against all odds, sought out the co-inventor of supply chain in Germany and convinced him to be a partner in his firm, GLOBAL SUPPLY CHAIN GROUP, launched in January 2000.
  • More than 500 successful blue chip projects with high impact business transformations in large corporations using the full power of SUPPLY CHAIN MANAGEMENT.
  • 4 Seminal and path breaking business books IN SUPPLY CHAIN MANAGEMENT – these are available in bookstores and universities and libraries worldwide.

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WHAT OTHERS ARE SAYING

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OUR CLIENTS

Our Clients come from a variety of industries – yet they have a common element. They rarely rest on their laurels, and are always looking to do better.

OUR PROJECTS - EFFECTIVE TRANSFORMATIONS

In the last 20 years we have completed more than 500 projects. Click below to see a sample of our projects.

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Our Books

5.0
5/5

THE 5-STAR BUSINESS NETWORK

If you are deeply passionate about the world of business and supply chain networks as I am, and enjoy digging answers to critical questions that will help build and steer your business with wisdom, then join me. This book is a journey of exploration through the world of business networks that run along the veins of today’s commercial world.

4.3
4.3/5

OUTPERFORM OUTSOURCE OUTPROFIT

The trend of outsourcing continues to grow unabated with the whole gamut of services, from simple to mission-critical tasks. There is not a single company on earth that does not outsource anything. It is not just about cost arbitrage, it is also a finer expression of division of labour at the organisational level. Like all leverage, outsourcing is a double-edged sword too. On one hand, it allows you to do more, faster. On the other hand, if it goes bad, it can easily kill your business. If you do not believe that is possible – you can google the Fox Meyer saga from the 90s and see for yourself.

4.3
4.3/5

UNCHAIN YOUR CORPORATION

Businesses Are Chained By Unseen Chains. If You Are Looking For Ways To “Unchain Your Corporation” A Successful Business Transformation Is Required.

Successful Business Transformations Are Difficult, Yet Rewarding.

Business Transformation Is Fast Becoming A Question Of Survival In The Modern Globalised Era.

Modern Supply Chains Integrate Businesses And Economies Faster By Systematic Information Sharing From Internal And External Sources.

Companies Can Multiply Profits By Progressively Ramping Up Cohesion And Collaboration Of All Moving Parts In B2B Network To Achieve Tighter Integration.

4.3
4.3/5

GREEN SUPPLY CHAIN – AN ACTION MANIFESTO

It is generally accepted that environmental consciousness is now changing to environmental proactiveness as organizations are discovering that it makes good commercial sense.

Boards are asking the management to review their policies related to environmental norms, not only to bolster their corporate social responsibility aims, but also because consumers are asking for greener supply chains

It is also widely agreed that consumers will increasingly prefer to buy more and even pay more for products or services provided in an environmentally sound manner.

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