Supply Chain Specialization / Competency Networks
From WikiSCM
Supply chain management as a service is a growing trend that's helping companies take an initiative from idea to business results in a matter of months
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Creating rapid and sustainable value
In today's hypercompetitive marketplace, survival requires a powerful strategy. But what are the ingredients of a good competitive strategy, and what are the most effective methods for implementing it rapidly to achieve and sustain value?
In the electronics market, success requires a supply chain infrastructure that incorporates adaptability and operational excellence at the speed of market innovation.
Competitive advantage can be gained by focusing on product leadership, customer intimacy or operational excellence. Central to this focus are product innovation and value chain collaboration. The electronics industry provides a perfect example of this in practice. Its constant demand for smaller, faster and more feature-rich products means that maximizing differentiation in any of those areas is critical to sustained success.
As product life cycles shrink aggressively, speed-to-market is critical for extending the length of a company's competitive advantage. Companies must now tackle risk, latency and inefficiency through shared management of critical operations across multiple supply chain tiers. There are many examples of companies that just a few years ago enjoyed dominant positions but that implemented failing strategies to introduce new and innovative products quickly and continuously. That vulnerability leaves the door open for competitors to take market share through their own innovation strategies.
The systems, processes and methodologies of the entire value chain support lasting differentiation. How you operationalize your strategy to innovate new products and bring them to market quickly is as important as the initial spark of innovation itself. The luxury of a lengthy development process in a product cycle is a thing of the past. The product cycle is now tied directly to large-scale product launches, placing significant challenge on the supply chain. Supply chain management is the key variable in the success or failure of these critical innovation campaigns.
This dynamic brings change at a higher frequency and at a faster pace than ever before. Disruptive products, technologies and competitors will demand that companies gain the ability to quickly realign their strategies and subsequently reengineer the processes that support its execution. The commercial challenge of translating innovation into a competitive advantage lies within your supply chain execution strategy.
Do what you do best
It's a simple concept: Do what you do best; outsource the rest. Companies need to focus their resources on value-added activities that are central to the strategic success of the organization, the core. This doesn't diminish the importance of other areas or contexts. Rather, it enforces the need to partner with a best-of-breed outsource provider.
In an October 2003 Forbes magazine article, Peter Drucker was quoted as saying, "What outsourcing does is greatly improve the quality of the people who still work for you. I believe you should outsource everything for which there is no career track that could lead into senior management." In other words, a janitor at a manufacturing company can become a manager of janitors in that company. If a janitorial outsourced company employed that same janitor, he could one day be the CEO.
Your context is another company's core. The specialization model enables each value chain contributor to focus its energy on becoming the best-in-class domain expert in its field; thus the model strengthens each link of the chain itself. The supply chain is customer-facing and has cost implications that impact the bottom line. Best-practice companies harness the value of external best-of-breed partners to realize the financial benefits of specialized domain experts.
So the question is, should you dedicate your valuable resources to supply chain information technology, understanding that it is not a one-time effort but an environment of ongoing and dynamic change, or is it more beneficial for you to align with a specialized partner? To answer this, you must understand both the current and future efforts required to manage this constantly changing network of supply chain partnerships.
At any given moment, market forces could demand changes within suppliers, logistics providers, locations, customers and any number of these specialized participants within your supply chain network. This variability has significant effect on the supply chain infrastructure, from the foundation layers of establishing and managing the electronic communication between the trading partners to the more-complex requirements, including the configuration of the processes and work flows that are essential to the management of the network itself.
It is in this complexity that supply chain management as a service has proven to deliver the agility for companies to leverage their partners' domain expertise of proven infrastructure and methodologies. Supply chain management capabilities as a service offering enable companies to achieve value quickly, without having to manage the learning curve directly and change processes that would be required if the operations were internal.
Accelerating time-to-value
Effective supply chain management fosters collaboration across the entire supply chain. Delivering supply chain management capabilities as a service offering gives customers the ability to leverage world-class supply chain management solutions while lowering the total cost of ownership and accelerating the time-to-value compared with traditional software deployment methodologies. This is achieved through:
-Tailored, program-specific views of multiparty, customer-tailored supply chains.
-Leveraging existing supply chain-specific electronic connectivity infrastructure and methodology requiring fewer IT resources to implement and operate the solution.
-Deep domain experience across the discrete requirements within planning, customer/supplier collaboration, transportation management, inventory management and supply chain network design.
-Establishing an integrated platform, with a common view of the data, for testing, development and deployment.
-Providing a highly configurable user interface.
-Enabling self-managed, customized configuration of best-practice work flows.
-Service-oriented architecture.
-Delivering automation across multiple tiers of supply chain partners.
-Facilitating real-time data aggregation and management.
Can't measure it? Can't manage it
The supply chain is the front line of the customer-facing operation and, subsequently, the source of critical activity. With this responsibility comes the role of supply chain management as the director, elevating the importance of day-to-day decisions that are now at the center of critical cost/performance trade-offs.
As supply chain managers' scope of responsibilities and level of collaboration with other internal and external functions expand, leading companies have realized they need a fully integrated supply chain architecture that can establish a single version of truth across the multiple enterprises that contribute to the network's success or failure.
Supply chain performance analysis allows you to gain greater control over supplier, partner and financial performance across the supply chain. This information can be viewed and disseminated across all value chain participants through business dashboards, shared metrics and performance scorecarding. Less time is spent arguing over which trading partner is at fault for a particular performance problem, and more time is spent on collective problem solving to address the issue to both partners' satisfaction.
A study published in March by the Aberdeen Group showed user adoption of supply chain management as a service is growing. This is important to watch, since what was once the practice of supply chain leaders is now becoming the practice of the majority.
Whether competing for value chain domination or market segment leadership, companies must differentiate themselves and their products through world-class supply chain design and execution. This will require companies to foster a culture of collaboration among all of their supply chain partners and establish a supply chain network that is agile enough to manage change ahead of the innovation curve.
