Supply Chain Maturity

May 30, 2007

The supply “blogosphere” is currently blogging on “Critical Supply Strategies for Succeeding in a Dynamic World“. It’s the cover story of the current issue of Inside Supply Management and is mentioned for example on Michael G. Lamoureux’s Sourcinginnovation Blog.

I like the article – it’s similar to IBM’s CPO study I’ve mentioned in of my previous blogs especially the critical supply strategies. I like this kind of studies because they provide directions for longterm objectives and lot of things to consider designing a supply (chain) strategy.

The real challenge from my point of view is not the strategy design process itself- it’s the movement from one maturity level to the next level and the transforming the strategy in real life. Additionally these types of strategies don’t fit for all companies. Their maturity level is different. All companies are equal, some are more equal (adopted from George Orwell’s Animal Farm).

One recommended critical supply strategy is to manage and enable the supply management organization. An indicator of procurement performance is “maverick buying” as a percentage of annual purchases. A low maverick buying rate indicates good performance and at least how procurement manages the spend – that’s spend management. Excellent explained on Jason Busch Spend Management Blog.

You see there’s a huge gap between leading procurement organizations and followers.

Another critical supply strategy is to develop and manage suppliers to deliver a competitive advantage in cost, quality, delivery/responsiveness, technology, and innovation achieved in a balanced way. Based on our research this is another area for different maturity levels. The maturity level of all companies is low by varying degrees on this strategy. Only Australian firms have a more balanced approach. See slide below.

Based on my experiences to define critical supply strategy aligned to current market environment is easier to do, but the next step of transformation (“do the strategy”) will be the real challenge. Happy to discuss.


Procurement Capability Accelerator II

May 21, 2007

The article is written. Please take a look on my publications tab and download the article.
Enjoy reading!

Procurement Capability Accelerator

May 16, 2007

Reading some blogs today I found the “Spend Management’s Top Three” on Jason Busch’s Blog “Spend matters” the business blog of spend management. To be honest this was the first blog I started to read regularly. Today he wrote his top three Spend Management issues. His second issue is a talent/recruiting miss-match inside many procurement organizations. I agree with him. In one of IBM’s previous studies on procurement CPO’s where asked to provide their main strategies for procurement performance improvement over next three years. The top three actions were people related:
1.) Management and retention of talent
2.) Upgrading of people capabilities and skills
3.) Training of staff to improve core procurement skills

From my point of view skills shortages are likely to be a major constraint on value growth. Value from procurement comes through procurement people – their skills and ability to interact with business objectives.

Currently I finalize an article on this topic. I’ll keep you updated, when it’s done.

At least I would like to refer to the CPO study again. It’s a quite interesting paper covering all relevant procurement topics from a strategic point of view. Some of the topics are still up to date like the organisational transformation of procurement and new frontiers for value and savings. A good reading.

Scoring High on the Supply Chain Maturity Model – II

May 15, 2007

Last week I was speaker at the CSCMP Europe 2007. I’ve presented how leading practices are being used to transform supply chain performance. The presentation is created based on IBM previous Global Value Chain Study.

This study, undertaken by IBM Global Business Services in
conjunction with APQC, identifies current practices, captures significant trends and establishes operational performance benchmarks in several key areas of Supply Chain Management: New Product Development, Planning, Procurement, and Logistics. By analyzing responses from companies across a range of industries, in multiple geographies worldwide, it provides unique insight into challenges and demonstrates how supply chain management is changing from a static and cost-centric function to an evolving, integrated business model.

Discover how leading practices are being used to transform supply chain performance by attending this session on the Global Value Chain Study.
This is my presentation. By the way, one of my key messages (it’s not in the presentation) was to think on the potential of utilizing Web 2.0 in Supply Chain Management. I think that Web 2.0 will reduce the cost of collaboration and one key element of Supply Chain Management is collaboration….

Supply Chain Visibility

May 15, 2007

On you find some benefits on Supply Chain Visibility. On my attendance during the last week at the CSCMP Europe 2007 conference in Paris some speakers highlighted the need and the benefits of supply chain visibility. I like this topic, because I know different performances or supply chain maturity levels of companies based on my research and have to agree with them.

To achieve a high supply chain visibility it’s necessary that a company needs integrated supply chain processes internally and externally. Enabling “real-time” supply chain information visibility inside and outside the enterprise should positively impacted the supply chain performance. Based on my previous research on supply chain planning most companies implement different initiatives to gain visibility. They respond more rapidly to changing customer requirements and market conditions and collaborate and share risks along the global network. Many are implementing vendor managed inventory and collaborative planning and forecasting programs, not only with key customers, but also their supplier community. More information can be found in this paper “Placing a lens on supply chain planning“.

How does your company determine how company’s supply chain meets different supply chain challenges? Visibility is necessary to identify issues in the supply chain and the gap between current status and plan. Then corrective actions can be set up to re-align the supply chain. Do you know your supply chain performance?

CSCMP Europe 2007

May 10, 2007

Currently I stay in Paris to attend the CSCMP Europe 2007. The first presentations today focussed on the misalignment of Supply Chain Management initiatives, managing a global supply chain and some more interesting topics. One presentation was on Supply Chain Alignment in the French Wine Industry. Quelle surprise, je suis à Paris (The conference is in Paris:-)) Do you know that the Wine Supply Chain can have up to seven different designs of a supply chain, including wine producer, wholesale and retailer? By the way, yesterday at the research seminar researchers identified more than 150 different definitions on Supply Chain Management. I prefer the one from CSCMP.

Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies.

Scoring High on the Supply Chain Maturity Model

May 9, 2007

Today I will fly to Paris. I’m speaker at CSCMP Europe 2007. This conference is a must for any supply chain professional who wants to enhance alignment and relationships both within their organization and across their supply chains. I will talk and present on IBM’s previous and current studies on global supply chain management. In 2005 IBM Global Business Services carried out surveys on value chains in all major developed countries.

I will outline current challenges like political and economic uncertainty or the increasing impact of global sourcing and highlight how many companies are utilizing new approaches like Supply Chain Visibility or Sense and Respond Event Management.

See you there!