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Game Changing Supply Chain Strategies Involve the Revenue Guys

By Chris Jones | 03/24/2013 | 3:28 PM

How do you know if your company has a “game changing” supply chain strategy? It’s really simple. Are the folks in your company responsible for revenue part of it? Do they put your supply chain capabilities in front of the customer as a differentiator? Are they counting on your supply chain capabilities to grow the top line or crush the competition? There is a “glass ceiling for greatness” in supply chain strategies, but most supply chain executives don’t know that it exists.

If you ask any self-respecting supply chain executive, he or she will say that their supply chain is strategic to their company’s success. But, it’s highly likely that the supply chain strategy is inward as opposed to outward focused. That’s easy to figure out too. Is the supply chain an afterthought for the “top line” and profit folks? It supply chain the “get it done” organization? I actually heard that saying from a marketing executive at a leading consumer package goods company.

If you look at the following chart you will see the “glass ceiling for greatness” for supply chain strategy. It hits when the discussion turns from cost, compliance and service to revenue, profit and competitive differentiation. Cost and asset reduction, compliance and service reliability improvement strategies are all things that the supply chain organization can do without anyone else’s involvement and is a given. When you get to the top line/profit/competitive differentiation side it takes active buy-in and sponsorship from the people responsible for revenue, profit and the customer which are usually the head of sales, COO or president.

Figure 1: Glass Ceiling for Supply Chain Greatness

Revenue guys picture 1
Source: Descartes

There are numerous and substantial opportunities for supply chain executives to make a difference in a company’s success and this has been going on for quite a long time. But sadly, they don’t happen enough because supply chain executives fail to sell the vision outside of their organization. Here are two successful examples of game changing supply chain strategies.

The first is John Lewis Partnership. I mentioned John Lewis in a recent blog Home Delivery Success Starts at the Order. John Lewis took what too many retailers consider to be mundane and a cost center – home delivery, and made it customer facing as part of their omni-channel retailing strategy. Instead of the traditional approach of taking the order and later figuring out how to deliver it, John Lewis engaged the customer at the point of sale – on the web and in the store. The result was that they took their top line for value added home delivery services up 500% AND improved their profitability by providing delivery choice with premium pricing for service for their customers. The following chart is an example of how to map home delivery capability to supply chain greatness.

Figure 2: Home Delivery Strategy Delivery Example

Revenue guys picture2
Source: Descartes

The second is Herman Miller in the 1990s. In the late 1960s, Herman Miller invented the modular office or better known today as the “Dilbert cube”. Herman Miller had an epiphany; they decided that their product was as good as any on the market, but not the point of differentiation. The office furniture at that time was defined by unreliable service and lengthy lead times. Instead, they believed that they could sell much more if they dramatically focused on reducing lead times (75%+ decrease), while automating order capture for convenience and accuracy to improve reliability. It all started with product configuration that happened right in front of the customer that was tied directly into a factory designed to turn out the order in a couple of days, not weeks. Their mantra became “MacMiller”, just like Mac Donald’s, fast and good enough. In Herman Miller’s case, this division grew its revenue 10X over a 6 year period while NOT fundamentally changing the product.

What is amazing is that the original game changing idea for both companies came from the supply chain organizations, not sales or the president - but those two had to "own it". If you are a supply chain executive you have to ask yourself a hard question. What can your organization do to deliver game changing results and have you convinced the revenue guys to do it?

How is your company breaking the supply chain strategy "glass ceiling" to deliver game changing results for your business? Let me know.



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The opinions expressed herein are those solely of the participants, and do not necessarily represent the views of Agile Business Media, LLC., its properties or its employees.

About Chris Jones

Chris Jones

Chris Jones is Executive Vice President of Marketing and Services at Descartes Systems. Jones has spent more than 30 years working with manufacturers, retailers, distributors, and logistics providers to improve their supply chain operations. One of his primary missions is to identify and leverage new and counter intuitive activities that make a difference in the business. Jones has held senior positions at Kraft Foods, Descartes, and Gartner. He has a B.S. degree in Electrical Engineering from Lehigh University.


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