To Infinity And Beyond: Speaking Finance Is Only The Beginning

A few weeks ago, I was moved to rant about the importance of relating what we do in the supply chain world to its several contributions to business success.  But, there's a more elemental need at play in our world - broad understanding of what the core elements of supply chain management are all about.  If we  - all of us - don't get that, seductively cooing into the CEO's shell-like ear about ROA, ROI, ROE, and such-like is like to only get us (deservedly) slapped.

The challenge takes on a couple of primary dimensions.  One is for everyone in an organization that lives or dies with its supply chain performance to understand what all makes up supply chain management, and logistics, how the pieces fit together, and how they impact financial performance, customer relationships, brand image - in short, how markets (financial and otherwise) view the company.

So, a collection of functions that we don't usually think about really could benefit from some fundamental, but comprehensive, education in the basics of supply chain manmagment.  Legal, Real Estate, Finance, Accounting, Sales, Marketing, R&D, IT - the list goes on.

Another dimension that might surprise you is the need for the supply chain organization itself to understand the basics of supply chain managementy and how the chain's elements inter-relate.  In far too many places, even in this enlightened 21st century, "supply chain" is only a name.  Functions are still independent and siloed.  Their metrics are not synchronized, and may even be in opposition to one another.

That's got to stop.  Functions must get integrated, metrics must get aligned, and each functional practitioner must understand what his or her peers are doing and why.

Happily, some companies get it.  They wake up one bright and sunny morning, stretch, yawn, and in a blinding epiphany, realize,"Holy Moley, we aren't in the health care business, we are in the supply chain business!"  "We have to get really good, really fast, at supply chain managment."  It's a variant of Southwest Airlines' contention that it is a customer service company that happens to run an airline.  Or Zappos with shoes and accessories.  Or WalMart.

The key to actualizing such a new vision lies in education, though.  Good intentions will not make supply chain masters out of yesterday's operational functionaries.  For those who have not started on this path, it is time.  The supply chain foundation is a necessary precursor to establishing the value context in financial terms.