Keep in Control of the Supply Chain

If you're not managing your supply chain, it's probably managing you.

By Dave Fusaro, Editor in Chief

"Supply chain management is everybody's job," Tom Blackstock, vice president of that discipline at Coca-Cola Co., began a recent presentation. "Complexity is a cancer we all must fight. Process management is the cure."

Maybe not everyone is such a fan, but how often do you give logistics and supply chain management the respect they deserve? Blackstock provoked the issue as the keynote speaker at the annual conference of the International Assn. of Food Industry Suppliers in March.

Supply chain management is not like a broken extruder or an adulterated product. You can probably continue to get by without getting your logistics totally under control. But you'll never really be in control of your business without it. To a large extent, all the factors tangential to your business really will be in control of you. Doesn't that bother you?

I may use the two terms interchangeably sometimes, but the shade of difference is a big part of the point. Logistics is tactical; supply chain management is strategic.

It's not what gets done

but how it gets done.

The subject(s) typically ranks low on the priority list. It came in seventh on our recent Manufacturing Trends Survey, with just 9 percent of the respondents calling it a top concern for 2005. However, the ratings spiked among those dealing with spiraling raw materials costs. A manufacturing executive at an international spice and ingredients company wrote of his respect because of "continued global ERP implementation and line speed/integration upgrades." Another told of new "process/product tracking and control systems." A General Mills official said his two main concerns were "No. 1: Getting supplies on time to meet our demands. No. 2: Getting replacement parts on time for breakdowns."

All logistics issues, really. But even the external and tangential ones can, sometimes invisibly, chip away at your company's profits and its reputation.

"The process-centered organization will be tomorrow's winner," continued Blackstock, quoting Michael Hammer, a former engineer turned management consultant. Hammer authored Reengineering the Corporation, a business best-seller from a decade ago. Hammer now heads his own firm, which promises, "By redesigning their processes, by measuring and managing them and by organizing around them, companies are able to achieve unprecedented and sustainable improvements in operating performance."

Process is Hammer's favorite word. Rather than manufacturers of products, he wants companies to be organizers of their process. "The focus in a process is not on individual units of work, which by themselves accomplish nothing for a customer, but rather on an entire group of activities that, when effectively brought together, create a result that customers value," Hammer writes.

Blackstock sounds like a big believer. "Things must be integrated into our process," he continued. "The world is too convoluted to do otherwise." Data comes at us from all sides. "Two-hundred-plus emails a day. Twenty-five-plus voice mails. A calendar that makes it impossible to react to anything. Compare those numbers to what you faced three to five years ago. Every 1,100 days, that's less than three years, the amount of data you get will double.

"It's not what gets done but how it gets done," Blackstock continued. "There usually is little difference in the goal or end result. But the difference is in the quality of the end result and in the process taken along the way."

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