Jun 6, 2008

A New Supply Chain Perspective

Last month I had the pleasure of speaking a couple of times to executives and managers from Latin American companies gathered at the annual VISUM conference in Mexico City (http://www.sintec.org/contenido.asp?seccion=128&idmenuGN=85 ).

VISUM is all about supply chains and much of my audience was procurement folks. For them, I had a simple message. If you take the conventional procurement view of a supply chain system (see diagram at right), you believe the chain ends at your company. But that’s a limited view. The company sits in the middle of the real supply chain, which extend s all the way to the company’s end customer.

If you’re a procurement person, why should this distinction matter to you? Because you can’t do your job properly if you don’t take a total system view, you won’t do your job properly. Worse, a limited perspective, which tends to focus on procuring parts and materials for the lowest cost, may compromise the company’s larger vision of delivering an optimal customer experience.
What if, for instance, in going for low cost you trade off timeliness of delivery on a key component?

If the whole assembly of what you make has to wait for this component to show up – late – your customer’s entire order could be delayed. If your customer is a business, its projects could get backed up. Bad customer experience. Your customer’s customers could become unhappy. Bad end customer experience. They could fire your business’s customer. That customer could pull its business from your company.

In other words, saving a little on the component just isn’t worth it.

I concluded by saying, If I manage to convince you of three things today, I’d like them to be:

  1. Customer experiences are important. They are becoming the critical factor in whether or not your company’s products sell or don’t sell.

  2. You in the supply chain help create them. Your work effects not just the price and quality of products. It effects whether a customer has a good or bad experience buying and owning your company’s product.

  3. Creating them is exciting. You should be looking for opportunities to get involved. It will make your work more interesting. It will give you a bigger role in your company.
    Those suggestions go not only for Latin America but all of the Americas, and anywhere in the world.

No comments: