CSCMP's Supply Chain Quarterly
October 24, 2018

Building "centers of excellence"

Concentrating supply chain expertise in functional centers of excellence has paid off for a number of multinational companies.

Supply chain executives who are running multinational operations should consider creating functional "centers of excellence" as a way to make their overall operations more productive. A number of global corporations, including IBM, Dow, and Procter & Gamble, have done so, with good results.

Consider the example of IBM. Back in the 1990s, each of IBM's business units around the world ran its own separate supply chain. The company came to the conclusion that in a global economy, it no longer made sense to manage its supply chains on a regional basis.

Instead of simply combining all of its supply chains into a single entity, IBM took a different approach. It created special centers for procurement, manufacturing, and order fulfillment at different locations around the globe. Each center was staffed by experts in those areas who could respond to requests from internal and external customers worldwide.

The establishment of the functional centers meant that supply chain personnel were no longer generalists. Instead, they became specialists in a particular area and could develop deep expertise in a specific function.

The "centers of excellence" concept allows staff to acquire the know-how to develop better solutions to complex supply chain problems and to institute best practices across the company. That's why it should be considered by every supply chain chief.

James A. Cooke is a supply chain software analyst. He was previously the editor of CSCMP's Supply Chain Quarterly and a staff writer for DC Velocity.

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