Supply chain managers and executives have a historical bias toward focusing on execution—in other words, getting the right goods to the right people at the right time. As a result, they may not take a step back and think about the design of their actual supply chain often enough.
At its simplest level, supply chain design involves deciding how best to get your products and services to market. According to the software company Llamasoft, every company has to make this decision, but not every one makes that decision well.
To help, the company has published a 21-page e-book titled "Four Steps to Creating Your Supply Chain Design Development Plan." The book asserts that companies cannot design supply chains on an ad hoc basis and expect good results. Instead, they need to take a thoughtful approach and have a plan for further developing their design process.
The four steps Llamasoft identifies for creating a well-crafted supply chain design process will be familiar to most readers: 1) align your supply chain strategy with the overall business strategy; 2) assess your current level of supply chain maturity; 3) identify gaps; and 4) create a road map and prioritize projects.
One of the meatiest sections of the publication addresses the second step: assess your supply chain maturity. Llamasoft identifies the following five stages of supply chain design maturity:
Stage 1: Companies are performing supply chain design projects infrequently and on an ad hoc basis. These projects are typically done within specific groups, such as a business unit, with little collaboration or knowledge sharing with other groups. Projects are often managed via spreadsheets, and project prioritization is completely arbitrary. Much or all of the company's supply chain knowledge may reside with one or two people.
Stage 2: Supply chain teams and executives in different business units are beginning to talk to one another and share knowledge and best practices. There are now a mix of ad-hoc and recurring projects, and the company has recognized the importance of mapping processes, identifying gaps/weaknesses, and implementing process-improvement initiatives. Supply chain managers and executives may need to refine role definitions, build a professional development program, and define career paths.
Stage 3: The company has designed repeatable processes and standards that are aligned with its overall business strategy. Employees have come to a common understanding of what supply chain excellence is for their particular company and have set common goals. The company has prioritized its process-improvement efforts and is documenting its processes.
Stage 4: Standardized processes are in place across business units and regions. The company has benefited from some "early wins" and is looking at how to achieve broader supply chain goals. Supply chain design not only is aligned with the overall business strategy but also is influencing business decisions and the direction of that strategy. Executive support for supply chain design efforts has been firmly cemented, and the supply chain organization is discussing with executives how to ensure that goals are aligned and that it has developed the right key performance indicators (KPIs).
Stage 5: The company is now focused on making supply chain excellence and process improvement "a way of life." It has created a supply chain design team that is seen as one of the company's core competencies. That team has designed standardized supply chain processes that are rendering the same quality and performance reliability every time. The company has expanded its collaborative modeling efforts to include third parties and external partners.
An especially helpful part of the book is a series of questions for assessing supply chain maturity. The questions are grouped around four focus areas: strategy, people, process, and technology. Examples of the questions include: What are the drivers that trigger supply chain design exercises in the company? Do we have a structure to develop the skills and talents of our people? What is the process to get executive sponsorship and involvement? What technologies do we currently use for supply chain design?
Not surprisingly, the publication makes the case that readers need some sort of software solution, like the modeling, optimization, and simulation tools that Llamasoft provides, in order to design better supply chains for their company. But even if the reader is not interested in—or does not yet have the funds or capabilities to implement—supply chain design software, the information in the paper will still be useful. And to its credit, the book maintains that companies should focus on getting their strategy, people, and processes in order before they apply technology. "If you haven't established the proper foundation of strategy, people, and process," the book says, "no amount of cutting-edge supply chain design technology can compensate."