Supply chain management the Disney way

Supply chain executives should be thinking about much more than reducing costs and moving merchandise. In addition to such typical concerns, they should focus on how the supply chain can help to enhance their company's brand. That view was espoused by John R. Lund, senior vice president of Disney Parks Supply Chain Management for Disney Destinations LLC. Lund made his remarks in an address at the CSCMP Europe 2012 conference held recently in Frankfurt, Germany.

Before Lund took the top supply chain job at Disney Destinations, which oversees theme parks, resorts, and cruise lines around the globe, the company's supply chain operations focused on cost containment. Under his tenure, supply chain management has added supporting Disney's mission of creating a "customer experience" for resort and theme park visitors to its portfolio.

Creating a customer experience requires that Disney theme parks always have certain merchandise in stock. For instance, because a visitor to a store in the Frontierland area of a Disney park would expect to see a Davy Crockett coonskin cap, Disney must carry this item, even though it's not a big seller. The coonskin cap typifies Disney's theme park inventory, which includes a large of number of low-volume stock-keeping units (SKUs.)

To maintain the image of the Disney brand, Lund said, his company works with suppliers it considers to be of high integrity. To achieve that objective, Disney has formed stronger relationships with fewer suppliers. "We have reduced the number of vendors by over 50 percent in the last four years," he said.

There's another way supply chain organizations can contribute to their companies' success, Lund added. They can also drive shareholder value by improving operating income, asset utilization, and the company's reputation. "The reputation of a company is fundamentally affected by the choices you make in running a supply chain," he said.