Supply Chain Strategy Mistakes - Very Common Mistakes
Summary
TLDRThis video discusses common mistakes companies make when developing supply chain strategies. The speaker, drawing on 24 years of consulting experience, highlights three key issues: failing to align the supply chain strategy with organizational goals, setting too many objectives, and overloading with too many KPIs. He emphasizes the importance of simplicity and focus—suggesting three to four clear objectives and a manageable number of enablers and KPIs to ensure clarity and effectiveness. The video offers actionable advice on streamlining strategies for better alignment and organizational understanding.
Takeaways
- 😀 Supply chain strategy must align with the organizational strategy to ensure cohesive goals and objectives.
- 🤔 One major mistake companies make is having too many objectives, which can cause confusion and lack of focus.
- 💡 It's essential to limit the number of supply chain objectives to three or four, focusing on cost, service, and possibly growth or safety.
- 🎯 A well-defined strategy provides clear direction without getting bogged down in unnecessary details.
- 🛠 Enablers should support each objective, focusing on people, processes, and systems, and are crucial for achieving strategic goals.
- 📊 Key performance indicators (KPIs) should be limited and clearly tied to the enablers, with one KPI for each enabler.
- 💬 Too many KPIs or objectives dilute focus and make it harder for the organization to understand and implement the strategy effectively.
- ⚠️ It's common for companies to become lazy by setting too many objectives and KPIs instead of thoughtfully streamlining their approach.
- 🔧 Examples of enablers include improving warehousing productivity or having a robust sales and operations planning (SNOP) process.
- 🔑 The key to a successful supply chain strategy is keeping it simple, clear, and easy for everyone in the organization to understand and follow.
Q & A
What is the main topic discussed in the video?
-The main topic discussed in the video is the common mistakes companies make when developing their supply chain strategies.
What is the first mistake mentioned regarding supply chain strategy?
-The first mistake is that the supply chain strategy is not aligned with the overall organizational strategy, leading to a disconnect between the two.
Why is it important to align the supply chain strategy with the organizational strategy?
-Aligning the supply chain strategy with the organizational strategy is important because the supply chain should support the organization's overall goals and objectives.
What is the second major mistake companies make when developing a supply chain strategy?
-The second major mistake is having too many objectives, which can confuse the organization and dilute focus.
How many objectives does the speaker recommend for a supply chain strategy?
-The speaker recommends having three or four objectives in a supply chain strategy to maintain clarity and focus.
What are the types of objectives suggested for a supply chain strategy?
-The speaker suggests having objectives around cost, service or availability, and possibly a third for quality, product, or safety, depending on the industry.
What comes after setting objectives in a supply chain strategy?
-After setting objectives, the next step is to identify key enablers—factors such as people, processes, or systems that help achieve those objectives.
How many key enablers should be identified for each objective?
-The speaker suggests having three key enablers for each objective.
What is the recommended number of KPIs in a supply chain strategy?
-The speaker recommends having one KPI for each enabler, which results in about nine KPIs if there are three objectives and three enablers for each.
What is the overall advice given for developing a supply chain strategy?
-The overall advice is to keep the strategy simple and focused, with a limited number of objectives, enablers, and KPIs to avoid confusion and ensure everyone in the organization understands it.
Outlines
📈 Aligning Supply Chain Strategy with Organizational Goals
This paragraph discusses the importance of aligning supply chain strategy with the broader organizational strategy. The speaker, who runs a management consulting company, shares insights from his experience in helping companies develop their supply chain strategies. He emphasizes that the first step in developing a supply chain strategy is to understand the organization's goals and objectives, whether the organization is commercial or non-profit. The supply chain strategy should clearly support these goals, and the speaker warns against strategies that are misaligned, as they can lead to ineffective operations. The speaker also introduces the concept of 'enablers' and 'KPIs' as part of the strategy development process.
🚫 Avoiding Common Supply Chain Strategy Mistakes
In this paragraph, the speaker identifies common mistakes companies make when formulating their supply chain strategies. The primary mistake is having too many objectives, which can lead to confusion and a lack of focus. The speaker recounts an instance where a company had as many as 13 supply chain objectives, which he argues is counterproductive. He suggests that a strategy should have a limited number of clear and meaningful objectives, typically three or four, with each objective supported by three enablers. This approach helps to minimize confusion and ensures that everyone in the organization understands the strategy. The speaker also stresses the importance of keeping KPIs to a minimum, recommending one KPI for each enabler to maintain simplicity and focus.
Mindmap
Keywords
💡Supply Chain Strategy
💡Organizational Strategy
💡Logistics Bureau
💡Objectives
💡KPIs (Key Performance Indicators)
💡Enablers
💡Alignment
💡Cost
💡Service or Availability
💡Quality of Service or Product
💡Safety
Highlights
Introduction to supply chain strategy mistakes.
Emphasis on numerous videos related to supply chain strategy on the channel.
Speaker's background: running a management consulting company called Logistics Bureau for 24 years.
Mistake 1: Supply chain strategy not aligned with organizational strategy.
Importance of aligning the supply chain with organizational goals for effective strategy execution.
Mistake 2: Too many objectives in the supply chain strategy.
Example of a company with 13 supply chain objectives, causing confusion.
Strategy should provide direction and focus, not detailed task lists.
Recommendation of having around three to four objectives.
Examples of key supply chain objectives: cost, service/availability, quality, and safety.
Importance of making objectives clear and understandable to everyone in the organization.
Next step: Identify key enablers for each objective, typically three enablers per objective.
Final step: Define key performance indicators (KPIs), ideally one KPI per enabler.
Challenge: Simplifying objectives, enablers, and KPIs to minimize confusion and maximize focus.
Concluding advice: Keep supply chain strategies simple and focused for better organizational understanding.
Transcripts
supply chain strategy mistakes that's
what we're going to talk about this week
there are loads of videos on this
channel about supply chain strategy and
i'll show you some links to those but
this week i'd like to talk about some of
the mistakes that people make when they
put these strategies together and that's
coming right up
[Music]
so supply chain strategy is the topic
this week and as i mentioned there's
loads of videos about strategy on the
channel i'll put some links down below
in the video description but this week
i'd like to talk about some of the
mistakes that companies make so
where am i getting these ideas on supply
chain strategy that i want to share with
you
well if you weren't aware my day job is
running a management consulting company
called logistics bureau and for the last
24 years or so i've been helping
companies put together their supply
chain strategies amongst other things
and we've developed this really
simple process to to enable companies to
do that but even then i come across
companies that are making some pretty
basic mistakes and that's what i want to
share with you this week so mistake
number one and i think we'll probably
talk about three mistake number one is
that the supply chain strategy is not
aligned with the organizational strategy
what do i mean by that
if you're going to develop a supply
chain strategy first thing you've got to
do is to have a look at what's the
organization trying to achieve be it a
commercial organization or not for
profit whatever it might be
your supply chain strategy needs to very
clearly support those organizational
goals so there's no point in the supply
chain sort of focusing on this and the
organization focusing on this uh
absolutely pointless so whenever i'm
working with a client company we always
look at the business strategy first we
look at the key objectives they're
trying to achieve and we try to dovetail
the supply chain strategy right into
that because the supply chain is there
to support the organization believe it
or not
okay so that's number one
number two and this is the biggest
mistake that i see they have way too
many objectives objectives goals you
know whatever you want to call them
i i had one company that i came across
that had 13 supply chain objectives
how do people get their heads around
that
it was almost like
everything on their to-do list became an
objective on a strategy a strategy is a
is a higher level thing it's to provide
direction to people and focus
it's not supposed to get down into lots
and lots of detail
in fact i worked with a company earlier
this year
that really went over the top
they wanted way too many objectives on
their strategy they wanted way too many
kpis and it just becomes confusing for
the whole organization so
how many is the right number
i always like three
but i recognize sometimes three isn't
enough and i'll give you a quick tip
here you want an objective based around
cost you want one based around service
or availability
you might want one so the third is kind
of an optional one you might want one
around sort of quality of service or
product something like that maybe growth
a fourth one
and i can generally get away with four
when i'm doing this with client
organizations the fourth one will very
often then be safety so in in mining and
heavy industry you know they've
absolutely got to have an objective
around safety so
you can generally get away with three or
four
and the secret there of course is to
articulate them in such a way that
they're really meaningful to everybody
in the organization you know you you
don't want something that's confusing to
people or can be misinterpreted it's got
to be absolutely crystal clear what this
objective means and i'm not going to go
through all of that today because
there's loads of videos on the channel
about it and i'll show you where those
are so we've got our three or four
objectives what comes next we have some
key enablers and remember we do this
from the top down not the bottom up the
next thing is
enablers and you generally want
maybe three for each objective so we
might have nine enablers and what are
they they're things about you know
people and process systems so it might
be we need to have a really good snop
process it might be that we need to
improve our warehousing productivity so
these are enablers to help us achieve
those objectives
and then what comes last you remember
number three is the kpis and we don't
need dozens of kpis
let's say we've got three objectives
three enablers each that's nine enablers
i reckon nine kpis one for each enabler
so
to to kind of minimize all of this to
just get three objectives three enablers
each and three kpis each
it takes a bit of effort it takes a lot
of thought
to actually get that right the easiest
thing in the world is to say we'll have
these 10 objectives we'll have these 28
kpis that's being lazy i'm sorry with a
little bit of thought you can actually
get it very focused you can minimize the
the number objectives and so on and you
can minimize the
the confusion that's the key thing if
you've only got three or four it's a lot
easier for people to understand it just
takes a bit more effort to be able to
articulate them in such a way that they
are the right ones and that they cover
all the bases so there we go just a
quick video this week the main mistakes
that people make when they're putting a
supply chain strategy together too many
objectives too many enablers too many
kpis keep it
simple
focused so that everybody can understand
so thanks for watching this week if
you've got any feedback on supply chain
strategy do comment down below
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[Music]
you
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