Supply Chain Strategy Mistakes - Very Common Mistakes

Summary

This 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

00:00

📈 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.

05:02

🚫 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.

Keywords

💡Supply Chain Strategy

Supply Chain Strategy refers to the comprehensive plan a company develops to manage the flow of goods and services from the supplier to the end consumer. It encompasses all activities involved in sourcing, procurement, conversion, and logistics management. In the video, the speaker discusses common mistakes made when developing these strategies, emphasizing the need for alignment with organizational goals.

💡Organizational Strategy

Organizational Strategy is the overall direction and plan an organization uses to achieve its long-term objectives. It includes the company's mission, vision, and values. The video script mentions that the supply chain strategy must be aligned with the organizational strategy to ensure that the supply chain supports the company's broader goals.

💡Logistics Bureau

Logistics Bureau is the management consulting company the speaker runs, which specializes in helping companies develop their supply chain strategies. The company's expertise is used as a basis for the insights shared in the video about common mistakes in supply chain strategy development.

💡Objectives

In the context of supply chain strategy, objectives are the specific goals a company sets to achieve its strategic plan. The speaker points out that having too many objectives can lead to confusion and dilute focus, suggesting that three to four well-defined objectives are ideal.

💡KPIs (Key Performance Indicators)

KPIs are quantifiable measurements used to monitor and evaluate the success of an organization's objectives. The video emphasizes the importance of not having too many KPIs, as it can lead to confusion and a lack of focus. The speaker recommends having one KPI for each enabler.

💡Enablers

Enablers in a supply chain strategy are the actions or processes that facilitate the achievement of objectives. The script suggests having three enablers for each objective, which are then supported by KPIs to ensure they are effectively implemented.

💡Alignment

Alignment in the context of the video refers to the synchronization of the supply chain strategy with the broader organizational strategy. Proper alignment ensures that all parts of the organization are working towards the same goals and that the supply chain supports the overall mission of the company.

💡Cost

Cost is one of the potential objectives in a supply chain strategy, aiming to minimize expenses while maintaining efficiency. The speaker mentions cost as a common objective and suggests having a KPI to measure cost-related performance.

💡Service or Availability

Service or Availability is another key objective in supply chain strategies, focusing on the ability to deliver products or services to customers reliably and promptly. The video script highlights the importance of having clear objectives and KPIs related to service levels.

💡Quality of Service or Product

Quality of Service or Product is an objective that emphasizes maintaining high standards in the goods or services provided. The speaker suggests this as an optional third or fourth objective in a supply chain strategy, depending on the company's needs.

💡Safety

Safety is a critical objective, especially in industries like mining and heavy industry, where the focus is on ensuring the well-being of workers and minimizing accidents. The video script includes safety as a common fourth objective in supply chain strategies for certain sectors.

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]

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