10 Minute Supply Chain & Logistics Strategy
Summary
TLDRThe speaker addresses the surprising scarcity of supply chain strategies in businesses despite their importance. They offer a concise guide to creating a strategy, emphasizing the need for alignment between business, financial, and service strategies to satisfy shareholders, customers, and the team. The focus should be on three clear objectives, derived from the business's goals, and translated into actionable tactics and measurable KPIs. The presentation aims to simplify the process, proving that a supply chain strategy can be straightforward and effective.
Takeaways
- 📈 Few businesses have a supply chain strategy, which has not changed much over the last 20 years.
- 📝 Developing a supply chain strategy is not difficult and can be done quickly.
- 🗣 Businesses often have a clear vision and mission, but these do not always translate to actionable strategies for supply chain staff.
- 🔍 Many businesses lack a documented supply chain strategy, leading to significant impacts on business performance.
- 📉 Glitches in the supply chain can cause an average fall of 8.6% in shareholder value.
- 🔄 Aligning business strategy, financial strategy, and service strategy is crucial for supply chain success.
- 🎯 Effective supply chain strategies should have clear, simple objectives (typically three or four).
- 🏆 Key components of a successful supply chain strategy include warehousing, transport, procurement, customer service, inventory policy, and planning process.
- 🛠 Objectives should be meaningful and easy to understand for all employees, from top management to warehouse staff.
- 📊 Once objectives are set, tactics and key performance indicators (KPIs) should be developed to support and measure the achievement of these objectives.
Q & A
Why do many businesses struggle to put a supply chain strategy together?
-Many businesses struggle because they often develop a high-level vision and mission that doesn't effectively translate to the operational level, where the actual supply chain work is done.
What is the significance of having a supply chain strategy?
-A supply chain strategy is crucial for aligning business, financial, and service strategies to ensure happy shareholders, customers, and a motivated team. It also helps to prevent supply chain glitches that can negatively impact shareholder value.
What is the average fall in shareholder value due to supply chain glitches according to the study mentioned in the script?
-The study identified that glitches in the supply chain cause an average fall of 8.6% in shareholder value.
What percentage of businesses actually have a documented supply chain strategy?
-Only 39% of businesses have a documented supply chain strategy that is understood by their people.
How does the lack of a supply chain strategy impact business performance according to the surveys conducted?
-65% of the businesses that do not have a supply chain strategy believe that it impacts their business performance negatively.
What are the three key components of a supply chain strategy as depicted in the Venn diagram?
-The three key components are business strategy, financial strategy, and service strategy, and their alignment is essential for a successful supply chain.
Why is it important to have a clear and simple objective for the supply chain strategy?
-Clear and simple objectives help to focus the organization on doing the right things and are easier for all levels of the organization to understand and act upon.
What are the recommended number of objectives for a supply chain strategy?
-It is recommended to have three or four objectives for a supply chain strategy, focusing on cost, service, quality, and often safety in certain industries.
What is the first step in developing a supply chain strategy according to the script?
-The first step is to come up with three clear objectives for the supply chain that align with the overarching business objectives.
Why is it necessary to develop tactics and measures after establishing the objectives?
-Developing tactics and measures ensures that the objectives are actionable and that there are clear indicators to measure progress and success towards the objectives.
What is the recommended approach for articulating supply chain objectives to ensure they are meaningful to all levels of the organization?
-The objectives should be articulated in simple catchphrases that convey the purpose behind them, making them relatable and understandable to everyone, including those working at the operational level.
Outlines
🤔 The Challenge of Implementing Supply Chain Strategy
The speaker expresses surprise at the lack of supply chain strategies in businesses over the past 20 years and aims to show viewers how to quickly develop a strategy. They share a presentation given at a conference, emphasizing the frustration with businesses struggling to create a strategy, which they believe is not complex. The speaker highlights the disconnect between a company's vision and the understanding of those working in the supply chain, using the analogy of geese flying in formation to represent executive alignment but questioning if workers like 'Jim' in the warehouse understand the company's goals. The importance of a supply chain strategy is underscored by its impact on shareholder value and the speaker promises to guide viewers through the strategy development process.
📈 Developing a Supply Chain Strategy for Top Performance
The speaker outlines a method for developing effective supply chain strategies, focusing on alignment between business, financial, and service strategies. They use a Venn diagram to illustrate the importance of these three areas overlapping to ensure happy shareholders, customers, and a cohesive team. The speaker simplifies the strategy into three main components: clarity in business strategy, focus on warehousing, transport, and procurement for financial alignment, and establishment of customer service, inventory, and planning policies for service alignment. They argue that focusing on these nine elements is crucial for a supply chain to be in the top 2% of performers. The speaker encourages starting from the top with clear objectives and working down to actionable tactics and measures, stressing the importance of keeping objectives simple and meaningful for all levels of the organization.
📝 Simplifying Supply Chain Strategy with Clear Objectives and Measures
The speaker advises on setting three to four clear objectives for the supply chain, derived from organizational and business goals. They recommend focusing on cost, service, quality, and possibly safety, depending on the industry. The speaker emphasizes the need for these objectives to be articulated in a way that resonates with everyone in the organization, including warehouse workers. They provide examples of objectives such as 'always in stock' and 'lowest prices' and discuss the tactics and key performance indicators (KPIs) that support these objectives. The speaker stresses the importance of starting with clear objectives before considering any new systems or processes, ensuring that all initiatives directly support the defined goals. The summary concludes with a reminder of the simplicity of creating a supply chain strategy and invites viewers to explore further resources on the topic.
Mindmap
Keywords
💡Supply Chain Strategy
💡Business Performance
💡Alignment
💡Shareholder Value
💡Tactics
💡Key Performance Indicators (KPIs)
💡Inventory Management
💡Procurement
💡Objectives
💡Service Alignment
💡Financial Strategy
Highlights
Speaker expresses frustration over the lack of supply chain strategies in businesses over the past 20 years.
A short presentation from a recent conference is shared to demonstrate the ease of creating a supply chain strategy.
Many businesses have a clear vision and mission but fail to translate this down to supply chain workers.
A study identified that supply chain glitches cause an average 8.6% fall in shareholder value.
Only 39% of businesses have a documented and understood supply chain strategy.
65% of businesses without a supply chain strategy believe it impacts their performance.
Supply chain strategies should focus on alignment between business, financial, and service strategies.
Alignment of strategies results in happy shareholders, customers, and a cohesive team.
Three key elements for each strategy component are identified: clarity, cost, service, and quality.
Speaker emphasizes the importance of having only 3-4 supply chain objectives for focus.
Objectives should be derived from top-level business goals and be meaningful to all employees.
Examples of simple, actionable objectives include 'always in stock' and 'lowest prices'.
Tactics should be developed after objectives to ensure they directly support the strategy.
Key Performance Indicators (KPIs) should be aligned with objectives, not exceeding three per objective.
The process of creating a supply chain strategy is simplified to a manageable and effective approach.
Additional resources on supply chain strategy are available on the speaker's blog.
Engagement is encouraged through comments, likes, shares, and subscription for further insights.
Transcripts
okay so why do so few businesses have a
supply chain strategy i'm amazed that
hasn't changed much over the last 20
years what i'm going to show you this
week is how to put a strategy together
really quickly and that's coming right
up
okay so what i'm going to share this
week is actually a short presentation
that i gave at a recent conference
because it's really frustrating i see so
many businesses that struggle to put a
supply chain strategy together and it's
actually not that hard so i'm going to
race through this there's quite a bit of
content
but there's going to be enough here for
you to actually put a strategy together
so first of all
what i often see in businesses is that
they have a great vision and mission
and you know very often there's these
photographs of people looking out over
the landscape or breaching whales or
something like that and it's all about
the great things they're going to do in
the world and the great things they're
bringing to the market but that doesn't
always translate down to the people
actually working in supply chain so here
we've got a whole bunch of geese
greyland geese i think they are
flying in a neat formation it's rather
like the senior executive team coming
back from a three-day off-site and
they've actually worked out the vision
and mission and the objectives for the
business and they know exactly what's
happening but i suppose the question in
my mind is does jim who does the product
picking in the warehouse really
understand what's happening and that's
the big gap in supply chain strategies
people you know develop it way up here
and it's very conceptual and it's hard
for people to understand lower down in
the organization at the coal face so let
me show you how i develop strategies
that really do work and i do this for a
lot of our consulting clients so first
of all
let me just point out that a lot of
businesses are burning money in the
supply chain without having a strategy
there was a study done
years ago that actually identified that
glitches in the supply chain
cause an average fall of 8.6
in shareholder value so you know a
strategy so important to keep people
focused on doing the right things so
that you don't get these supply chain
glitches and in recent surveys that
we've done those results have been the
same over about the last 20 years or so
we ask people does your business have a
supply chain strategy and if you don't
do you think it impacts your business
performance and if we look at these only
these charts only 39 of businesses
actually have a supply chain strategy
it's documented people understand it
and of all of those people who don't
have one guess what 65 percent yup it's
65 percent believe that that impacts the
performance of their business well
put one together
you know it's not rocket science
so
there's a couple of uh tips that i'll
give you on on putting a strategy
together but first of all i'd just like
to share what i believe are the really
important components of supply chain and
why a strategy is so important
and let me just build this diagram for
you so it's venn diagram we've got three
interlocking circles here and it's about
getting alignment between the business
strategy the financial financial
strategy and the service strategy and
why is that so important well where
these circles interlocked you see if we
get the strategy aligned business
strategy aligned and the financial
alignment we get very happy shareholders
if we get the service and financial
alignment right we get very happy
customers and if we get the strategic
and service alignment right we get a
happy team because they know what
they're supposed to be doing
and i've just simplified it by putting
three things against each of these
elements of the strategy in terms of the
business strategy we've got to have
clarity around that we've got to develop
it if it's it's you know immature and
we've got to constantly calibrate it and
circle back and make sure that it's
right in terms of the financial
alignment you know from a supply chain
perspective i think there's three big
ticket items there one is warehousing
one is transport and one is procurement
and then on the service alignment the
three things there to focus on are
having a customer service policy an
inventory policy having a good planning
process and making sure that we have
good inventory management practices in
place so look we can have a list of 50
things that you have to get right in the
supply chain but i reckon those three
interlocking circles with nine elements
around the outside are the crux of it
and if you get those right not only will
your supply chain actually be you know
in best of best in breed best in class
which is the top 20
of performers but we see amongst our
clients if they get this right they're
in the top two percent that's really the
cream of the cream
and so the simple way that i explain
this at a recent conference is that you
have to start from the top you work down
and you come up with three simple
objectives for your supply chain not
eight not twelve
i see so many supply chain strategies
that have you know 16 pillars that we're
going to focus on
why do why do i think that's too much
well it's just too much for people to
focus on you know we can't
we can't be trying to keep 16 balls in
the air at once so three or four
is generally the number that i recommend
and we want to come from the top down
and how do we decide those three
objectives well what are what's the
organizational objectives what's the
business objectives
what does the business expect of our
supply chain and when i'm helping
clients put supply chain strategies
together i actually start with the
senior executive team and go around and
understand what the business strategy is
and what they expect of the supply chain
and what they believe the supply chain
performance is like and what they'd like
it to be and so
with that overarching business objective
it's not then too hard to drop down a
level and work out what should be three
or four supply chain objectives now i'll
give you a tip there's generally one
around cost there's generally one around
service and there's probably one around
quality and very often i say to people
uh in many industries there are there's
definitely a fourth and if i said you
know mining or heavy industry you know
immediately what i meant and that is
safety so three or four objectives
should be enough for most businesses
now the trick here is to articulate
these objectives in such a way that
they're really meaningful to jim who's
picking the product in the warehouse it
shouldn't be something too conceptual
so let's think about
cost for a moment
what could we have as a simple objective
around cost it might be
lowest total cost always
what could we have as an objective
around service
never any back orders
so think about that for a moment what
does that mean to people working in the
supply chain never any back orders if
i'm working in inventory it means i've
got to have my inventory accuracy right
i've got to get the cycle counting right
if i'm working in procurement or
inventory management i've got to make
sure that we've always got the right
amount of stock if i'm picking in the
warehouse or dispatching i've got to
make sure that the orders are always you
know 100
in full
so coming up with these little sort of
catch phrases around the objectives that
really articulate the purpose behind
them is so important for people right
you know up and down the organization to
fully understand so step one is to come
up with those three objectives
so here i've got some examples always in
stock lowest prices and quality products
once we've done that then we can start
developing the tactics now what i see in
so many businesses is they kind of start
at this level oh we need a new transport
management system we need a new
warehouse management system we need new
warehouses
why
you need to work out the objectives
first and then if those things actually
directly support achieving those
objectives then they make sense but
otherwise they don't so that's why we've
got to start from the top so always in
stock what what sort of things what sort
of enablers or
initiatives do you think we'd have to
focus on to make sure that we're always
in stock
great inventory management
sales and operations planning you know
great inventory accuracy you know
there's three things that we might focus
on what about lowest prices if we want
the lowest prices to to our customers
what do we have to focus on we have to
buy well
so when we're buying product in or
manufacturing it we've got to make sure
that we get that price down we've got to
have the movement through the supply
chain as low cost as possible so you see
then how we're really focusing in on
what matters
from a tactical perspective and then of
course the final thing
is that once we've developed the tactics
we need to develop the measures
so you don't need hundreds of kpis in
your supply chain you probably need
under each of those objectives maybe
three
and so let's have a think about always
in stock what might be the kpis that we
measure
okay if you're a retailer you'd be
measuring on shelf availability or will
you be counting gaps on the
shelves
you'd be
monitoring your availability in the
warehouse you'd be monitoring your
supplier performance in full on time
delivery so again it's all aligned
if we if we've got an objective of
always being in stock then we need to
have some enabling processes and
technologies to make sure that we're
doing that and we've got to measure the
right things to ensure that we're
achieving that as well so look
in a nutshell that is how simple it is
to put a supply chain strategy together
it's not difficult you can do it on a
page so i hope that's been helpful to
you if you jump onto our blog i'll put
links below there's other videos here on
the channel about supply chain strategy
there's definitely some articles so i'll
put a link below in the blog a link to
the blog
and of course you know how it works uh
do comment i i personally reply to all
the comments if you find this video
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[Music]
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