Driving supply chain improvement is critical to continued business success. One framework that has proven successful time and time again is the SCOR (Supply Chain Operations Reference) model, which has been used successfully in organizations in many different marketplaces. Using this model will not only drive immediate results, but also create a framework that can be repeatedly applied to many different supply chain improvement initiatives. A great reference book for this method is Supply Chain Excellence by Peter Bolstorff & Robert Rosenbaum. Research has shown that over hundreds of projects’ operating income improved by 3% of sales, on average, from cost reductions and service level improvements. Furthermore, enterprises that use this methodology for continuous improvement see profit gains from 0.5% to 1% per year.
By following the five key steps below you can ensure that your enterprise is on the path of supply chain excellence, providing lasting and measurable results for the years ahead.
5 Steps to Achieve Supply Chain Excellence
1. Build Organizational Support
No project can be successful without the support of key stakeholders. Truly impactful projects are large and require diverse resources to be successful. Because of this, it’s critical that there’s buy-in from many different levels in your enterprise. There are four key roles that must be filled to create an environment for success:
- Who brings the passion and technical leadership
- Who’s the accountable sponsor
- Who provides guidance and review of proposed solutions
- Which analyzes the supply chain from end to end and provides recommendations for change
2. Define Project Scope
Clearly defining the project scope is critical to understanding what success looks like and how it can be measured. The main outcome of this step is the development of the Project Charter. The Project Charter is a robust document that defines the scope, approach, objectives, schedule, milestones, deliverables, budget, organization, measures of successes, and communication plan. In short, the project charter describes the current state of a specific supply chain focus area in your organization, what the future state looks like and the playbook that will get you there. Specific project focus areas will shift and change as new information is unearthed and more “whys” are answered, but the Project Charter should be relied upon to provide structure to maintain project momentum.
3. Analyze Performance
Once the project scope has been defined and your project launch performance must be measured and analyzed to ensure the program is on the path that’ll deliver the desired outcomes defined in your Project Charter. It’s in this step where success metrics are defined, data are collected, defects are analyzed, benchmarks are tallied, and performance gaps are calculated. During this step it’s not uncommon for the results of work completed to be different than expected. Changes to project goals may be warranted, but it’s important that any deviations from the project plans be closely reviewed by the overall project team before any changes are made. This phase helps the team prioritize and balance the multitude of metrics available for monitoring.
4. Develop a Project Portfolio
While one successful project is great, many successful projects are what set good enterprises apart from great ones. Clearly, not every project will be successful, making it important to explore a wide range of projects at the same time, allowing above average successful projects to make up for projects that don’t provide the expected results. Key steps for developing a project portfolio include conducting a brainstorming session with other key teams such as sales and finance to understand company-wide financial and customer service goals. By working together as a cross-functional team to develop a project portfolio, not only do you build collaboration across traditionally segmented businesses, but also you create broad organizational support that’ll generate program results not possible otherwise.
5. Implement Projects
The old saying is “talk is cheap”, meaning without the ability to implement projects, all results are theoretical. In the implementation phase it’s important to leverage key analytic techniques such as process mapping, data analysis, key stakeholder interviews, storyboarding, design and test solutions, and the final enterprise rollout. Most importantly, this is the phase where the supply chain strategy is developed that’ll pay dividends by generating more projects that will sustain gains and build momentum for the road ahead.
Driving and sustaining supply chain excellence is critical to the ongoing success of your business, and in order to consistently achieve this, a repeatable framework must be utilized. By following the five steps described herein, any organization can excel at continued supply chain success.