Supply Chain Transformation: Building and Executing an Integrated Supply Chain Strategy / Edition 1

by J. Paul Dittmann

Overview

STREAMLINE OPERATIONS AND DELIVER MORE VALUE THAN EVER WITH A STRONG SUPPLY CHAIN STRATEGY

"Dittmann’s thoughtful approach and real-world examples make this book is an excellent resource for anyone in the supply chain field, whether a beginner or an executive seeking a better framework for the existing supply chain strategy." -- Dave Clark, Vice President, Global Customer Fulfillment, Amazon

"A practical approach for developing and implementing breakthrough customer-driven integrated supply chain strategies designed to generate best in class operating and financial performance for any enterprise." -- Paul H. Trueax III, Vice President, North AmericaCustomer Services and Logistics, Colgate Palmolive

"An effective supply chain strategy can have a huge impact on all of the stakeholders of the organization. This book lays out nine clear and concise steps that are very helpful as your company starts this critical process." -- Bill Hutchinson, Vice President, Global Supply Chain and Fulfillment, Dell

"Dittmann's book lays out a customer-driven, case-derived nine-step method for creating and implementing a transformational supply chain strategy. It is a must-read for any supply chain professional developing or refreshing a supply chain strategy." -- Reuben Slone, Senior Vice President, Supply Chain, Walgreens

Product Details

ISBN-13:	9780071798303
Publisher:	McGraw Hill LLC
Publication date:	10/19/2012
Pages:	256
Product dimensions:	5.90(w) x 9.10(h) x 1.00(d)

About the Author

Dr. J. Paul Dittmann is Executive Director of the Global Supply Chain Institute at the University of Tennessee. Previously he was Vice President of Supply Chain Strategy, Projects, and Systems for the Whirlpool Corporation, and he has also consulted for many companies, including OfficeMax, Walgreens, Lowe's, Nissan, Walmart, Estée Lauder, Johnson and Johnson, Honeywell, GlaxoSmithKline, Cooper Tire, and Lockheed Martin.

Read an Excerpt

SUPPLY CHAIN Transformation

Building and Executing an Integrated Supply Chain Strategy

---

By J. PAUL DITTMANN

The McGraw-Hill Companies, Inc.

Copyright © 2013J. Paul Dittmann
All rights reserved.
ISBN: 978-0-07-179830-3

---

Excerpt

CHAPTER 1

Transforming Your Supply Chain

Perhaps you picked up this book because your supply chain strategy is not generating the results you expect and need, or perhaps you did so because you know that you need to completely transform your supply chain. Perhaps your supply chain routinely fails to deliver products on time and to manage inventory and cost to the right levels. Perhaps you realize that your firm's lack of a good supply chain strategy is a major problem that is causing your supply chain to flounder without real direction. This book is for all those who need a transformational supply chain strategy.

As I define it, a supply chain strategy is a multiyear road map that starts with the needs of your customers. It must honestly evaluate the strengths, weaknesses, opportunities, and threats faced by the firm relative to best practices. It must recognize the most likely megatrends and their implications. It must comprehend the challenges generated by foreign and domestic competition, and it must account for the evolving technology that will be available. It must satisfy the financial goals of the company, and it must assess the organization and its people and metrics. It must be accepted fully across the company, and finally, it must do something! Namely, it must generate a set of actions that creates the supply chain capabilities the firm will need in the future.

I often see companies without a supply chain strategy chasing the latest hot trend or flavor of the month. In January, it might be cost savings, and by May, it's lower inventories. Like a ship without a rudder, it sees any wind as favorable. People in these companies complain that there are too many initiatives. As one executive said, "All we do is launch and then leave initiatives. We rarely focus on the critical few and complete them. We have no strategy."

WHY DOES YOUR COMPANY NEED A SUPPLY CHAIN STRATEGY?

A few years ago, I coauthored a book called The New Supply Chain Agenda, in which my coauthors and I argued that supply chain excellence creates economic profit, and that economic profit is tied directly to shareholder value in public companies and to owners' equity in private companies. Economic profit, very simply, is profit less the cost of the capital needed to generate that profit. Economic profit is a big deal because it shows that the company is delivering returns greater than the cost of the capital invested in it.

When economic profit increases over time, shareholder value increases. Stern Stewart, a global management consulting firm, has done extensive research on this concept, which it calls EVA (economic value added). It has demonstrated through extensive analysis of many companies that the relationship is very strong, especially over time. As we demonstrated in The New Supply Chain Agenda, supply chain excellence, driven by a clear and compelling supply chain strategy, is one of the most underutilized tools for creating economic profit. The supply chain of a firm often manages 60 to 70 percent of the cost, controls 100 percent of the inventory, and provides the foundation for all of the revenue generation. It is the lifeblood of the firm, and as such must be guided by a robust strategy.

Unlike other areas of the firm, the supply chain process is a horizontal end-to- end process that guides the seamless flow of product across the extended enterprise. Products flow from suppliers to customers through the firm. But this flow must in effect pass smoothly through vertical functional barriers. In addition, the customers' requirements must guide the flow, and those requirements must flow smoothly back through the functional barriers. Because of this highly complex, cross-functional, cross-company challenge, a supply chain strategy represents a different set of challenges in its scope, its development, and especially getting buy-in to do it.

DEVELOPING THE SUPPLY CHAIN STRATEGY MODEL

During my industry career at Whirlpool Corporation, I led the development of several major supply chain strategies. After doing plenty of things wrong there, my team and I created, I felt, a good process for supply chain strategy development. When I came to the University of Tennessee in 2005, where I now serve as executive director of the Global Supply Chain Institute, I was exposed to a vast database of documented supply chain best practices from hundreds of firms. The supply chain programs at the University of Tennessee include the traditional education of graduate and undergraduate students, but we also maintain an extensive network of partnerships with many companies, including the more than 50 member firms that participate in our semiannual Supply Chain Forum. Our faculty ranks among the world leaders in supply chain research, and it is that faculty I am referring to when I use the pronoun we in this book.

In all the data on hundreds of companies kept by the university, I was surprised to see very little material on supply chain strategies in a collection that exceeds 400 firms of all sizes and types. Most companies were all about execution and lacked a real multiyear road map for achieving competitive advantage. I have personally experienced the same situation. In working directly with well over 100 firms through our Supply Chain Forum, as well as through the supply chain assessments we do for companies, I continue to be surprised at the paucity of real strategy work. In a range of companies that includes manufacturers and retailers of all sizes in many industries, we see up-to-date, multiyear supply chain strategies in less than one in five companies.

The lack of comprehensive supply chain strategies in industry compelled me to write this book. Few would debate the principle that a company's supply chain is critical. I am fully convinced that supply chain excellence drives shareholder value and controls the heartbeat of the firm, that is, the fundamental flow of materials and information from suppliers through the firm to its customers. Unfortunately, too many companies have a supply chain that is crippled by the lack of a comprehensive strategy.

Yet it would be inaccurate to say that no company has a strong supply chain strategy. Some excellent practices definitely exist. The supply chain assessments we do for scores of firms have produced more than 700 interviews and uncovered some best practices that offer excellent revisions to the strategy process I had used at Whirlpool. Evidence from those more than 700 interviews is the basis for the strategy model and many of the examples I use in this book. In addition, in the last two years, my colleagues and I have applied this strategy model successfully in two major companies, building confidence in its effectiveness. A detailed case study in Chapter 11 shows how a major corporation recently implemented this best practices model. Using all of this as a foundation, this book will guide you through the process of developing a breakthrough supply chain strategy, and will help you avoid some of the mistakes others have made in the process.

THE STATE OF SUPPLY CHAIN STRATEGY DEVELOPMENT TODAY

My colleagues and I recently conducted a survey on the state of supply chain strategy at our Supply Chain Forum meeting. Forty companies responded directly. These firms ranged in size from close to $1 billion to more than $50 billion in sales. They included retailers, heavy manufacturers, consumer packaged goods (CPG) companies, and others. Overall, 62 percent of the respondents said that they have a supply chain strategy, but, upon further probing, only 30 percent of those respondents confirmed that their strategy was a documented, multiyear strategy. Thus only 18 pe
(Continues...)

---

Excerpted from SUPPLY CHAIN Transformation by J. PAUL DITTMANN. Copyright © 2013 by J. Paul Dittmann. Excerpted by permission of The McGraw-Hill Companies, Inc..
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

---

Table of Contents

Chapter 1 Transforming Your Supply Chain 1

Chapter 2 Start with Your Customers 25

Chapter 3 Assess Your Internal Supply Chain Capabilities Relative to Best in Class 13

Chapter 4 Evaluate the Supply Chain Game Changers 65

Chapter 5 Analyze Your Competition's Supply Chain 89

Chapter 6 Survey Supply Chain Technology 109

Chapter 7 Manage Risk in the Global Supply Chain 125

Chapter 8 Determine the New Supply Chain Capabilities and Develop a Project Plan 145

Chapter 9 Evaluate the Organization, People, and Metrics 175

Chapter 10 Develop a Business Case and Get Buy-In 191

Chapter 11 Case Study: Developing a Supply Chain Strategy 209

Notes 239

Index 243