The Race for Supply Chain Advantage
The ability for a company to excel in supply chain management is a vital characteristic that can widely separate one company from another. Successful companies have used a variation of certain practices that embody the attributes necessary to be known as a leader in terms of competitive advantage. A recent study conducted by McKinsey and Company has revealed that there are only six supply chain practices that matter most to company performance. These practices include: supply chain strategic alignment, segmentation to embrace the complexity that matters, a balanced and forward looking design, a lean end to end value chain, world class integrated planning, and the right talent accountable for performance.
The right combination of the above listed supply chain practices is a large influencer on driving sales, margin, and return on capital. Within the survey, research found that the top-performing companies were more apt to use a combination of formal and home grown IT tools. In addition, according to the article, “the companies were also likely to centralize their supply chain management across business units, devolve it to individual business units, or use a mixture of both approaches.” This then leads into the importance that lies within the six practices for success. One of the main practices, in my opinion, is supply chain strategic alignment. The companies within the survey that had achieved exceedingly in strategic alignment were found to have a higher likelihood of achieving top service, cost, and inventory performance. One of the most interesting details within the research was that the top practitioners are 1.9 times as likely to become a top service performer. As indicated in the previous “Triple A Supply Chain” article, Wal-Mart exemplifies the proper use of this practice by placing such a massive focus on cost reduction and reducing labor in their distribution centers.
Another vital practice within supply...
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