Transforming Your Supply Chain


Perhaps this article caught your eye because your supply chain strategy is not generating the results you expect and need, or perhaps it’s because you know that you need to completely transform your supply chain. Perhaps your supply chain routinely fails to deliver products on time and manage inventory and cost to the right levels. Maybe you realize that the lack of a good supply chain strategy in your company is a major problem, causing your supply chain to flounder without real direction. And you know that if your supply chain is struggling, your entire company is suffering.

Supply chain excellence drives shareholder value

A few years ago I co-authored a book called The New Supply Chain Agenda,1 in which my co-authors and I argued that supply chain excellence creates economic profit and thus is tied directly to shareholder value in public companies and owner equity in private companies. If supply chain excellence is directly tried to increasing shareholder value, you would think that all companies would have a strategy to transform their supply chain.

To test that theory, my colleagues and I conducted a survey on the state of supply chain strategy at our Supply Chain Forum. Forty companies responded directly. These companies ranged in size from close to about $1 billion to over $50 billion in sales. The group included retailers, heavy manufacturers, consumer packaged goods companies and others. Sixty-two percent of respondents said they have a supply chain strategy but, upon further probing, only 30 percent of those respondents confirmed that their strategy was a documented, multi-year strategy. Thus only 18 percent of companies (30 percent of the 62 percent) could produce an up-to-date supply chain strategy document

By J. Paul Dittmann, Ph.D., Executive Director Global Supply Chain Institute, University of Tennessee

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