This magazine usually covers the hardware and software that companies are employing to drive competitive advantage in their supply chains. But Shekar Natarajan points out that "mindware" is just as important for creating value through supply management.
Natarajan currently is director of supply chain operations for Pepsi Beverages Company, the operating unit of PepsiCo., and he was one our Practitioner Pros to Know for 2010. Natarajan is heading up a project to transform his company's logistics and delivery systems, with a focus on repurposing the PBC warehouses, increasing storage and driving productivity to deliver improved returns on invested capital and reduce reliance upon direct labor. Prior to joining PBC, Natarajan served as supply chain network manager for Coca Cola Bottling Company Consolidated, where he implemented solutions for network design and optimization, logistics optimization, distribution planning and strategic sourcing.
Supply chain, Natarajan says, must focus on ensuring reliability and dependability of supply, but also bring a continuous focus on cost control and reduction in order to bring value to the enterprise. "Depending on capital and asset intensity, supply chain can influence upwards of 50 percent or more of total delivered cost in many companies, making it strategic by definition," he says. He further notes that reducing complexity and increasing velocity, core activities of effective supply chain organizations, serve to improve margin.
To bring competitive advantage to their enterprises, supply chain executives must also look to hire, train and retain creative problem-solvers, Natarajan adds. The goal is to drive "productivity of the mind" within the supply chain organization, emphasizing systematic thinking and developing problem-solving skills. "Imagine the value that could be driven by an organization that improves its problem-solving speed and quality by 10 percent," says Natarajan.
To develop this "mindware" within their organizations, Natarajan advises supply chain leaders to look for team members with a specific set of qualities. To be effective, a supply chain executive must be:
- Logical — The cause and effect nature of a supply chain requires a logical mind.
- Analytical — The ability to draw information from data, recognize patterns and develop alternative modes and plans is critical.
- Resourceful — Supply chain team members must have the ability to "find a way" when none is apparent.
- Thoughtful — Executives in the supply chain must be aware of, and be able to evaluate, future risks and opportunities.
- Flexible — They cannot be wed to any one course of action.
- "Systematic" — Supply chain executives must ensure that the detail work is done and no stones left unturned.
- Process-oriented — Team members must respect process as the key to alignment of resources.
Natarajan, who has been named as a top industry executive by various publications in the space, currently is developing a Supply Chain Excellence Model that breaks supply chain organizations into five maturity levels ranging from "Myopic" to "Prescient." At the earliest level of development, supply chain organizations are reactive, enjoy no C-level awareness or support, and are internally focused, among other attributes. At the most advanced stage, by contrast, the supply chain function proactively addresses potential disruptions, enjoys full C-level support, and is globally focused and trading partner-centric. The model details additional attributes of supply chain organizations in such areas as technology, metrics, cost-focus and demand-focus, among others, providing a roadmap for supply chain leaders to assess their own organization's level of maturity as a foundation for targeting improvements.
Above all, Natarajan says, supply chain executives must think and act like a CEO, and they must engage in a passionate pursuit of excellence. Only in that way can supply chain truly support the business. "Supply chain's long-range initiatives should concentrate on ensuring the business's viability and profitability in the long term," he concludes.
— Andrew K. Reese
Editor, Supply & Demand Chain Executive