"Looking Left, Looking Right": The Critical Role of Supply Chain in Supporting Business Transformation

Ensuring alignment between supply chain strategy and broader business objectives is an increasingly critical success factor in any competitive market, particularly as companies evolve to meet new challenges and conditions. Three examples from the office...


Part of the challenge in building this type of collaboration with the company's customers and its supply base has been changing the traditional buyer-vendor relationship. "The typical supply chain culture and I think the typical customer-supplier culture, too is very transaction-oriented," Gaffney explains. "It's not very goal-oriented. The challenge is to educate people and to inspire them to recognize the larger context and to act consistent with the larger goals, even though it might look like they're giving something up in their set of transactions. We have to change the dialog from 'What price are you going to charge me for that product?' to 'What are the total economics of the relationship?'"

"Bullet Points" for Success

The technical backbone that backs up the supply chain's efforts at Staples to look left and right, and achieve synchronization with its partners, includes three buckets: analytics, transactions and collaboration. The first bucket comprises a full-strength data analytics solution from Brio (acquired by Hyperion last year) that Staples has been using for about five years, according to Gaffney. This tool provides the information that the company uses as the basis for discussions with customers and supply chain partners about the patterns of their relationships and about potential changes that could benefit all involved parties.

The transaction systems in use at the company are one area where Gaffney sees opportunities for new efficiencies. Like many enterprises, Staples has been using a number of packaged and home-grown transactional solutions, but the company has been on a two- to three-year mission to integrate those systems to a greater extent.

For example, a couple years ago the company used one system for replenishing its retail stores and an entirely separate system for replenishing its warehouses. Combining those two systems to operate off a shared view of demand was an important improvement in Staples' execution environment, according to Gaffney.

Finally, with regard to collaboration tools, Staples has invested in tools on the customer side, for example, in its B2B commerce framework. But the company has also made a number of investments in functionality to allow it to do better planning and forecasting with its upstream partners. "That functionality really having a planning and forecasting discipline supported by robust, easy-to-use, best-response tools has been an important element of our transformation," Gaffney says.

Asked about the success factors for ensuring that transformation within the supply chain supports broader business transformation within an enterprise, Gaffney offers two "bullet points." The first, he says, is ensuring that the supply chain's fundamental economic objectives equal the company's overall fundamental economic objectives. At Staples, that has meant keeping the supply chain focused on the primary goals of customer satisfaction and return on net assets, both of which are directly linked to supply chain decision-making. And "bullet point" number two, Gaffney says, is to maintain a focus on the end customer. "Somebody once said that one of the more sobering realities of thinking about supply chain is that, at the end of the day, the only source of money is the paying customer. And so all participants in the supply chain are essentially shuffling around the customer's money. Oftentimes just returning people to that simple reality helps them understand the need for greater efficiency and collaboration."

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