In a shrinking economy, supply chain leaders face a dilemma. They face increased pressure to deliver greater cost reductions. However, other functions within the enterprise are looking to supply chain to provide higher levels of service and to be more responsive to the evolving environment to help these functions deliver on their own targets for sales numbers and profitability.
In this situation, what can supply chain leaders count on to win? Typically, the supply chain organization does not control product or market strategy, and pricing and revenue goals are set elsewhere in the organization. Nevertheless, the supply chain executive has direct influence on a powerful source of competitive advantage: the supply chain staff and how they interact with internal customers within the enterprise.
Expert sales professionals know how to build customer relationships that generate profitable sales — as long as they are able to add real value to the customer's business. Similarly, supply chain professionals with expertise and solutions that address business fundamentals such as productivity, efficiency, financial results and return on investment (ROI) can build relationships with internal customers that help their companies shut out the competition while increasing both the amount and profitability of their sales.
The Business Consultant Role
"Consultative selling" — the ability to understand and link solutions to a customer's business priorities — is a critical skill for salespeople, but when dealing with internal customers it is, by itself, no longer sufficient. Of course, it is important to know how to identify information about a customer's products and market position, and how to ask questions to uncover business issues important to the customer. But the consultative sales role is still, as the term suggests, a sales role.
The real opportunity for supply chain executives lies in becoming a true consultant to the business, asking a different set of questions focused on the customer's core business processes. Once the supply chain executive thoroughly understands these processes — how they link to each other and what kinds of information is exchanged among them — it is possible to identify unique opportunities to improve key metrics such as inventory turn, labor costs or time to market that matter most to the business and that present the greatest potential for impact by the supply chain.
Looking for Opportunities in the Value Chain
Unlike information about a company's financial performance, people and products, business process information must be gathered by talking to the right people in the right parts of the organization. Michael Porter's Value Chain model is a useful tool for organizing a business process discovery effort. It provides a lens for looking at the business from the point of view of key functions. The model then serves as a guide for gaining access to owners of key functions.
Michael Porter depicts an organization's critical business processes (at the top of the model above) as a "value chain" wherein each key production process or system adds a specific type of value to the final output of the enterprise. Support processes (at the bottom of the model) include such functions as general management, technology, human resources, and procurement or purchasing.
Supply chain executives seeking to understand core processes outside their function should focus on gaining sponsorship from executives who own the key processes. Once connections are made to the people who have primary responsibility for identified processes, the supply chain executives can ask questions to understand what the value chain looks like for this customer. Then, the supply chain executives can begin to analyze how efficiently and effectively these processes are functioning and how well or poorly they work together as a productive and profitable system.
Conducting a Process Conversation
Typically, companies divide into silos or territories that function semi-independently, despite operational interdependence and efforts to foster cross-functional communication and collaboration. A supply chain executive acting as a business consultant can provide great value to an executive sponsor or key contact by asking questions and identifying patterns that cross functional lines.
A successful conversation with a business process owner should include several key components:
1. Preparation: As with any call on a customer, it's important to prepare by learning as much as possible about the function or department of the person you are calling on, and to consider what aspects of their process might be important. For example, if calling on the head of warehouse operations, it would be useful to learn something about managing inventory and, in general, which metrics are important in that process. By definition, what is most important to one functional head is bound to be different from that which is important to other functional heads.
2. Establishing the purpose of the discussion: Many of the people contacted may not have a very clear idea of why they should be talking with a supply chain executive. The purpose of the conversation needs to be explained — namely, to understand their function and operations in order to identify possible ways to help improve overall effectiveness across functional lines.
3. Asking discovery questions: Drawing on preparatory information, the supply chain executive should plan a series of questions that will help guide the process of gathering the right information. Three key questions should be discussed:
- What has to go right in your operation for you to be successful?
- Which of those factors are currently the most effective? Are there any that are not going as well as you would like?
- Which of the other functional areas in the company are the most important to you, in terms of receiving inputs to your operation, and which functions are the most affected by your success or lack of it?
4. Following up
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