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SJ GuestEditorial

3 Steps to Take Before Embarking on End-to-End Supply ChainTransformation

New Gartner research indicates that 40 percent of chief supply chain officers report directly to the CEO today, up fromjust 12 percent in 2013. The study also shows that 63 percent of CEOs are focused on growth as a top priority in2014. Priorities in achieving goals—also called out in the study—include:

Standardizing and improving processes

Performance management and analytics

Supply chain strategy

Supply chain technology enablement

But digging a bit deeper, Gartner turned up the following priorities:

Talent management

Benchmarking

Change management

Best practices

The research supports an ever more important rule of thumb in today’s fast-moving world of end-to-end supply chaintransformation: Connectivity and collaboration are essential to any operational initiative. But while processes andtechnology are vital to connecting internal functions and external partners, the more urgent matter is internalalignment. Retailers, brands and consumer goods companies have to look inside before looking outside whenattempting to transform the end-to-end supply chain. Three things must be in place organizationally to be successful.

1. Internal alignment: Align the transformation project with the greater vision and corporate goals. Make sureeveryone knows the direct impact of their role. Make it part of the culture.

2. The right talent: Make sure the right people are in place, not just to create the transformation roadmap, but todeliver and execute on the initiative. The team in place will be the ultimate determining factor of success.

3. The necessary resources: Provide the support, tools, solutions, data, staff and budget to make thetransformation happen. Commit the resources and time.

Internal Alignment

A supply chain transformation is a business transformation. It has the potential to reshape how companies go tomarket, redefine markets served, rewrite processes and workflows, repurpose roles and responsibilities, and changethe entire orchestration of global business.

Consider all of the internal departments a transformation could potentially impact and benefit: sales, marketing,sourcing, procurement, finance, operations, legal and HR, for example. Internal alignment means the entire companyrallying around the initiative. The CEO or a C-level executive is its champion. It’s showcased internally as a high-profile project with a tagline and slogan and regular, noticeable updates. Perhaps most important, everyone feelsconnected to it. It’s part of the culture.

For example, “The transformation will free us up to deliver and sell goods in new markets, such as sub-SaharanAfrica. We’re researching potential market opportunities right now,” or, “The transformation initiative will providesupplier connectivity and visibility to eliminate agents so we can source directly. We’re mapping out a plan now tostreamline the flow of purchase orders, amendments, invoices and settlements—and we plan to hit the ground runningwhen the project is live.” Every team and team member understands that there’s “something in it for me.”

The Right Talent

Just as every team and individual should see and understand how the transformation impacts their world, thetransformation leadership team must be able to deliver on the needs of the greater organization. The right talent isneeded to develop a grand vision and then execute it across the organization. This team proactively interprets theneeds of the rest of the organization and meets those needs so that the transformation project moves forward. Thisteam also serves as the primary communication vehicle. It communicates regularly on updates, what the projectmeans, how it impacts specific teams and what the value impact will be on the overall company. Talent is no longeronly in the supply chain. End-to-end supply chain transformation requires talent in project management, data analyticswith insights, technology, finance, regulations, compliance and political skills. The supply chain transformation teambecomes almost a microcosm of the broader organization—fully equipped with decision-making officers, operationsleads and sometimes a CFO of the organization.

This means HR becomes a key partner in the supply chain transformation project—from planning to execution andcompletion. Identifying the roles and skills needed from the outset is essential. At the end of the day, the talent is goingmake the difference between success and failure of the project.

The Necessary Resources

The right team in place becomes the foundation. The next layer to enabling success is providing the right tools todeliver transformation. This requires commitment. Budget, time and resources must be made available from the start.Company leadership should understand that this is a long-term initiative with significant ROI down the road. But thisrequires a well-defined vision and ongoing patience and resolve to keep working toward the final prize. When salesdip or revenue falls, this isn’t a pet project that can be lopped off. But what exactly is enough time, resources andbudget? Finding these answers demands significant time and research assessing where the organization standstoday and determining where strengths and weaknesses lie. Do I have the infrastructure to facilitate and execute thisplan? Does my internal IT model provide the foundation for end-to-end supply chain visibility? Am I relying too muchon ERP, EDI and portals for our vision to become reality? Are we setting up the supply chain to function as a network,and do we have a multitenant underpinning?

Having the right resources includes having the plans and opportunities to capture ROI with quick wins along the way.There’s no rule that says you must have a fully baked internal infrastructure, solution and model in place beforekicking off the transformation initiative. As you conclude early stages in the project, you should explore opportunitiesto plug in visibility initiatives that, for example, deliver transparency and orchestration for a specific product line orregion. If benefits can be achieved six months into the two-year project, why not take advantage of that?

Capturing ROI

End-to-end supply chain transformation is only as effective as the personnel, plans and processes within the fourwalls of the organization. These are the foundation upon which visibility, collaboration and agility are built. It’simportant to gain support at the top and drive the right culture. Get the right people energized and onboard to drivesuccessful change. Provide the right tools. Recognize the strengths and weaknesses of your enterprise systems,processes and team—and then make adjustments based on the grand vision. With this in hand, the technology part ofthe equation—which is never easy—becomes much more manageable and valuable.

Authors

Jamie O’Halloran of GT Nexus has more than 15 years of global supply chain technology experience and is anauthority on end-to-end supply chain visibility. Cort Jacoby and Praveen Kishorepuria, both of Kurt Salmon, are end toend supply chain experts, who together have more than 35 years of experience advising retail and consumer productssupply chain executives.