The 2:00 Minute Warning

Over the past several months I have been invited to give several presentations to companies and various associations about how to build a better supply chain.

The presentations begin with a simple question: How would you rate your company's supply chain on a 1 to 5 scale? As pictured below, the scale ranges from a one, which basically means your company has an "Inefficient" supply chain up to a five, which means your company has "World Class" capabilities.

As depicted in this little chart, a supply chain that is functioning as a five is proactive, strategic and integrated. A supply chain that’s a one is reactive, tactical and operates in a siloed environment. After one of my presentations, a member of the audience came up and shared an observation when he told me: "It seems like what you are saying is that we ought to be in the fire prevention department versus the fire fighting department." When I asked him to clarify that thought, he noted that companies with inefficient supply chains, or supply chains with lower scores, were likely to spend more time fixing problems and fighting fires than companies with efficient and effective supply chains.

Personally, I find it interesting that when I ask this question, fewer than 10% of the companies rate their supply chain as a four or higher. About 30% of the companies usually rate their supply chain as a three, which is slightly above average, and around 60% of the companies rate their supply chain as average or below. These results are consistent with a recent survey from Gartner, one of the leading supply chain research firms, that noted that only 17% of the companies they surveyed had "fit" supply chains.

So here is a question for those of you reading this week's Two Minute Warning: How would you rate your company's supply chain? We all know that in a post-covid world, you can’t build a great company with an average or mediocre supply chain. Before the pandemic, when there was more slack in the system, a supply chain that was merely average might be “OK” and issues could go unnoticed, but now in this Code Red transportation environment, the demands on your company's supply chain have never been more intense.

So here are three things that can help your company build a stronger supply chain:

First, you need to have a "Top Down" commitment to building a strong supply chain. In my presentations to hundreds of CEOs and Presidents, the message is simple but direct: Great supply chains requires C-Level involvement - not just delegation! There are all sorts of important decisions affecting suppliers and customers that require C-Level executives who are engaged and aware of the issues.

Second, companies with great supply chains recognize that there's a need to invest in people and technology in order to get the outcome they want. With that thought in mind, what is your company willing to invest to move up the supply chain spectrum?

Third, moving up the supply chain spectrum will require experience and expertise, whether from the outside or internally. This is important because you need to make sure your resources are being invested in the right areas, addressing the right issues, and moving your company in the right direction.

Move Your Supply Chain Up to the Next Level with a Rapid Assessment

If you could use help evaluating your supply chain and identifying what changes to make, we encourage you to get in touch for a Rapid Assessment. During this consultative process we help companies move up the supply chain spectrum, lower their costs and improve their supply chain capabilities.