Think you’re doing Supply Chain Management? Think again.

When a consumer buys a wood desk, the people chopping the trees are fully aware.

It’s been trendy to have departments, titles, business cards, presentations, and more loudly proclaim focus on supply chain management.

It’s a worthy goal. We need to get there. Our profession needs to get there. But with a few exceptions, we’re definitely not.

In the ideal model, here are 10 things that need to be happening:

1. When a consumer buys a wood desk, the people chopping the trees are fully aware.

2. There is a glass pipeline of information that runs from one end of the supply chain to the other, whereby only the right people get only the right information at only the right time.

3. Procurement is not only working with suppliers but their suppliers too. And also their suppliers.

4. Procurement is working on the demand and customer sides as well, aligning and influencing demand requirements with the supply side. Business units don’t get in the middle, adding an extra 2-3 communication rungs.

5. There is a supply chain council, with representatives from each link in the chain, with metrics that measure the health, agility, cost, quality, sustainability, flexibility, and resilience of the chain – and not that of the individual links.

6. Decisions are made for the good of the chain instead of for the good of individual links in the chain – usually for the good of the gorilla in the supply chain.

7. Supply chain systems are digitally linked. Not through the investment of millions of dollars in software customization and coding, but through the establishment of plug and play XML standards.

8. Capabilities are in place to invoke supply chain improvements, with the support of each supply chain link necessary, with the final consumer as the exclusive prioritization and execution criteria.

9. Traceability is perfect, whereby any defect or excursion can be immediately traced along the supply chain, back to the exact point of origin, allowing immediate root cause analysis and remediation efforts, as necessary.

10. Focus is on supply chain cost reduction rather than on supplier price reduction.

Ask yourself, are you doing these things? Any of them? This is where we need to get to. Managing logistics or managing suppliers doesn’t qualify.

Now there are a few companies that are doing this really, really well.

Walmart and Tyson Chicken, for instance. If there is a head of lettuce that causes E. coli at Walmart, they’ll be able to immediately trace it back to the origin. The same with Tyson Chicken and their products.

The Japanese have several advantages that we suspect other countries will never have.

One advantage the Japanese have is cultural. They believe in everything long term. If a supply chain link fails in the US, we look to immediately replace it. If a supply chain link falters in Japan, they seek to invest in and help that supply chain link. They look to strengthen, support, and repair – rather than to put corrective action plans and then extract and replace.

Another advantage the Japanese have is legal. If customers in most countries ask and allow suppliers to build facilities right next to their facilities, then they have exposed themselves legally.

What if they want to switch suppliers? Now they are stuck. If they switch suppliers, then the customer company can sue them for detrimental reliance.

The final major advantage the Japanese have is software. Since they establish supply chains with suppliers that remain largely fixed, they can then make long-term investments in supply chain systems integration.

Now, has our profession made major progress? Absolutely! Should we be proud of this progress? Yes!

Should we be proclaiming that we are doing supply chain management? Unless you fall into the rare exceptions, probably not.

So move forward and aspire for true supply chain management. It’s the grand prize that we all aspire to.

Now go off and do something wonderful. Be your best!

Omid G.

– “THE Godfather of Negotiation Planning” ~ Intel Corp

P.S. Over 40% of the Fortune 100 have CPSCM™ graduates who know how to surgically remove costs from the supply chain better than anyone else in the profession. Invest in your career. Invest in your results. Join the best in the world today and get on the CPO Fast Track. You’ll be glad you did.