The chain of alignment jan. 2011


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My latest article has been published in APICS Magazine. We all know companies no longer battle other companies. More and more, it’s supply chains competing against other supply chains in the race to market supremacy.
Misalignment, which is often experienced by different silo’s/business functions, can now be methodically mapped.

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The chain of alignment jan. 2011

  1. 1. The Chain of AlignmentGet your supply chain players moving in the same directionBy John van Veen, Today’s global marketplace is more ercely competitive and volatile than everCSCP before. Globalization, compressed product cycles, recessions, rapid technologi- cal changes, ever more demanding customers, and continuous innovation and improvement force companies to be exible, get lean, and use the strengths of their supply chains. Companies no longer battle other companies. More and more, it’s supply chains competing against other supply chains in the race to market supremacy.34 January/February 2011 | APICS magazine
  2. 2. e possibilities of sup- Figure 1: An aligned supply chainply chain management areenormous, and practice Internal alignmentshows the path to supplychain excellence is equally Boardformidable. Current litera-ture focuses on ve types of Boardroom Boardroombarriers to e ective supply alignment alignmentchain integration: techno- Supplier Supplier Customerlogical, relationship, struc- tier 2 tier 1tural, human resource, and Supplier and supply Procurement Business Demand chainalignment. e following chain alignment Business alignmentfocuses on alignment, as an alignmentaligned supply chain o erssigni cant opportunity togain greater competitive Value chain alignmentadvantage. External alignment Inconsistent goals chal-lenge successful internaland external supply chain strategies are in parallel (See Figure 1 for an example more importantly, beingintegration. Divergent with division strategy and of this.) It is crucial to align part of those plans. Figureobjectives lead managers the demand and supply all segments of the value 2 illustrates a chain ofto make self-interested, chain—is essential to real- chain with regard to objec- alignment representing thesuboptimal decisions that izing competitive advantage tives, themes, and the like. overall aligned supply chainfrequently are in opposi- for the supply chain as a At the heart of boardroom, agenda.tion to those of other whole. In addition, align- supply chain, and businessbusiness managers and ment may be the most criti- alignment is the premise Topics and themessupply chain members. cal element to supply chain that true parallel operations How should supply chainFor example, procurement excellence. Also note that, require knowing about and professionals go about iden-departments o en formu- although sales and opera- understanding each other’s tifying the relevant topicslate cost-reduction goals, tions planning is an impor- priorities. erefore, any and themes with which theywhereas business goals are tant alignment mechanism, e ort to foster alignment should align? e follow-set toward innovation or there are more themes to entails getting to know ing are carefully selected,risk reduction. consider. stakeholders’ agendas—and, industry-independent Only when the various It is remarkable how o enmembers of a supply chain business owners do not actand internal stakehold- according to their o en- Figure 2: The chain of alignmenters are pulling in the same public strategies and objec-direction can competitive tives. Even vice presidents Buyproducts and services be of logistics are not always side Customer needsdeveloped for both short- fully aware of corporate Demand chainand long-term success. objectives and themes. As alignmentMismatched goals must be a result, the company and Company goalsavoided. All internal man- the entire supply chain runagers and all members of a er their own, sometimes Boardroom alignmentthe supply chain must view misaligned, objectives. ethe other members as fully risk is obvious. Companies Business goalscommitted to the chain of must stop rewarding Businessalignment. In cases where suboptimization as certain alignmentthere are di erent value stakeholders achieve successstructures, collaboration with no connection to the Procurement goalsbecomes di cult as each “alignment chain.” Supplier and supply chaindepartment and chain alignmentstruggles with unique stra- The chain of Supply Supplier and supply side chain goalstegic directions. alignment erefore, alignment—or Supply chains must operatehow well business goals and as an extended enterprise. APICS magazine | January/February 2011 35
  3. 3. topics that can be used to Figure 3: Alignment topics and themesdetermine the level of align-ment between the variousfunctions in the value chain. 5 ey include 4 cost reduction agility enhancement 3 Level innovation service orientation 2 risk reduction 1 core competences corporate social 0 responsibility s y t n n n n n n ce lit en io sio io io io io expansion en sib m at an at ct ct at et p n ce liz p ov du du nt internationalization. p es n na Ex n e re ie m lr ha io In tr sk or ese nine topics and co ia en at C os Ri ice re so c ity rn rvthemes were revealed Co te lil te Se ib In ra exthrough extensive analysis po Fl Corof annual reports fromvarious companies in the Boardroom topicsNetherlands. ey arebroken down further into60 areas of focus. Forexample, if cost reduction is the major business within from heightened collabora- eye-opener for everybodythe main value driver in the the company. The white tion, which is inherently involved. It will deliversupply chain, business goals line illustrates the current difficult to achieve and and inspire. Supply chaincan be directed at on-time position of procurement maintain. alignment initiatives can bedelivery, lean supply chain professionals regarding Obtaining cross-functional viewed as supply chain man-management, reduction of those topics. Finally, the buy-in and a balanced agement enablers becausecash-to-cash cycle time, and gray line reflects the sup- supply chain management they will help the variousthe like. pliers’ vision of the nine approach that takes dispa- chains avoid inconsistent topics. rate functional views into operating goals and stimu- e scores, rated 0 to 5, account is essential. e late a shared vision, com- are determined by means previously stated method mon strategic objectives, of assessment and re ect facilitates these goals. To and consistent policies and ratings in terms of “not establish common vision procedures. applicable” to “applicable.” and objectives (and percep-Alignment may e distance between the tion of di erences) among John van Veen, CSCP, is lines re ects the degree of the various chains must be managing consultant atbe the most misalignment. is par- measured and mapped out Benefit Value by Procurement, ticular example shows that clearly. is can be achieved a consultancy firm in thecritical element procurement, business, and with research and by means Netherlands. He may be suppliers are not in parallel of discussions with represen- contacted at john.van.veen@to supply chain with the principal strategic tatives of the various chains. topics of risk reduction and e degree of (mis)align-excellence. service orientation. ment among all the stake- To comment on this holders then can be identi- article, send a message to Getting there ed and visualized in clear The benefits of effective presentations. e insights supply chain management obtained are the start- can be huge and can help ing point for a structured a company achieve much dialogue among the board, The red line reflects the higher levels of customer the business, procurementboard of directors’ focus satisfaction at a lower (internally), and the mainon the nine topics. The total cost. However, these suppliers (externally).black line depicts the focus advantages are far from Executing supply chainon the relevant themes of automatic. They derive alignment o en is an36 January/February 2011 | APICS magazine