The Stream by River Logic

5 Lessons From Our Greatest Supply Chain Leaders

August 17, 2016 | By River Logic

One of the best ways to develop skills in a specific area is to emulate the habits of people who have already attained success in that field. This is as true for supply chain management as it is for sports. The goal of this post is to examine the opinions of some of the world’s top supply chain leaders in order to empower future / up-and-coming leaders in the space.

These leaders were not chosen at random. Gartner recently released their 2016 Supply Chain Top 25 list, which ranks businesses based on the success and efficiency of their supply chains. The first three lessons come fro

m leaders at the three companies that topped the list this year: Unilever, McDonald’s and Amazon.

The final two lessons come from businesses that qualified for Gartner’s Masters category, indicating sustained supply chain excellence over the last decade — Apple and Procter & Gamble.

Lesson 1: Speed Is Your Friend

“Speed is our currency, and we make the difference in the business by actually putting our products on the shelf as quickly as possible, by launching products globally…”1

-Pier Luigi Sigismondi, Chief Supply Chain Officer at Unilever

While Sigismondi and Unilever identify multiple areas that help set their supply chain apart from competitors — including sustainability and collaboration with suppliers — the speed at which they are able to get their products to shelves may be the most impressive part of their model.

Unilever operates on a massive scale, with distribution in 90 countries and over 2 billion people using their products daily, according to Sigismondi.

Companies of this size often have difficulty with product introductions, relying on slow roll-outs in individual countries. Unilever views this as an opportunity to derive a competitive advantage, focusing on their ability to get products to the shelf as quickly as possible.

Supply chain speed is important for businesses in any industry, but those in retail may find it especially beneficial. Improved margins, increased market share and higher customer satisfaction are all possible by making sure your products are on the market first, and that once there they don’t run out.

Lesson 2: Think Big Picture

“I think it's not common for people, let's say, in traditional business roles to think out 20 years… Most companies think about a three- to five-year plan. But as you know, in the area of sustainability, if you want to make true impact and true change, that takes a commitment and a vision that goes past a few years.”2

-Francesca DeBiase, Chief Supply Chain and Sustainability Officer at McDonald's

McDonald’s is currently in the middle of a major push towards greater sustainability, and this move is being led by DeBiase. The plan includes sustainably sourced beef, fish, coffee, palm oil and fiber, as well as a commitment to cage-free eggs and antibiotic-free chicken.

This is a major undertaking and one that takes incremental steps over years in order to actually complete. Many of these goals were introduced in 2014 with a target date of 2020 for completion, and so far they have been steadily progressing. DeBiase says that a large part of their success is due to the fact that they weren’t afraid to look far into the future when planning.

Just because something can’t feasibly be accomplished in the near term, doesn’t mean it's not worth doing. Many people only seek to make changes that can show immediate and measurable profit, but adopting this type of attitude can be detrimental for the long-term success of the business.

Lesson 3: Experiment, Experiment, Experiment...

“If you double the number of experiments you do per year, you’re going to double your inventiveness."3

-Jeff Bezos, CEO of Amazon

Amazon is often the first business people think of when they think of an innovative and disruptive supply chain. They are behind some of the most interesting advancements in logistics of the past decade.

These advancements include anticipatory shipping, Amazon Prime Air (a still-in-development drone shipping program) and Amazon Flex. Flex is a new service that guarantees shipments within 2 hours of ordering in select cities by crowdsourcing deliveries to anyone with a car and a smartphone.

According to Bezos, the reason that they have been so successful is that they reinvest the majority of their money and they are constantly experimenting. Bezos isn’t afraid of failed experiments, recognizing them as a necessary part of the development process.

The lesson here is to strategically invest resources into small-scale trials that may uncover new operating procedures that will optimize the flow of goods through your supply chain. Bezos also cautions against the temptation to only try things you know will work, as the whole point of an experiment is figuring this out.

Lesson 4: Develop Laser Focus

“We have to make sure, at Apple, that we stay true to focus, laser focus - we know we can only do great things a few times, only on a few products.”4

-Tim Cook, CEO of Apple

When Tim Cook first started working at Apple as SVP of Worldwide Operations in 1998, his first order of business was dramatically streamlining the entire supply chain. Apple had 100 key suppliers at the time, but that number was quickly cut to just 24. He also managed to drastically drop inventory turnover time, as well as the amount of time it took for them to actually build their products.

Having a clear focus on your goals allows you to easily identify what is superfluous and then remove it from your business. When it comes to supply chain management, this means identifying what you wish to achieve and then analyzing how your current practices help you to do so.

If any of your procedures help to further lessor or secondary goals while inhibiting your pursuit of more important objectives, it may be time to rethink things.

Lesson 5: Develop a Clear Strategy

“Strategy can seem mystical and mysterious. It isn't. It is easily defined. It is a set of choices about winning. Again, it is an integrated set of choices that uniquely positions the firm in its industry so as to create sustainable advantage and superior value relative to the competition.”5

-A.G. Lafley, former CEO of Procter & Gamble

If you find your business struggles when it comes to focus, then you may be lacking a concrete strategy. As A.G. Lafley points out in his book, strategies are not some vague hinting at an idea, they are clear and concrete.

This point relates directly to goal-setting. Once you have identified your goals, both short and long term, the next step is developing a plan of attack that will get you from where you are now to wherever you want to be in the future.

The more detailed this plan is, the more likely you will be able to succeed. This doesn’t mean that you shouldn’t remain flexible --things can and will change-- but it does mean that you should be able to visualize a path forward at all times.

Sources:


  1. How Unilever Derives Value From Its Supply Chain [Interview by B. Bowman]. Retrieved from http://www.supplychainbrain.com/content/videos/2012-videos/gartner-2012/how-unilever-derives-value-from-its-supply-chain/
  2. One year later: McDonald's supply chain, sustainability chief Francesca DeBiase [Interview by B. Langert]. (2016, March 1). In GreenBiz. Retrieved from https://www.greenbiz.com/article/one-year-later-mcdonalds-supply-chain-sustainability-chief-francesca-debiase
  3. Bezos, J. Speech presented at 2013 World Economic Forum in Davos, Switzerland.
  4. Interview with Tim Cook [Interview by B. Williams, Transcript]. In NBC Rock Center. New York City, New York: NBC.
  5. Lafley, A. G., & Martin, R. L. Playing to win: How strategy really works.

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