Having World Class Supply Chain is not by Chance

Supply Chain has evolved worldwide as a specialists job over past two decades. There are people and organizations focused on giving it due importance and also reaping the benefits. A lot of credit must be given to Automobile Industry for really focusing early on its evolution and IT development across the world, that has facilitated its advancement leaps and bounds and evolving it as a discipline of experts. Having said there is another school of thought largely lead by Promoters and majority of Industries where Supply Chain/Purchasing is considered like a housewife’s job assuming any one can do that and it does not generate revenue and the assumption that Supply Chain is a cost Centre. Majority of Organizations, rather vast majority of them treat Supply Chain as Cost Centre and do not even define Cost Innovation/Optimization through Supply Chain as Profit Centres.

Historic Reasons :

“I often say Supply Chain is not a housewife’s job”, but it actually is:

I think one global historic reason is that majority of global households have Housewives doing routine shopping around the world in majority of houses and so spend management never got the respect it could get despite the fact that best Supply Chain Guys around the world will agree that no one can negotiate it better than their mothers, even after acquiring Harvard Business School Degrees. I must agree to that. I must also agree that my mother’s supply planning was so accurate that 40+years back without a tool, not even a calculator , we rarely ran out of anything at home that we needed everyday. We rarely got our meals late and got our new clothes when we thought we should get, duly stitched by her. So immaculate planners, organizers and Negotiators. But only trouble was that they never asked anything in return and so their work was not counted to be of any reasonable value. I was watching TV a few days back and a report came up that world will become poorer by 13% of global GDP if it started paying the housewives for the work they happily do charitably. This means almost a seventh of Human Capital is engaged in the work Free of Cost. That is why probably they do not get the recognition they deserve because most of men folks will can never can have a heart that big. And the male dominated world in its own superiority attaches a lot of valuable work in and outside house as useless.

Heavy Cost of Complacency :
In natural evolution of an organization , be a manufacturing driven organization on Sales/Service driven organization, the first focus of the organization is to get orders, even before they have ability to sell or offer to sell. So entire organization (especially the promoter) is driven to create sales at most arrange finance.

The second stage is growth in sales . The third stage is dip in sales and when that happens they start thinking of Cost Optimization. The first thing they typically touch is people who can do that and work on right-sizing the organization. The Chief buyer typically is the promoter, so he never looks at him. So he looks at people to reduce cost. Most of the organizations perish I this process as they start loosing good people in other expert areas. 90% of bigger organizations cannot even build standard processes, so they perish. A few top guys change themselves and do what is required to be done.

TOYOTA taught the world :
What an optimized supply chain is, what empowerment of people is. There are may be better examples today but Toyota Production System and concepts they introduced like milk van, JIT, Planning for production gave respect to supply side and the skill of Supply Chain.

Supply side needs :
Respect, Recognition and understanding of their problems more than the orders and money a buyer offers as profits. Definitely two organizations come together for and due to business. And by many definitions business means profit. But profit comes at the end of a lot of cost even in a P&L. Those who are willing to pay the price for profit definitely get it. But as ZigZiglar says “help enough people to get what they want and you will get what you want”. The price to pay for an enterprise for efficiencies out of a Supply Chain is first investment in right people, infrastructure (their own) and then infrastructure of stake holders (Supplier group), their skills sets to buy their hearts and not just buy them over by the money you can throw. The price is patience till they come upto your expectation and giving them security that they will be taken care of no matter what. This is not simplifytools like supplier rating, reward and penalty but setting the culture right. The culture is not quantifiable in a rating system but longevity of relationship and Depth of Trust and loyalty created.