While there is a tremendous amount of attention paid to the concept of supply chain management, we’ve always had the sense that it is a simple concept that perhaps has been made needlessly complex.
So when we met Michael Powell, who has more than two decades of experience in supply chain and information technology management, we thought we’d address the subject with him. (Supply chain happens to be a subject we get requests for a lot here at MNB World Headquarters.)
Currently a partner and senior consultant with the Business Strategy Group, Powell formerly was Senior Vice President, Supply Chain with Massachusetts-based Shaw’s Supermarkets. He served in senior management roles in the UK at both Home Base and J. Sainsbury.
Full disclosure: we met Mike Powell through his work with StoreParts.com, where he serves on the advisory board. StoreParts is a valued sponsor of MNB…and it comes up in the interview not because of the company’s sponsorship of our work, but because the company happens to be doing something that is different within the discipline of supply chain management. (If StoreParts weren’t a sponsor we’d mention it…and it doesn’t seem to make sense to penalize the company for what we view as thought-leadership for its support of MNB.)
MorningNewsBeat: What in your mind are the key building blocks necessary to achieve better supply chain management?
Michael Powell: The most important step is to get the business to accept that the supply chain needs to be managed as a single entity. The organisation needs to be changed to get the accountabilities in the right place across the whole enterprise. The supply chain needs to be populated with the top talent available in the market. In particular, strategic planning skills need to be put into place.
Everyone working in the supply chain has to have the right incentives. In many companies, one group may be responsible for availability but another group may be responsible for inventory control. Elsewhere, one group may be responsible for service to the stores but another group may be responsible for distribution costs. These are two classic examples of misalignment and there are many others. The result can totally undermine the performance of the supply chain.
The next requirement is to ensure that you have the right metrics in place to understand the performance of the supply chain. Most retailers know the service level output from the distribution centers in infinite detail. However, they have very poor visibility of the availability seen by the customer. This needs to be addressed urgently. It is also important to look outside the boundaries of your own business to see what technology can offer and how specific distribution channels can be organised for greater efficiency.
MNB: What are the primary reasons that companies struggle in achieving excellence in this area? Is it because they under-emphasize it? Over emphasis it? Or emphasize the wrong parts of it?
Michael Powell: Retailers generally under- emphasize the importance of maximising the efficiency of their supply chains. In many cases, they do not have visibility of the operating efficiency or total costs of their supply chain. Is it delivering the right level of availability to the customer at an affordable cost? A lot of companies couldn’t answer this question. The problem is that supply chains are sometimes organised in silos, accountabilities are unclear and measurement systems are inadequate.
A lot of retailers regard their supply chains as being with the manufacturer and ending at the back door of the store, when in reality that is only part of the chain. The full supply chain extends from manufacturer to the ultimate customer. It is the last few yards of the supply chain that has traditionally not been addressed very well. Many retailers still operate under a “sell what we buy” vs. a “buy what we sell” philosophy. This often leads to maximizing return and efficiency on the supply side at the expense of the demand side.
MNB: From a retail perspective, what are the companies worth modeling in supply chain management? Why? And how about from the manufacturer perspective?
Michael Powell: Wal-Mart is clearly leveraging their huge scale to achieve levels of supply chain efficiency that most retailers could not achieve. Several companies are making sizeable investments in technology to improve supply chain performance. For example, both Home Depot and Best Buy have made important statements in recent months. Several solution providers now seem to be gaining traction particularly in the field of web-based solutions and data mining. Important technologies that are emerging including the auto-ID development.
MNB: You’ve just joined on with StoreParts.com…what does this company, and others like it, bring to the supply chain management table?
Michael Powell: StoreParts’ web-based tools will enable the whole process of store maintenance and equipment procurement to be streamlined. This is a highly costly process for retailers but has been largely overlooked in recent years. StoreParts will deliver great simplification and rapid cost reduction. I see this as a very quick win for the retail industry.
Web-based retail tools, of which StoreParts is a leading example, are revolutionising the way the supply chain is managed. In the last couple of years, web based tools for freight management, labor scheduling and many other functions have been brought to market. Very fast implementation is possible with these tools and cost savings can be achieved rapidly.
MNB: The biggest misconception about supply chain management?
Michael Powell: A supply chain is basically a very simple concept, the process of moving products from a supply point to a demand point. However, over the years it has been made to look incredibly complicated. This has led to the creation of innumerable initiatives between trading partners and other industry developments. I think we need to cut the jargon and get back to basics. Of course, it is vitally important to maintain industry awareness and take advantage of developments in technology. However, the benefits of making any changes to your supply chain need the be clearly demonstrated. Getting back to basics involves making sure that your organisation is properly aligned, that everyone has the right goals and incentives and that you have the right metrics in place to measure the performance of your supply chain.
So when we met Michael Powell, who has more than two decades of experience in supply chain and information technology management, we thought we’d address the subject with him. (Supply chain happens to be a subject we get requests for a lot here at MNB World Headquarters.)
Currently a partner and senior consultant with the Business Strategy Group, Powell formerly was Senior Vice President, Supply Chain with Massachusetts-based Shaw’s Supermarkets. He served in senior management roles in the UK at both Home Base and J. Sainsbury.
Full disclosure: we met Mike Powell through his work with StoreParts.com, where he serves on the advisory board. StoreParts is a valued sponsor of MNB…and it comes up in the interview not because of the company’s sponsorship of our work, but because the company happens to be doing something that is different within the discipline of supply chain management. (If StoreParts weren’t a sponsor we’d mention it…and it doesn’t seem to make sense to penalize the company for what we view as thought-leadership for its support of MNB.)
MorningNewsBeat: What in your mind are the key building blocks necessary to achieve better supply chain management?
Michael Powell: The most important step is to get the business to accept that the supply chain needs to be managed as a single entity. The organisation needs to be changed to get the accountabilities in the right place across the whole enterprise. The supply chain needs to be populated with the top talent available in the market. In particular, strategic planning skills need to be put into place.
Everyone working in the supply chain has to have the right incentives. In many companies, one group may be responsible for availability but another group may be responsible for inventory control. Elsewhere, one group may be responsible for service to the stores but another group may be responsible for distribution costs. These are two classic examples of misalignment and there are many others. The result can totally undermine the performance of the supply chain.
The next requirement is to ensure that you have the right metrics in place to understand the performance of the supply chain. Most retailers know the service level output from the distribution centers in infinite detail. However, they have very poor visibility of the availability seen by the customer. This needs to be addressed urgently. It is also important to look outside the boundaries of your own business to see what technology can offer and how specific distribution channels can be organised for greater efficiency.
MNB: What are the primary reasons that companies struggle in achieving excellence in this area? Is it because they under-emphasize it? Over emphasis it? Or emphasize the wrong parts of it?
Michael Powell: Retailers generally under- emphasize the importance of maximising the efficiency of their supply chains. In many cases, they do not have visibility of the operating efficiency or total costs of their supply chain. Is it delivering the right level of availability to the customer at an affordable cost? A lot of companies couldn’t answer this question. The problem is that supply chains are sometimes organised in silos, accountabilities are unclear and measurement systems are inadequate.
A lot of retailers regard their supply chains as being with the manufacturer and ending at the back door of the store, when in reality that is only part of the chain. The full supply chain extends from manufacturer to the ultimate customer. It is the last few yards of the supply chain that has traditionally not been addressed very well. Many retailers still operate under a “sell what we buy” vs. a “buy what we sell” philosophy. This often leads to maximizing return and efficiency on the supply side at the expense of the demand side.
MNB: From a retail perspective, what are the companies worth modeling in supply chain management? Why? And how about from the manufacturer perspective?
Michael Powell: Wal-Mart is clearly leveraging their huge scale to achieve levels of supply chain efficiency that most retailers could not achieve. Several companies are making sizeable investments in technology to improve supply chain performance. For example, both Home Depot and Best Buy have made important statements in recent months. Several solution providers now seem to be gaining traction particularly in the field of web-based solutions and data mining. Important technologies that are emerging including the auto-ID development.
MNB: You’ve just joined on with StoreParts.com…what does this company, and others like it, bring to the supply chain management table?
Michael Powell: StoreParts’ web-based tools will enable the whole process of store maintenance and equipment procurement to be streamlined. This is a highly costly process for retailers but has been largely overlooked in recent years. StoreParts will deliver great simplification and rapid cost reduction. I see this as a very quick win for the retail industry.
Web-based retail tools, of which StoreParts is a leading example, are revolutionising the way the supply chain is managed. In the last couple of years, web based tools for freight management, labor scheduling and many other functions have been brought to market. Very fast implementation is possible with these tools and cost savings can be achieved rapidly.
MNB: The biggest misconception about supply chain management?
Michael Powell: A supply chain is basically a very simple concept, the process of moving products from a supply point to a demand point. However, over the years it has been made to look incredibly complicated. This has led to the creation of innumerable initiatives between trading partners and other industry developments. I think we need to cut the jargon and get back to basics. Of course, it is vitally important to maintain industry awareness and take advantage of developments in technology. However, the benefits of making any changes to your supply chain need the be clearly demonstrated. Getting back to basics involves making sure that your organisation is properly aligned, that everyone has the right goals and incentives and that you have the right metrics in place to measure the performance of your supply chain.
- KC's View:
