Supply Chain Management (SCM) has captured the attention of managers seeking a way to improve the performance of their organizations and enhance service levels offered to customers.  Better collaboration, tighter process integration, information sharing and proactive demand management all have been suggested as techniques available for driving that improvement.  Adoption of these and other techniques requires the cooperation of many organizations -- but who's to say which initiatives should be implemented, and in what order?

This type of strategic decision requires a company in the supply chain to assume a leadership role, and this role will fall to the company capable of exerting greater influence over other supply chain organizations. Although leadership is generally thought of as an individual characteristic, in a supply chain context, leadership can be considered at the organizational level.

Yielding The Power Of A Dominant Supply Chain

A dominant supply chain leader may use its position of power to force change to occur across the supply chain. Wal-Mart has played this role in the thousands of supply chains that feed its stores. The company has invested heavily in information technology and has "encouraged" its supply chain partners to replenish stock based on real-time sales data and to track inventory using RFID.

Dell provides another example of a dominant company.  The company is famous for its two-hour MRP cycle that has driven suppliers to locate across the street from its assembly facilities.  Its knowledge of upstream-parts availability has created what is arguably the most agile supply chain in the world.

Although Wal-Mart and Dell represent the "800-pound gorillas" in their respective supply chains, economic power should not be considered a necessary prerequisite for supply chain leadership.  A supply chain leader may emerge solely on the basis of its skills and behaviors. These behaviors may take the form of procedures, announcements, and contractual requirements and be facilitated by systems and the interactions of boundary-spanning managers.  Whether through size, power, or compelling behaviors, supply chain leadership is granted to the company capable of exerting the greatest influence over other organizations in a given supply chain.

Behaviors Behind Leadership

Four organizational behaviors can be used to define supply chain leadership: vision creation and articulation, goal-based relationship development, identifiability and influence. The ability to develop and project a vision is a key behavior of supply chain leaders. Often this vision is developed from a need to create change in the supply chain.  Yesterday's competitive advantage may be eroded or overtaken in the face of new competitors, new technology,and evolving customer demands.  The vision serves as a rallying point for the all supply chain organizations and provides motivation across many supply chain members by conveying the importance of change for the long-term welfare of all partners.

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