Part of a bigger programme and a bigger challenge

March 19, 2010
Its been interesting to review some of the threads on this site. Having looked over some of the discussion here, i thought i might add a few thoughts, to garner opinions on the wider perspective and how supply chain issues feature in broader risk ...

Its been interesting to review some of the threads on this site. Having looked over some of the discussion here, i thought i might add a few thoughts, to garner opinions on the wider perspective and how supply chain issues feature in broader risk management.

There have been a few threads dealing with supply chain risk, proposing quite specialist solutions to planning, securing, and delivering against supply chain requirements, with the ultimate aim being to optimise performance for the greater good of the organisation.

I'm coming at this from a board level perspective here, and am very accutely aware of the existing and pending compliance and risk legislation.

My first thought is that you will know far more about supply chain optimisation and security than i do. But related to this is the requirement for your activities to securely integrate with the broader business approach to realising corporate objectives. You will, as supply chain professionals, be working to make a valid contribution, and delivering specialist skills. However, the balance needs to be struck between working in isolation, with a specialist skills set that can sometimes be supply centric, and balancing that pull with the need to surrender some control, or fit in with the broader plan and the needs of other organisational functions to deliver on the overall strategy.

Without trying to teach you to suck eggs, if we go back to the central focus of business; the senior management team have the responsibility to set the objectives for the organisation. In an effective organisation a two way communication stream should exist, with divisions or departments driving information up to keep the leaders grounded and aware, whilst the leaders review this information and retain a broader environmental awareness in order to steer the business toward key aims and to ensure effective market and competitive performance - driving the objectives down throughout the organisation to provide a clear direction.

However, here are some challenges:

1. Research by organisational resilience firm Epiphany, reveals that on average, less than 3% of the personnel within an organisation (public or private sector) can actually recall or are aware of the organisations strategic objectives Source: . If this is the case, how easy is it to ensure any supply chain strategy is actually in line with the overarching direction the organisation needs to take, and how do you integrate your supply chain activities with the broader activities of the organisation, where you may actually be supporting the same objective but coming at it from different directions.

2. Management of Enterprise Wide Risk - optimising the supply chain and ensuring effective risk management is in place, along with continuity planning is vital. However, this activity within the specialism needs to fit within the overall risk management framework for the organisation. As a board member, what i frequently see, and have seen over the years ranges from no plans, to very poor plans, through to excellent, but near impenetrable plans because of the level of detail. High quality plans are great, but if they exist only in a specialsied language and cannot be articulated in the wider context of organisational wide risk, in a concise and clear fashion, then they risk being too silo'ed and under scrutinised. Compounding the problem, there is often a territory challenge taking place that debates whether Risk in its various forms and the implications are the responsibility of the Cheif Risk Officer, the Assurance Division, the Business Continuity Manager, the Head of Procurement, the Finance Director, or board. Well, ultimately, the responsibility rests with the board - at least from an accountability perspective. However, the turf wars, lack of give in terms of division of responsibilities is seen all to often. I'd be interested in how supply chain professionals view these territory battles, particularly between assuring the supply chain and Continuity planning.

My overarching conclusion is that, specialist skills are vital for delivering the strength to an organisation, but that each specialist area must not lose sight of the need to serve the overall purpose of the organisation. Which means avoiding turf wars, and being willing to integrate often detailed planning into a simplified framework to make the act of bringing the broader risk and continuity planning together in a way that makes it more accessible and understandable across the organisation.

There is also a continued need to ensure communication channels between functions remain open, and equally importantly, the linkages between functions, the dependencies are actually aligned with specific organisational objectives.

The question has to be asked, if you can't link your activities to a specific 'published' organisational objecive - then either you should not be doing it, or the board need to rethink their strategy to take greater account of the operating environment.

My final thought would be to continue to encourage professionals across functions to ensure they integrate their activities, not just across the supply chain, but across functions to ensure the relationships between sales, manufacturing, marketing, and finance are clearly understood and optimised. I commend any professionals that recognise this, of which there will be many on here. Unfortunately, there is still the challenge where the minority still exist in personal kingdoms. Personally, the ability to access a corporate wide perspective on objectives and associated risks makes life a lot easier and allows for a greater understanding of the often complex interrelationships between the actions or risks within one function, and their implications for another.

Out of interest, (please be honest here) how many of you can recount your organisations stated strategic objectives, understand them, and use that as a guide when developing supply chain strategy?

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