Just In Time -- Vision Quest

June 7, 2007
U.S. manufacturers are in an ideal position to capitalize on globalization -- as long as they make products people want to buy.

"Vision without execution is a hallucination."

Albert Einstein probably didn't have supply chain management in mind when he uttered those words, but no matter -- they still serve as an apt metaphor for the manufacturing industry's approach to today's globalization challenges.

General Colin Powell, former U.S. Secretary of State, used that quote in his keynote address at the recent AMR Research conference to both loosen up the crowd (let's face it, it's a funny line) as well as to challenge the attendees to stop thinking in "us vs. them" terms. While the United States clearly faces very real threats from the likes of al-Qaeda, according to Powell the greatest weapon in our arsenal is not our armed forces or our security protocols -- it's the openness of American society and business.

Acknowledging China's growing importance as a global power, Powell sees that country in the light of a worthy adversary, rather than the "Red Menace" of yesteryear. "The only real fight we're going to have with China is over shelf space at Wal-Mart," he predicts.

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See Chain Reactions: David Blanchard's blog about supply chain management.
Picking up on that theme, Jim Waters, vice president of the Caterpillar Production System Division of Caterpillar Inc., is disturbed by what he sees as a shift toward protectionism and isolationism in the United States. "A lot of people are afraid of global competition," Waters observes, "but I don't think the United States got to where we are by being afraid of competition."

That attitude of fear, he says, runs counter to our country's traditional strengths, which include:

  • creativity and resiliency,
  • a vibrant, market-based economy,
  • technical expertise, and
  • a tradition of openness, flexibility and governmental restraint.

The U.S. business community needs to build bridges, not walls, he says, pointing out that 95% of the world's population lives outside the United States. "If you're getting beat in the marketplace, it's because somebody else's supply chain beat you, not globalization."

One manufacturer that is carrying through on the "execution" side of its vision is Novartis Pharma. With $22 billion in sales and double-digit growth in the past year, the Swiss pharmaceutical company seems to be doing a lot of the right things. Increasing sales even more, however, isn't one of the goals on Tom van Laar's to-do list. As head of the company's global technical operations, van Laar's vision is for Novartis to become "the Toyota of pharma." Novartis aims to apply Toyota's "lean vision" to develop into a pharmaceutical supply chain leader.

Novartis' plan to achieve that goal is centered on three strategic pillars, which van Laar outlines as:

  1. implementing and synchronizing lean manufacturing from end to end
  2. realigning the company as a process-oriented organization
  3. enhanced business process reengineering.

The major challenge of pharmaceutical supply chains is the need to maintain a constant supply of life-saving drugs, so reducing inventory cannot come at the expense of supply. Fortunately, as van Laar notes, "lean is a strategy that can deal with highly variable demand forecasting." Two key enablers of that lean strategy, he explains, are a senior management team supportive of the plan, as well as an advanced planning system capable of crunching all the numbers that go into a supply chain plan.

Going global is a strategy that Coca-Cola knows well. According to Irial Finan, president of the company's Bottling Investments and Supply Chain, Coke staked its claim to the East German market within hours of the fall of the Berlin Wall. "There is no global template, no one size fits all' strategy that applies everywhere in every market," he explains. That's why it's important for multinational companies to recognize that they're "engaged in a global war for talent."

Although Finan summed up Coke's goal with a twinkle in his eye, there's really nothing facetious about it, and in fact it neatly summarizes the defining purpose of every manufacturing company: "Our mission is to put our products in danger of being purchased." That's one danger zone that no manufacturer should fear.

David Blanchard is IW's editor-in-chief. He is based in Cleveland. Also see Chain Reactions: David Blanchard's new blog about supply chain management.

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