Orchestrating an Integrated Supply Chain

This past Easter weekend I witnessed an extraordinary performance at Philadelphia’s Kimmel Center for the Performing Arts: conductor Yannick Nézet-Séguin led the Philadelphia Orchestra in Bach’s Passion According to St. Matthew. The piece has only been performed a handful of times in the city over the past 30 years, and once the concert started I realized why. It calls for resources on an enormous scale: two orchestras and two choirs, flanked by an array of vocal soloists and specialized instrumentalists.

Nézet-Séguin guided this immense organization through three hours of intricate counterpoint, harmonies, duets, trios, and full blasts of sculpted sounds. Each artist on the stage displayed world-class virtuosity, yet all were working together in a perfect blend of musical complexity.

When one thinks about an artistic group presenting a unified, cohesive product that goes beyond individual contribution, the analogy for business organizations is easy to see.  Especially when we consider one of business’s most critical, delicately-balanced, coordination-intensive functions: the supply chain.

supplychainThe Dream of a Triple-A Supply Chain 

Hau Lee’s classic 2004 HBR article “The Triple-A Supply Chain”, a cornerstone of many executive education programs on operational performance, asserts that top-performing supply chains possess three distinct qualities: agility, adaptability, and alignment.  You can easily see that these capabilities would be desirable as firms try to grow their businesses while controlling the costs of sourcing, manufacturing, and delivering products.

Building on Lee’s article, John Gattorna in “The Triple-A Revisited” (2009) identified what he felt was a core missing element of Lee’s theory: the need for a “fresh attitude and culture”. Gattorna wrote, “In the end it is people and their leadership that matters most if the enterprise is to deliver ever-increasing operational and financial performance.”

There’s a wealth of other writings on supply chain processes, featuring approaches that range from down-to-earth to blue-sky. But based on conversations with my clients at CorpU—and with top academics in supply chain education and consulting—successfully leading a world-class supply chain still proves elusive for many large global companies.

Triple-eh? Some Classic Tensions

What barriers are there to actually achieving Lee’s principles of agility, adaptability, and alignment? For starters, there are misalignments of operational incentives that virtually guarantee conflicts. Some of the classic ones are between sourcing/procurement and manufacturing, and between sales and distribution.

One example shared by a client recently brought the challenge to life.  The procurement unit had contracted with a packaging provider for a certain number of product packages at a guaranteed price.  The vendor was contractually entitled to ship out whatever remaining units were left on contract quarterly, regardless of the client’s customer demand level or existing inventory. As a result, packaging supplies were piling up in a corner of the staging warehouse, becoming damaged and unusable.

Compare this with the other end of the supply chain: a sales rep, anxious to fulfill a customer order, checks to see if some particular product—a key industrial component part—is available in the warehouse. If the product is stock-out, because corporate strategy has mandated a reduction in inventory-holding levels (from shortening of lead times), he or she may be out of luck.

These examples drive home the need for better collaboration and communication across functions.  An efficient demand-driven supply chain, fueled and activated by good-quality customer demand forecasts, could enable these businesses to fulfill orders responsively and cost-effectively.

Gattorna has it right that the secret sauce is leadership.  How do we define and develop the leadership capabilities and behaviors needed to “conduct” true supply chain orchestration?

The Supply Chain Leader as “Orchestrator”

Leadership training has not traditionally been prioritized for supply chain professionals. Access to top B-School executive leadership programs has historically been limited. Moreover, given the sheer number of supply chain managers in global organizations, the cost and time commitment of flying them off to in-depth, face-to-face programs would be mind-boggling.

But these individuals’ professional development is critical to many companies’ strategic objectives. For example, to source everything sustainably—as numerous organizations have declared as 2020 goals—you must engage thousands of people around the world in technical innovations, management change, process innovations, and cultural adaptation.

The ideal supply chain leadership development program would involve world-class thought leaders in the supply chain space—practical academics, let’s say—or a group of consulting practitioners with proven performance working with industry.  It should be contextualized in the realm of the actual business unit or plant in which the learner lives and breathes. And it should emphasize collaboration and shared leadership principles.

Social-collaborative, virtual learning is a practical way to reach thousands of supply chain professionals wherever they are around the world. And their professional development is critical. Supply chain managers are the ones holding the baton, trying to stop the cacophony of misaligned incentives and smoothly orchestrate the complicated, global, end-to-end supply chain.

0878f43Dave Kurz, Ed.D. is a Principal at CorpU and serves as its Vice-President of Learning. Dr. Kurz works with leading educational institutions advising them on the translation of executive education needs into effective blended leadership development and change programs.  He has over 25 years of experience working with Fortune-class global companies in operations, strategy, supply chain leadership and talent development. Previously, he was a Principal Consultant with PricewaterhouseCoopers and Accenture. He is an assistant clinical professor in organizational behavior at Drexel’s LeBow College of Business and holds masters and doctoral degrees from the University of Pennsylvania.