5 Ways to Spot a World Class Supply Chain Organization
I battled the traffic of downtown Houston a couple of weeks ago and made my way to the beautiful new Petroleum Club. I was excited to have another chance to take in the views from that beautiful vantage point, but I was there for the Houston Strategy Forum’s Sixth Annual Supply-Chain Symposium. I recognized the companies that were to sit on the panel and assumed it would be satisfactory content, decent networking and unremarkable lunch. I was pleasantly surprised in that I was wrong on all fronts. The panel discussions and audience participation were very insightful and interesting. I appreciated the candid nature of the panelist and the realities of Supply Chain Management they so freely shared. The networking was great primarily based on the format of the conference.
Impressively, the Houston Strategy Forum builds its agenda around audience participation and table-wide discussions facilitating great collaboration and networking opportunities. Last, but certainly not least, the fresh snapper lunch offering was one of the best “banquet” meals I’ve ever eaten – all in all, a wonderful way to spend the afternoon. The theme of the symposium was “Building World-Class Supply-Chain Capabilities” and there seemed to be a lot of commonality on what that exactly meant to each panelist. Here are my key take-aways and what I believe is the top 5 Ways to spot a World Class Supply Chain Organization:
TalentI was shocked and frankly refreshed to hear how many comments were made about talent. It was clear that when you strip back everything else, the most valuable aspect of a World Class Supply Chain Organization is the people. I loved how one of the panelist from a household name shipping service described her team, “we aren’t in the BO BO (back office, back office) anymore.” The idea that Supply Chain professionals now have a seat at the table and are directly responsible for providing value to their organizations is contradictory to a now antiquated view of paper pushers in the back-office rubber stamping purchase orders. There was even discussion about trying to attract data scientist to the field. Nothing works without the proper team and I was excited to hear these SCM professionals recognize the talent in their organizations as such a valuable asset.
Collaboration and CommunicationThis may sound like an assumptive position, but many stories were told about the siloed nature of SCM organizations. The head of Procurement for a major EPC talked about the disconnect between procurement and accounting in his own organization. Disconnect between the people buying the goods and the people paying for the goods. It can happen to the best of organizations, but it was highlighted that world-class organizations work to get this collaboration right. They work to understand the inputs and outputs of the supply chain and strive for cohesive collaboration and clear communication inside and outside the organization.
Cost ConsciousI knew the discussion would eventually circle back to cost, because as the panel conference chair cleverly described Supply Chain using a quote from the infamous American bank robber, Willie Sutton, “that’s where the money is.” Conservatively, material represents 40% of the total installed cost (TIC) of a capital project, so the game can be won or lost in the supply chain. There was talk of economies of scales and price negotiation, but what I found especially interesting was the aspect of preferred suppliers in terms of cost. A head of Procurement from a global owner shared that at times, procurements organizations can get so comfortable with certain suppliers that they end up creating their own monopolies. Very interesting take on another aspect of cost control often in the organizations direct control.
Transparent and AccountableThere was much head nodding around the room when it came to the topic of transparency and accountability. Everyone knows that this should happen but getting the right processes and systems in place can be the challenge. Just like links in a chain, the different areas of the supply chain are connected, but often siloed. One representative from a global Owner Operator said he sees that at times people spend “80% of the time obtaining data and 20% making sense of it.” Having systems and platforms in place to facilitate sharing data could certainly reduce the time of obtaining data and add some transparency when everyone is working off the same set of books.
Embrace TechnologyAs a Digital Solution provider, this last one was music to my ears. I loved hearing all the aspects of technology and innovation being bantered about the room. Everything from 3D printing spare parts and the use of robots and drones to data centric, digital material management systems that can help facilitate the management of the supply chain from material specification to material installation. I loved that one of the SCM executives quoted Kevin Kelly’s book, The Inevitable, saying that “Technology is the human accelerant.” How true is that? If you take the talent and proven processes of a supply chain team and add in some enabling technology – the sky is the limit! As a technology geek and a provider of a digital material management system, AVEVA ERM, I left the symposium with a spring in my step knowing that the tools I have to offer are part of the recipe for a World Class Supply Chain Organization.
Jen Rizzo is part of the Digital Business Solutions team based in Houston, TX. With more than a decade of capital construction and supply chain experience and more than 8 years at AVEVA, she helps clients reduce project total installed cost by digitizing materials, construction and contracts management.