How to achieve success for your company and yourself
When I review the current state of procurement and supply chain at companies, I always look for three-year plan at a category and business level. I am curious to learn the vision for the future and how strategies are being executed to achieve the vision. It is extremely unfortunate that many procurement and supply chain team members can’t articulate the plan. I also want to learn just how the organization will be structured to meet future business needs, what is the current capability and competence, where the talent will be acquired that is needed in the future and how the supply base and supply chain will be restructured. In many cases, there is no formal plan, vision nor linkage to the business plan and no alignment across the business.
When asked why strategic plans aren’t available, these are always the justifications:
- Now more than ever before, there is pressure for quick financial results leaving limited time to plan.
- It is impossible to predict demand and customer preferences and supply chains are complex.
- Input costs are volatile and difficult to control and costs and volume are no longer linear, so financial implications of a business plan are difficult to forecast.
A hot topic in business today is integrated business planning (IBP), which is all about harmonizing strategy and execution in financial and operational plans. The key thing about IBP is that the departments are no longer planning as discrete silos. The supply chain remains the heart of the process. Think of IBP as moving Sales and Operations Planning (S&OP) from the backroom to the boardroom.
To help create a mindset to begin the IBP process, review what happens without a strategic plan. Lack of planning drives organizations into tactical approaches, creating a reactive culture rather than proactive strategy to anticipate and manage the volatility in today’s market. This tactical firefighting opens the door for competitors to gain advantage in the marketplace.
When I am evaluating procurement and supply chain capability in organizations, I am always expecting to see a plan indicating the direction they are headed. Will they be rationalizing the supply base? Will the company be moving into strategic alignment with suppliers or remain in competitive leverage? Will they be rationalizing and optimizing inventories and distribution? To answer these questions, it takes vision, leadership and internal collaboration to build an effective strategic IBP.
To drive IBP from supply chain management, five questions to ask are:
- What is the vision of the future in terms of short term, medium term and longer term horizon?
- Where will the supply chain expand/contract, where should we integrate and align with suppliers?
- How can we optimize warehouses, distribution, logistics, procurement and operations?
- How can we break down internal organization silos and drive the plan to maximize performance?
- How can you increase the agility, flexibility and value in the supply chain?
Is your career and business limited by lack of a strategic IBP?