Supply chains are key to enterprise growth, fueling customer satisfaction and increased revenue, but they also face vulnerabilities from the uncertainties of global demand and supply.
To increase resilience and improve performance, many companies have set out to transform their supply chains. Like builders constructing a complex house, however, they often must contend with the challenges of coordinating multiple teams, meeting ever-increasing demands for digitization, and adhering to accelerated timelines. As a result, their ambitious transformation initiatives fall short of expectations
To manage the complexity of an end-to-end supply chain transformation, companies need a blueprint that allows each function to understand the assumptions relating to the transformation that affect it and how its own assumptions affect others. This will enable each function to perform its own design, building, and execution in coordination with others.
BCG has designed an approach composed of five interlocking steps. It ensures coordinated action by providing a strategic and execution roadmap across functions and teams.
- Articulate and quantify business aspirations. To guide its efforts, the company must specify what it wants to achieve through the supply chain transformation. It can then determine the KPIs and the underlying execution metrics that contribute to meeting the overall success criteria.
- Understand current and future product flows. The company needs a baseline, granular understanding of how pallets, cases, and individual items flow from suppliers through distribution networks to end customer locations. It uses this information to assess how it must change the product flow to achieve its goals.
- Map end-to-end supply chain capabilities. Understanding product flows allows the company to determine which end-to-end supply chain capabilities it needs today and in the future. It can then pinpoint critical capability gaps and decide how to address them.
- Develop a multiyear capability-building roadmap. The company must determine how to build new capabilities that will enable current and future product flows. This requires identifying which capabilities are prerequisites for others and which ones are critical to completing the transformation.
- Establish a high-touch and agile program management office. To support execution, the company needs to appoint a high-touch and agile PMO. (See Exhibit 3.)This body sets up the transformation program, defining KPIs and key milestones. It also creates the governance structure by assigning responsibilities across functions and developing the meeting cadence for evaluating critical tradeoffs and resolving issues. In addition, the PMO establishes tools and reporting formats, including the use of data analytics to enable more effective and agile decision making.
Please read the full article on BCG.com, where are also present a detailed use case using our methodology in helping a global retailer transform its supply chain to drive and sustain revenue and volume growth.
Michael Hu | BCG 