Ten Key Traits of Effective Supply Chain Management

Introduction to Supply Chain Traits

Any supply chain is designed to satisfy consumer demand and distribute products from one location to another, meeting and fulfilling patterns of demand and supply. The supply chain not only encompasses suppliers and manufacturers, but also takes into account retailers, distributors, warehouses, and consumers. For instance, in a manufacturing entity, the supply chain consists of all functions involved in receiving and fulfilling a consumer's request. These include, but are not restricted to, marketing, finance, product development, customer service, and organizational operations (Mentzer et al., 2001).

Supply chains must possess different characteristics in order to be effective and successful. According to Poirier et al. (2010), successful corporations approach their supply chains in ways that differ significantly from their less-successful competitors. Specifically, these companies consistently embrace particular traits that positively influence their operations, enabling them to function more efficiently and profitably. The purpose of this paper is to discuss these traits of supply chains that any company would be wise to follow.

Sound Supply Chain Strategy and Leadership

Supply chain planning and decision making should be incorporated within higher-level business strategies in order to support sustained progression across the entire initiative. This trait involves developing a compelling strategy with a clear, effectively linked charter for continuous process improvement throughout the enterprise. Key to this is having both vertical and horizontal functions engaged throughout the business, along with involvement from individuals at different process phases. In this way, the organization is able to effectively identify the source of problems and implement suitable solutions. Companies with this trait in their supply chains can freely identify and overcome cultural reservations and structural obstacles to necessary change (Poirier et al., 2010).

Financial Metrics, Innovation, and Collaboration

Focus on Financial Metrics

Virtually every corporation can benefit from closer partnership between the supply chain and its financial departments. The objective is to help financial personnel gain a deeper understanding of how supply chain initiatives can directly influence financial performance. Financial support through the implementation of balanced scorecards and activity-based costing (ABC) provides the kind of substantiation needed to establish the prospective value of a supply chain initiative (Brewer and Speh, 2000). Moreover, it eliminates several actions that consume time and resources without generating the expected benefits. According to Poirier et al. (2010), when the financial function of an organization becomes invested in and places emphasis on the supply chain—and identifies areas in which value can be added to business operations—the results change dramatically.

Commitment to Innovation and Process Improvement

In the contemporary business environment, success is not simply about doing things better, but about doing things differently through a selection of approaches tailored to business requirements. This means establishing new ways of improving a supply chain while effectively managing change. Business leaders employ various techniques to achieve optimal performance throughout their key process phases. Quality standards are applied to identify and eliminate sources of issues, ensure customer satisfaction, and sustain a leadership position. In addition, business leaders also use outsourcing selectively across different business partnerships to obtain optimal performance within their organizational networks. Techniques commonly employed for process improvement include total quality management, radio frequency identification technology (RFID), and enterprise resource planning (Poirier et al., 2010).

Collaboration with Selected Partners

This supply chain trait involves the segmentation of different types of relationships with different kinds of suppliers and consumers. In order to achieve greater performance within supply chains, customer and supplier segmentation must take place, followed by working in tandem with major business partnerships. In today's globalized business environment, leaders are going beyond an internal improvement emphasis to a broader focus in which business partners are carefully chosen and partnerships are nurtured throughout the extended enterprise. The formation of this kind of collaborative organizational culture is an essential criterion for attaining a successful supply chain (Poirier et al., 2010).

Conclusion

The traits discussed above are what a supply chain must possess in order to be effective and successful. As history has shown, supply chains that incorporate these characteristics have thrived, while those lacking them have deteriorated. Supply chains such as Walmart's have flourished, while others have declined due to the absence of such traits (Cecere, 2014). This is largely attributable to effective leadership and proper organizational strategies. Successful supply chains do not arise by accident; rather, they come about as a result of the deliberate and planned integration of supply chain considerations into company strategies and operations. In order to achieve effective supply chain management, it is imperative for a company to take into account the traits discussed in this paper and incorporate them into its supply chain operations.

References

Brewer, P. C., & Speh, T. W. (2000). Using the balanced scorecard to measure supply chain performance. Journal of Business Logistics, 21(1), 75.

Cecere, L. (2014). Seven characteristics of supply chains to admire. Forbes. Retrieved 18 November 2015 from: http://www.forbes.com/sites/loracecere/2014/09/21/seven-characteristics-of-supply-chains-to-admire/

Mentzer, J. T., DeWitt, W., Keebler, J. S., Min, S., Nix, N. W., Smith, C. D., & Zacharia, Z. G. (2001). Defining supply chain management. Journal of Business Logistics, 22(2), 1–25.

Poirier, C. C., Swink, M. L., & Quinn, F. J. (2010). Ten traits of the best supply chains. Supply Chain Management Review. Retrieved 18 November 2015 from: http://www.scmr.com/article/ten_traits_of_the_best_supply_chains

Poirier, C. C., Swink, M. L., & Quinn, F. J. (2010). Diagnosing greatness: Ten traits of the best supply chains. Fort Lauderdale: J. Ross Publishing.