Lately, the phrase “supply chain management” has been coming up in almost every business conversation I have. It's catchy, it sounds important, and it's something that you can impress your vendors and customers with if your company professes to embrace it as a business initiative. In practice, supply chain management can streamline operations, improve communication with business partners, increase efficiency, create more sales opportunities, and the list goes on. Many dealers have their sights set on these goals, but to achieve them those at the corporate helm must define their company's own supply chain boundaries and vision, know how to share the objectives with employees, and be capable of measuring results. This is easier said than done.
In the past 15 years I don't think I have ever met anyone in business—in any industry—who has not at least heard of supply chain management. On the other hand, I've met very few people who can concisely define exactly what it is and outline its parameters. In some ways, supply chain management has morphed into a foggy catchall concept that can be used to describe just about any initiative to improve a company's operations and/or logistics.
It can be difficult to get your arms around the exact scope of supply chain management because the discipline is part art (intuition, creative problem solving, etc.) and part science (process engineering, information technology applications, etc.). There definitely is a subjective component that comes into play given this combination, and it becomes readily apparent when you dive into books, research studies, and other documentation to begin formulating a supply chain management strategy. Do a quick search of the Internet, for example, and you will easily find three or four somewhat different definitions of supply chain management.
In the construction supply industry today, these boundaries often contribute to a lot of talk and some smoke and mirrors about the existence and implementation of true supply chain management initiatives. As a result, there currently is a short list of outstanding examples with documented, quantifiable results to benchmark against. However, this is not unusual. Having spent a good part of the 1990s on an R&D committee looking at supply chain management strategies in different sectors including automotive, apparel, heavy-equipment manufacturing, and computer hardware, I have found that industries go through several learning curves in the quest to master their supply chains—and it takes time to build a solid bench of successes.
The good news here is that the flurry of interest and excitement over collaborative business strategies suggests that our industry is embarking on a supply chain evolution that has the potential to dramatically improve operational efficiencies and develop many more partnerships both upstream and downstream. And the time definitely is ripe for this movement because most experts anticipate that consolidation and market dynamics will drastically increase competition and force companies to focus on taking business away from their competitors. In this environment, only the lean will survive.
Going forward, I think pro dealers are going to fall into two categories: those who truly get on the supply chain bandwagon and succeed in streamlining their businesses and those who run behind the cart trying to catch up. If you are ready to get rolling, a good place to start is the Supply-Chain Council (www.supply-chain.org), which has developed and endorsed The Supply-Chain Operations Reference-model, which defines what the organization denotes as the five basic components of supply chain management: plan, source, make, deliver, and return.
No doubt, the scope of supply chain management will vary among companies and industries, but that does not preclude the need for all organizations to outline and disseminate a definition and vision of supply chain management that addresses internal operations, customers, and suppliers. Without this foundation, there can be no measurable improvements.