The Trouble with Supply-Chain Best Practices
When it comes to the supply chain, best practices gleaned from the likes of Apple and Cisco simply don't apply to all companies' problems. Here's some advice on how to think more critically about improving supply chain.
Fri, October 22, 2010
CIO — Best Practices: It's an often overused term that can apply to literally any decision-making process: parenting quandaries, personal finance questions, buying a house, getting a job, or selecting a puppy breed.
For businesses today, gathering of best practices is fairly routine: one company culls, analyzes and then shares their lessons learned with business partners, or with consultants, analysts or the media. That's then compared and contrasted with others' experiences and rounded up into a pool of measured experience.
Overall, the concept connotes a transfer of commodity knowledge: a type of information benevolence and goodwill towards others.
That's the nuanced question raised in an interesting blog post by Dr. Harpal Singh, CEO of Supply Chain Consultants. His answer: probably not.
"Trying to define supply chain best practices is like trying to select the best car," Singh writes. "It is not so much how good the car is, but how well the car works for you."
Singh argues that successful companies have common, core values or goals, rather than a list of tried-and-true best practices that they follow.
"These core values are around teamwork, communication and a desire to manage their supply chain quantitatively," he writes. "These core values do not translate to practices in exactly the same way for every business because converting these values into practices must always take into account the particular characteristics of the business."
Think about it: It's a stretch to think that GE's (GE), Procter & Gamble's (PG) or Apple's (AAPL) supply-chain best practices are indeed applicable or even relevant to your business. Chances are, most of them are not.
Singh's point may seem obvious, but the meaning is crucial for those supply chain chiefs whose CEOs and boards are asking them: "Why is our supply chain not as good as Cisco's?"
An example would be a company's perceived need for lightning-fast, real-time data when, in fact, relying on such data could be a destructive force for the business.
No doubt, industry-specific supply-chain best practices can be a fantastic source of ideas and inspiration. But there is a huge difference between learning from the leaders and blindly pushing your staff to alter your supply-chain processes so that you can be more like Apple.
Success, Singh contends, comes in the thoughtful application of proven, winning ideas and dove-tailing them with your company's core values, specific processes and long-term strategies.