High performance in supply chain management?

Get to the root of the problem and use strategic competitive advantage.


Strategic Competitive Advantage through High Performance Supply Chain Management

Supply chains are under pressure. The pandemic has highlighted the limits of traditional SCM processes and exposed the vulnerabilities of international supply chains. And we are already facing the next test: the consequences of the war in Ukraine. Additionally challenged by new regulations as well as rapid technological development, companies often resort to short-term partial solutions to cope with the acute challenges - with mediocre results. SCM can determine the success or failure of companies and must therefore be at the top of the strategic agenda.

With the right design approach to High Performance SCM

High performance organisations have recognized this. They view SCM from a holistic business perspective and gain a significant competitive advantage by anchoring their SCM in the organisation with a clear design approach. This involves eliminating weak points along the entire process from supplier to customer. This not only strengthens SC performance and resilience, but also enhances customer value, increases process efficiency and optimizes purchasing prices.

Advantages SCM

The strategic and operational activities of SCM must be systematically embedded in the business process model. Strategic development (Develop) lays the foundation for high performance SCM, while operational excellence is ensured in day-to-day business (Run). The strategic activities in Develop have a scope that is often underestimated: experience shows that up to 80% of the costs incurred are determined in this framework. The design criteria of a high performance organisation help to tap the potential of high performance SCM.

Design criteria of the High Performance SCM

a) Separation between strategic further development and day-to-day business:
A quantum leap towards high performance SCM can be achieved by separating strategic considerations from day-to-day business. In strategic procurement and logistics planning, the necessary foundations are laid to enable smooth operations in operational procurement and logistics.


b) End-to-end responsibility for availability and costs:
Clearly assigned end-to-end responsibilities are elementary for the functioning of SCM processes. Procurement and logistics are responsible for the availability and costs of purchased goods, coordinated with production. They are measured against this using clearly defined metrics.


c) Relevant capabilities along the SCM processes:
Procurement and logistics business processes are characterized by clear capabilities to meet the requirements along the process and enable optimum task sharing. Tasks, responsibilities, and capabilities are in harmony.


d) Clear interfaces between business processes:
Clear principal/contractor relationships prevail between production and procurement as well as procurement and logistics. The same applies to the interfaces with suppliers.


e) Strategic and operational impact monitoring:
Strategic impact monitoring is anchored in Develop and operational impact monitoring in Run. Closed learning loops both within and between Develop and Run ensure that the potential for further development is optimally exploited. They form the basis for a learning organisation.


Current fields of action in High Performance SCM

For a high performance and sustainable value chain, it is essential to find the right balance between increased customer value, increased process efficiency and optimized purchasing prices. An isolated focus does not do justice to SCM as a cross-functional process - it must be viewed holistically as part of the business process model. Experience values of hpo show that five fields of action currently deserve special attention. The deepening of the individual fields of action shows what the concrete challenges are, how we classify them, and how the challenges can be mastered.

With a targeted approach to high performance

Based on your individual challenges in SCM, we design the approach to support you in the direction of High Performance SCM. According to the following diagram, we proceed in four phases: Based on your individual SCM action areas, we perform an as-is analysis to then design the SCM target picture with clearly defined design criteria. A successful roll-out can be ensured in the final phase through the targeted involvement of those affected.

Process SCM
Stefan Zirhan
Stefan Zirhan

Partner

+41 44 787 60 04

Email
Christoph Lanz

Christoph Lanz

Head of Sector Team Industry

+41 44 787 60 00

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Who is hpo?

hpo makes companies more successful and more innovative. The strategy consultancy for enterprise design boasts more than 25 years of experience in the creation of strategies and organisations spanning many different industries. The management consultants at hpo specialise in the meticulous development of strategies, processes, business models, innovation and culture, and in the consistent alignment of these together with their targeted implementation. The basis of the industry-spanning design approach is an academically grounded methodology with which companies are shaped and which is continually further developed with the latest findings from research and practice.


hpo – we design organisations

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