7 Replies Latest reply on Apr 23, 2012 10:03 AM by billseliger

    SCM30 Discussion Series: If you could re-name SCM today, would you? If so, what would it be?

    Apprentice

      Welcome to the third discussion in the Supply Chain Expert Community's SCM30 series. To commemorate the 30th anniversary of the term "supply chain management," this year Kinaxis will explore the past, present, and future of supply chain management. Look for a variety of content with the SCM30 logo from Kinaxis throughout 2012.

      Kinaxis-SCM30-logo-small-square.png

      Our third discussion question is:

       

      If you could re-name SCM today, would you? If so, what would it be?

       

      Share your insights by clicking "reply" below.

       

      You'll see a blog post by Kirk Munroe on the same topic next Friday (April 20) on the 21st Century Supply Chain blog. Feedback from this discussion thread will be incorporated into the blog post, so weigh in, and your thoughts may be published!

       

      We look forward to seeing what you have to say!

        • Re: SCM30 Discussion Series: If you could re-name SCM today, would you? If so, what would it be?
          tbrouill Master

          This is a great topic Lauren, because of all the changes in terminoligy during the past history of the supply chain along with all of the extended capabilities available through mobile technology and social networks.  However I don't think that I would rename it because I think that the term Supply Chain Management is broad enough that it covers all of the practices related to the chain of processes and relationships that relate to providing a product to the end consumer.  The beauty of the term, at least in part, is due to the nebulous nature of the term.  The term can mean many things to many people and the key is to define your roles and definition based on the industry, market and channel that you are a part of.

           

          I like the fact that the definition itself allows for refinement based on your company's individual practices and circumstances while also allowing your company to extend the focus of their definition to include the extended partners within their chain. 

           

          Something just came to mind for me regarding the term and it is related to the concept of the 'chain'.  If I were to change anything I would consider revising 'chain' to 'web'.  I think that a web provides a better concept to describe and understand all of the relationships withing your extended supply chain.  I think though that the concept of a web would also be the result of the individual company and their partner structure and relationships.  I think that many organizations still develop relationships that 'chain' together the partners that supply goods and services to support the business and end customers.  I think that the web concept would become more prevalant as the Social Supply Chain expands and extended into the extended network. 

           

          So if I were the all-empowered ruler of business terminology, I would keep the term Supply Chain Management intact.  This term provides a flexible and extendable definition that reflects the growing and chaining capabilities that support the extended supply chain.  When it comes right down to it, I don't think that Supply Web Managment, or Supply Network Management have the same cache as Supply Chain Management!

          • Re: SCM30 Discussion Series: If you could re-name SCM today, would you? If so, what would it be?
            dustinmattison1974 Elite

            I believe the term supply chain management is an artifact of the industrial age. I did an interview with Tom Wentz a while back where he discussed that supply chain isn't a chain at all, it is a supply network with  very different economics. It is a supply network that must operate in  real time. A chain is linear, a network is exponential. SCM professionals recognize that the word “chain” is inaccurate. Mass  customization as a business model requires an incredible real-time  supply chain/supply network logistics systems.

             

            The economics of  networks are one of increasing returns, while the industrial age is one  of diminishing returns. It’s just a completely different economic model. To learn  more about the concept of networks, Tom recommends Dr. Barabási’s book  Linked.

             

            The Industrial Age business model, and all other leadership and  management models, fall within what Tom calls the "problem-solving  models"  category. When senior leaders see a problem, Tom says, many become  self-deceived and look for someone or something outside of themselves to  blame. To make his point, Tom referenced the book, Leadership and  Self-Deception by the Arbinger Institute, which further illustrates the  issue. Stephen Covey, Dee Hock and many others agree that moving away  from the problem-solving model makes many senior leaders feel  vulnerable, even embarrassed, that for years they have been "yelling at  the water" and accusing everyone else of being the problem.

             

            I also believe it is important to consider the people aspect of supply chains. Social networks are inextricably linked with the supply "chain". Technology alone will not deliver  supply chain integration unless it facilitates people connecting with people. Rather than  using the term 'supply chain,' which implies a sequential discussion  between Point A to Point B and from Point B to Point C, we must start to look at supply chains as networks of people.

             

             

            As Peggy Daniels said in her interview, the  way to accomplish supply chain integration is to  leverage technology, and then lower the unit of analysis down to  individuals, or at the very least, down to departments, because it isn't  companies or organizations talking to one another, it is people talking  to one another. "Once we understand how and when people and groups  communicate, then we can work on moving up the food chain to look at how  the organization communicates,”

             

            Verna Allee discusses how value network analysis is a human centric,  role-based network view of any business activity, so instead of  evaluating work as a process or quantifiable production line, the roles,  interactions and deliverables that the end product rests upon are  highlighted. Questions like “How can the work be done most  effectively?” aren’t assumed to rely solely on the functioning of the  technology but rather the collaborative efforts of the individuals  making up the network.

             

            David Meggitt says that with Value Network Analysis we can view the way people interact in the  supply chain in a way that looks at the roles various people play, the  deliverables they are offering at the time, and the perceived value of  what they offer at any point. We can actually begin to give people the  power to contribute and co-create, bringing new innovations when  allowed.

            • Re: SCM30 Discussion Series: If you could re-name SCM today, would you? If so, what would it be?
              RDCushing Master

              Yes, Lauren, another great topic! Thanks.

               

              I am not at all certain that I would rename supply chain management. What I might try to do is to get people to recognize the real implications of the name it already has.

               

              Let's look at that key middle word in the name: "chain."

               

              Very few organization "manage" the supply chain as a "chain."

               

              A great many managers and executives are content to manage only their "link" in the chain. If things don't go well, they may try to substitute one link for another (e.g., change vendors or find new customers, for example). But they do not recognize or manage the chain as a chain. They still manage pretty much within the four walls of their own "link" (i.e., company).

               

              The important thing to understand about a "chain" is the interdependence of the links and that the strength of the entire chain is governed entirely by the strength of the weakest link in the chain.

              Chain.png

              The interdependence of a chain should drive organizations inexorably toward supply chain collaboration and, even further, toward a genuine mutuality. In many cases, the fastest, best and most secure way for organizations to improve their own profitability is to work together with other supply chain participants to strengthen the weakest link in the chain--not seeking to replace that link. That means that all the participants in the supply chain--or at least the strategic links--must be (or become) open to collaboration and even invite new ideas from other participants in the chain.

               

              Collaboration and end-to-end data sharing can help end the damaging effects of "the bullwhip," help firms in the supply chain break their frequently misguided addiction to large batch sizes, and help redefine purchasing and pricing metrics that can lead to more frequent replenishment while holding both truly variable costs and operating expenses low for all the participants.

               

              High-level meetings should be sought between executives and managers for all the critical players in the supply chain. The healthiest supply chains are those where all the participants are making satisfactory profits and a few strong players in the supply chain are not using their leverage to increase profits through policies that weaken other important links in the chain.

               

              How can you tell when your "supply chain management" team is beginning to act like they are part of a "chain" and not just content to manage their own "link"? Look for the following signs:

               

              1. Metrics and actions taken for improvement reach outside "our link" and efforts are made to optimize the "whole chain" by identifying and seeking to strengthen the weakest link.
              2. Management up and down the supply chain have learned to not ignore the industry's larger ecosystem. They monitor the ecosystem for signs of impending change, manage proactively, and share information freely.
              3. Supply chain managers recognize that there will always be a "weakest link" and, while seeking to strengthen the present "weakest link," learn to pace the flow of products by the "drum" of the present "weakest link." They also recognize that any loss of productivity at the present "weakest link" is productivity lost to the whole supply chain. (As a corollary, supply chain managers should recognize that time, energy and money spent strengthening links other than the present "weakest link" will not improve the performance of the "chain.")
              4. Managers and executives involved in the supply chain have ceased using metrics stuck in "cost-world" thinking and have seen that it is synchronizing product flow and increasing throughput that lead to ongoing improvement and higher profits.
              5. Supply chain managers have recognized that profits depend upon meeting customers' needs and demands, and that understanding these needs and demands is essential from product design forward through all the processes and links in the supply chain.
              6. Collaboration across the supply chain begins with product design so that maximum external variety (end-products) can be achieved with minimal internal variety (raw materials, components and subassemblies).
              7. Supply chain collaboration is leading to strategic flexibility in both products and the processes of maintaining supply chain flows.
              8. Wherever possible, all along the supply chain, the flow of product is buffered with capacity rather than inventory. (Supply chain partners may make strategic capital investments in other parts of the supply chain to build needed capacities as part of the collaboration.)
              9. Managers and executives involved in the supply chain have made it a priority to develop strategic alliances and partnerships all along the supply chain in order to recognize and strengthen the present "weakest link."
              10. All across the supply chain, metrics focus on increasing throughput (not cutting costs).
              11. Forecasts are still used for planning, but "pull" is used to drive all execution in the supply chain.
              12. The focus is now on synchronizing the flow of product across the supply chain, not on balancing supply chain capacities.

               

              ONE ADDITIONAL NOTE:

               

              On the contrary side, some "big dogs" (or "big dog" wannabees) in the supply chain think they are managing "the chain," but they treat it more like a "leash." They yank their smaller suppliers around until their suppliers are either driven out of business or simply won't do business with the "big dogs" at all any more.

               

              This kind of attitude is bad for business and bad for the economy in general. The best suppliers are profitable suppliers. If any organization is destroying the supply chain's profitability one link at a time, it is destroying its supply chain by weakening one link after another. These weak links will not have reserve capacities to respond to changes in demand or make up for supply chain losses when "Murphy" strikes.

               

              P.S. - I was going to write on the other words (i.e., "supply" and "management"), but this is probably enough for now. Thanks.

              • Re: SCM30 Discussion Series: If you could re-name SCM today, would you? If so, what would it be?
                Jim Fulcher Master

                Great topic, Lauren. There have been some thought-provoking replies so far.

                 

                 

                I too think the term “Supply Chain Management” is the most appropriate. Essentially, there really is a “chain” reaching from the end consumer back, well, as far as it needs to go. And while each involved company (or link in the chain) is a self-contained unit, their larger purpose and strength is dependent on other companies’ strength and performance as well. So in the end, these companies really are tightly linked together.

                 

                 

                But as Richard Cushing posted above, the next step needs to be collaboration so the links can strengthen each other to, in turn, improve the overall strength of the entire chain. What’s interesting to me, is that after all the focus and discussion on collaboration, it sometimes seems there really isn’t that much true collaboration taking place. In other words, the links could be closer together.

                 

                 

                Incidentally, Cushing makes a great point that some larger companies treat the chain more like a leash. The unfortunate reality, however, is that this happens all too often. I suspect that we’ve all either seen—or at least are familiar—with this situation. Examples can range from a larger company having a “war on cost,” which really means squeezing suppliers to cut their prices, or a larger company stringing along suppliers by delaying payment so long that smaller companies either go out of business or simply can’t afford to do business with the larger company any longer. Either way isn’t good for the supply chain, and, ultimately, it hampers performance.

                 

                 

                Nevertheless, even when links are weakened, there still is a chain. Each company functions both as an independent link doing its part, and collectively as part of the larger entity. To be sure, some links could be stronger, but to me, it is still a chain of companies linked together.

                • Re: SCM30 Discussion Series: If you could re-name SCM today, would you? If so, what would it be?
                  billseliger Newbie

                  Great comments above from everyone.  I posted this on the outside blog site but I thought you may be interested in my POV so I'm cross posting here. 

                   

                  Kirk, the word that I find most misleading in ‘Supply Chain Management’ is ‘Supply’. The terms Chain and Management are widely understood, even in the general public, but all too often SCM is thought to mean supply into an organization (not out to customers) and we even find that Supply Chain Management starts and ends with sourcing or purchasing in some organizations (to their detriment!)

                  I hear the term ‘Value Chain’ mentioned often these days and I believe that’s a better term for what supply chain managers should be focusing on – the adding of value from resources to customer (and even back again, including reverse logistics). Value chain also implies focus on product in one direction and cash in the other – all part of SCM. The term ‘value’ even tilts us towards ‘Lean’ and reminds us to also focus on eliminating those activities that don’t add value.

                   

                  I agree that Value Chain Strategy would be a subset of Value Chain Management (Management includes Strategy but goes on to include execution, etc.)

                   

                  Thanks for the thought provoking post!