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While
customer satisfaction and product quality are
obviously critical factors in long-term business
success, the quickest way to improve the bottom-line
could be by focusing on the efficiency of your
supply chain. An increasing number of McDermott &
Bull’s clients are recognizing this compelling
argument, as evidenced by a significant amount of
high-level search activity for impact-talent
focusing on the supply chain. Companies should
consider some key factors as part of their
continuing bottom-line improvement efforts:
(1)
a most expeditious way to improve the
bottom-line;
(2)
the “Path of Least Resistance” to cost
reduction; and
(3)
ensuring the right supply chain talent is in
place to provide the necessary expertise and
focus.
The
Shortest Path To Bottom-Line Improvements -
Optimizing “total spend” is more likely to yield
short-term cost savings than can be realized by
optimizing operational processes. While focusing on
operational process efficiency is obviously
valuable, it does not necessarily reduce total cost
in the short-term, with the impact from operational
improvement efforts often requiring a longer-term
perspective. In an era where quarter-to-quarter
results are more important than ever, the most
certain short-term way to save money is to be
prudent about how you spend money for goods and
services obtained outside of your fixed cost
structure. The supply chain may just be where you
find the “lowest” hanging fruit.
Organizational Resistance Is Minimal To Improving
Supply Chain Performance - Even though the cost
of facilities and labor may not be totally fixed
costs, they are at least highly painful and
disruptive to significantly reduce. Put another way,
it is easy for an organization to convince itself
how much it “needs” resources that are extremely
painful to shed. Conversely, while significant
reduction in supply chain “total spend” requires
extensive expertise and planning, it is not nearly
as “painful” for a company to execute. Organizations
tend to have a natural resistance to making painful
hard choices like facilities moves or layoffs, but
there is little such resistance to reducing the
total spend for goods and services. In fact, this
less-painless type of improvement is actually
something the whole company can rally around, and
also provides an easy opportunity to create the kind
of incentives that greatly enhance enthusiasm for
the improvement program.
Sufficient Focus Requires Dedicating The Right
Talent To The Task – Focusing on supply chain
efficiency certainly yields valuable results for
companies, but the existing resources of most
organizations are already overtaxed. In addition,
the knowledge necessary to maximize efficiency of
the supply chain may not be resident within your
company today. Fortunately, the decision to invest
in expert talent to focus on the supply chain can
easily be tied to an ROI – it can clearly be viewed
as an investment and not a cost. We all realize that
sufficient focus on this objective is the only way
to get the maximum benefit desired, so the argument
for knowledgeable, expert talent is a strong one.
The trend within our client community suggests they
agree.
Improving bottom-line performance is a multi-faceted
challenge being engaged by every company - every
day, and there are many contributing factors that
lead to company success. However, the opportunity to
implement changes in the supply chain and to quickly
impact the bottom line must not be ignored. We would
be pleased to share supply chain improvement success
stories with you, in hopes they may help you in
reaching your own company goals. |
