AMN Perspectives by Thomas Group: Experience at Work

Posted: Oct. 12, 2004, 9 a.m., EST

by John Steidl, Thomas Group consultant and David Demers, president of Avicon

IRVING, TX — Defining the Transformation Roadmap

What is the roadmap that successful companies follow in redefining their supply chain? Technology companies like Apple, Cisco, Dell and others are setting the trend toward faster innovation cycle times and shorter time to market. Supply chain velocity and agility are the bedrock of their competitive differentiation. As this transformation gradually cascades across industries, including automotive, implementation of the supply chain lifecycle based on the DNA building blocks we have been talking about can help companies manage these transformations effectively. The DNA building blocks represent strategies and distinguishing capabilities that have been implemented by the business-innovation leaders. The lifecycle model in Exhibit 1 provides a systematic approach to implementing these building blocks.

Exhibit 1

It is no simple task to develop a supply chain solution by selecting the most appropriate DNA building blocks, configuring them into company-specific patterns, and assembling a new integrated operating system that spans the entire supply chain of suppliers, contract manufacturers, OEMs, distributors, resellers, logistics services providers and other trading partners. Such a solution must be designed with an eye toward optimizing simultaneous outcomes: cash-to-cash velocity, order-to-delivery predictability and response time and operating margins. The solution can best be driven by a holistic approach that focuses on the following guiding principles:

* Organize across the four PICO areas-process, information, cash and organization. Engineer the integrated operating system from all four perspectives concurrently for enhanced business value.

* Optimize competitive performance at the outcome level. Benchmark against the competition to determine relative ranking and to help establish target performance objectives.

* Collaborate proactively among strategic partners. Being proactive helps eliminate any barriers to success and ensures that objectives are aligned.

* Understand the issues with the current model that impact performance objectives from the four PICO perspectives.

* Prioritize the critical DNA building blocks based on their contribution to performance, the logical sequence of implementation and ease of implementation. Understand the distinguishing capabilities implemented by the leaders. Prioritize and adapt these to suit the specific environment in order to enhance competitive prospects.

* Design the DNA solution patterns of the DNA building blocks to include quick-win opportunities balanced with systemic longer-term investments.

* Create a time-phased roadmap to provide continuous releases of business value in short (for example, quarterly) time frames. Delivering higher business value in shorter releases provides greater opportunity to connect with the boardroom and Wall Street.

* Ensure ongoing organizational alignment by creating a senior leadership forum/steering team supported by a program management office. Formalized and standardized practices, processes and operations lead to consistent, repeatable results and a greater probability of successful projects.

Ultimately, how successfully an organization transitions to an integrated operating system with the right supply chain DNA rests with the people involved and their ability to continuously push the envelope and to overcome internal and external barriers to change. A successful transformation will significantly enhance business success, enabling companies to develop and maintain a winning competitive strategy-one that is based on a solid DNA structure.

Next time we’ll provide a short case study from a company that has successfully re-designed its supply chain using this approach.

For additional information, visit www.thomasgroup.com .

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“AMN Perspectives by Thomas Group: Experience at Work” is written and sponsored by Thomas Group. The opinions expressed in “AMN Perspectives by Thomas Group: Experience at Work” articles appearing on aftermarketNews.com do not necessarily reflect the opinions of AMN or Babcox Publications.