Supply Chain Management is STRATEGIC...

Filed in archive Best practice on March 13, 2006

There are usually two instances when a company's supply chain comes to the attention of the CEO. It either has achieved a noticeable, positive influence on the firm's bottom line and product line or it has driven the company into some sort of financial or marketplace disaster. And getting the CEO's attention for the right reasons could make all the difference in the world for a supply chain organization.

Leon Shivamber, vice president of supply chain management and operations for Melbourne, Fla.-based Harris Corp. knows this fact well and has driven his organization towards the goal of turning his CEO's head for the right reasons.

"The supply chain is almost invisible to most CEOs," Shivamber says. "In some cases, they get there through a rude awakening, because something went wrong in the supply chain. But, regardless, once they are there, they are very sensitive to the opportunities the supply chain creates. The 'awakened' CEO understands that supply chains contribute more than just cost reductions. They can shape how a business becomes competitive in the marketplace."

In the case of Harris, a government, military and commercial communications company, supply chain functions are reviewed quarterly as part of the overall evaluation of each division covering supply chain, as well as engineering, sales and marketing operations. The quarterly analysis helps Harris as a company determine where there may be gaps in the product and service lines and which markets the company can tap to advance its growth. The supply chain strategy helps divisions operate effectively as a standalone business and leverage the capabilities of other divisions without having to reinvent the wheel.

Harris spends as much as $700 million annually on R&D alone, some of which comes through government funding. A significant portion of the company's success is based on its ability to transfer intellectual property developed by R&D into commercial products that can compete in the nongovernment-related marketplace.


To help drive that transfer of information, Harris has aligned its organization so that supply chain can collaborate with the engineering and sales and marketing teams more effectively and achieve end goals. What role should a CEO play in developing a supply chain organization? Shivamber says a CEO should spend considerable time with customersas many dobut then translate the needs of the marketplace into a focused strategy for the supply chain organizationwhich many CEOs don't do.

Just as there is a strategic process for evaluating competitors and products, a company must have a similar process for supply chain issues and opportunities. If senior executives are spending five days with sales and marketing and five days with engineering, they also should spend at least one day, if not more, having a strategic discussion with supply chain personnel.

In turn, the supply chain staff needs to know the company's objectives and, most importantly, how it can shape its own agenda to meet those goals. Shivamber says any supply chain "worth its salt" is reporting and talking to CEOs and company presidents regularly.

"Unfortunately, most supply chains spend a lot of their time responding to the issue of the day or trying to keep up with demands placed on them," he adds. "The most interesting supply chains think about ways their services and capabilities can contribute to growth or improve profitability. They are in the corporate and executive suites explaining how by changing the way a product is designed, how customers can buy those products or adding a unique set of services, we can generate more growth and opportunities for customers."

(Source: TMCNet)