Operations management went through many transformations and eras*:

-          Industrial revolution  (division of labor, interchangeable parts)

-          Scientific management (time and motion studies, Gantt chart, assembly line)

-          Operations human relations (motivation theories, Hawthorne studies)

-          Operations research (linear programming, MRP, PERT)

-          Quality revolution (TQM, JIT, business process reengineering)

-          IT Revolution (ERP like SAP, SCM tools like i2, IT and process integration, e-commerce)

Now what will be the next era of operations management?

Is Operations Excellence the next era of operations management?

One very popular topic right now is Operations Excellence, which is based on the lean six sigma approach. Operations Excellence is a great tool and approach to improve operations execution.  However, this approach is very much oriented towards cost reduction and lacks a global perspective that could support the company’s growth.  For these reasons, I do not believe that Operations Excellence will be the next era of operations management…

What should be the next era of operations management then?

The next era of operations management needs to encompass all of the previous improvements. It has to be multi-dimensional (process, people, technology, strategy, customers, products, finance, risk, partners, culture and environment). But the most important is that the new transformation should be:

-          Global & strategic,  not just local & focused on execution

-          Oriented towards value and growth, not just cost reduction

-          Sustainable & long-term oriented, not just short-term oriented

-          Oriented towards operations leadership, not just operations management

-          Technically advanced to allow global collaboration with partners.

-          Contextual rather than “one model fits all”.

Finally, the next transformation should encompass the entire operations life cycle (design, plan, execute, monitor, react and improve).

This is what should be the next era of operations management. I call this new era “Global Operations Leadership”.

*: Russell & Taylor, Operations Management, 2006

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A few months ago, I gave an interview to a logistics journalist from Gestion Logistique Magazine. The interview was published in the June 2009 issue.  Our discussion was about all the facets of supply chain and logistics, new trends, the ways to improve supply chain, etc…

And guess what the journalist kept from our interview?

His whole paper is about how important people management and leadership are to supply chain management, which for me was obvious, but for him, these were new ideas that he wanted to share with his readers…

To summarize this paper in one sentence, behind every supply chain decisions or improvement actions there is human action or decision. And because of this, you need to have a clear people management and leadership function to support supply chain improvement projects and operations: 

·         Executive Leadership for supply chain excellence strategy,

·         People empowerment for supply chain execution,

·         Change management and education for sustainable supply chain improvement, and

·         Alignment of compensation with supply chain objectives.

For more details about this paper, you can visit:    Imed Othmani, Gestion Logistique, Juin 2009.

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 Because of the current economic recession, supply chain management has become a hot topic! In fact, operational and supply chain efficiency is becoming the leitmotiv of CEOs and COOs in order to reduce and master costs, and balance the erosion of customer demand.

This is both a good and a bad news for the field of supply chain.

On the dark side:

Service providers, mostly consulting providers, from all fields understand these trends. And being opportunistic, they start to package their services and to market them as enablers of supply chain and operations efficiency (see Kennedy report).  So you start to see strategy, marketing, IT, HR, and Finance consulting companies, to name a few, talk to executives about their services as operational and supply chain efficiency services and as extending supply chain management to include other fields. Worse, they propose core supply chain services where they don’t have the expertise.

For example, HR consulting services which aim to improve employee motivation can help enhance operational efficiency, but at the same time, should motivation be considered part of the supply chain management field? A similar case could be made for many other fields.

These phenomena could, in the long run, have a very bad impact on the credibility of “true” supply chain improvement methods because these other providers will likely not deliver the results and will bring confusion to the market by extending the field of supply chain to no end! This confusion will make it harder and harder for supply chain experts to demonstrate their unique added value.

On the bright side:

This crisis increases the awareness of the importance of supply chain management as a strategic weapon/ advantage to survive bad economic times and to prepare for better ones to come. This might represent an opportunity for true experts in the field of supply chain, as long as they are able to position themselves clearly and to keep innovating to demonstrate the real added value that they bring to organizations.

Furthermore, the fact that more and more people from other fields are becoming interested in supply chain management can be a plus, since other specialists, in conjunction with true supply chain experts, may help bring to the fore innovative methods to enhance operational efficiency. My position is not that other specialties are irrelevant or that supply chain experts need to “defend their territory”. Rather, I am arguing that the field of supply chain should be circumscribed to what it truly is, rather than including extensions to the field that will lead to confusion that might, in the long run, be detrimental to all those who want to focus on true supply chain issues. I guess I just don’t want supply chain management to be or become a dog’s breakfast…

Am I a purist? Maybe.

Thank you for your comments!

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 First of all, and perhaps most obviously, a supply chain leader should have the necessary knowledge and know-how of supply chain and should master best practices and best-in-class systems needed to fulfill his or her duties. These skills are the technical and functional supply chain skills; technical expertise is the foundation upon which a supply chain leader can rely in order to assert their credibility as a leader, and from which they can start influencing people and implementing a higher-order vision.

Then come the 5 main skills that will make turn a supply chain manager into a supply chain leader. To do so, a supply chain leader needs to be or learn to be a(n):

Transformational leader, to motivate and inspire troops … by defining an appealing vision, communicating it in a way that is motivational and that raises enthusiasm, by stimulating people and inspiring them to fulfill this vision and reach higher levels, and by uniting them around a common goal…

Improvement leader, to ensure greater efficiency … by proactively looking for improvement opportunities, assessing return on investment and risks, ranking and planning initiatives and managing the projects and the changes needed to make these initiatives sustainable…

Customer-centric leader, to provide higher value ….by understanding the current and future needs of the customers and planning the operations accordingly, and by being the voice of the customers— remember, customer service and supply chain are the first and last contacts with the customers…

Collaboration leader, to establish trusting relationships… by putting in place and managing collaboration inside the company to unite all stakeholders around a unique sales and operations plan and by establishing collaboration outside the company with the trading partners to reduce bullwhip effect…

Corporate sustainability leader, to incorporate social and environmental objectives within the company …by putting in place green supply chain techniques, work safety practices,  respect for the  employees’ and the  suppliers’ rights, and consideration of all stakeholders in the decision-making process…

Thank you for your comments!

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In my first posts, I will try to define in simple terms what a Supply Chain Leader is.  To do so, in this first part, let’s concentrate on what a Supply Chain Leader is not.

A Supply Chain Manager is not necessarily a Supply Chain Leader…

A Logistics Manager is not necessarily a Supply Chain Leader…

An Operations Manager is not necessarily a Supply Chain Leader…

First, from an organizational behavior point of view, management skills such as planning, organizing, coordinating activities, and managing people are different from leadership skills like defining a vision, inspiring, influencing, coaching, and managing change. Leadership and management are two different roles.

Second, from a supply chain perspective, the functions of a logistics or operations manager are more focused on execution and on products: buy, make, and transport the products. It is less strategic and value oriented: improve processes and performance, define and execute the strategy…

To conclude, the operations or logistics manager who plans and coordinates activities and focuses on very operational tasks and execution is not necessarily a supply chain leader.  But be careful, I don’t mean to underestimate the management and the execution part of the supply chain. All I am saying is that this type of skills and role are not enough to make you a supply chain leader. Both roles are not mutually exclusive and can be combined successfully.

In the next posts, I will try to define the DNA of the supply chain leader, and discuss the extent to which all companies need such people in their organization. I will try to answer the following questions: How to become a supply chain leader? How to identify them? etc…

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First of all I would like to introduce myself:  I am a Supply Chain Expert and Leader working as a SCM consultant for the industry and a university instructor. I decided to start this blog because I am passionate about Supply Chain, Business Optimization and Leadership. My objective is to make this blog the reference for Supply Chain Leadership!

The mission of this blog is to share with you my ideas, opinions, experiences and comments about SCM and Leadership, and to get your comments, ideas, experiences and feedback. I would like this blog to be an open forum where we can discuss in the respect of everyone’s opinions!

Welcome to the Supply Chain Leader blog!

Imed Othmani

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