Supply Chain Leader

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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 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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