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The Four Supply

Chain Enablers
Edward J. Marien
To create your plan for a successful SCM strategy, you need to know what specific
things to concentrate on. This article by yearbook co-editor Ed Marien lays out the
four key enablers that are central to SCM effectiveness. Its based on a survey of supply chain professionals and includes sidebars detailing the comments of four of these
professionals. As the author reminds us, Companies that recognize the scope of the
supply chain management enablersand the resulting barriers that can form in their
absenceposition themselves for business success.

iscussions about implementing supply chain management (SCM) initiatives


tend to focus upon information technology (IT) solutionssometimes to the
exclusion of other considerations. IT providers and the consultants who help
facilitate their solutions often lead you to believe that technology is the critical enabler in
realizing the abundant benefits of supply chain management implementation.
Yet in the seminars and workshops conducted at the University of Wisconsin (UW),
weve heard a slightly different storyboth from the supply chain professionals in attendance and the guest instructors from industry. They have noted that the soft side of
SCM implementation is at least as important as (and usually more difficult to deal with
than) the hard side of information technology. Furthermore, they point out that technology encompasses more than information. It also includes the physical materials-handling technologies associated with sourcing, making, and delivering product throughout
supply chains.
The discussions that took place in the universitys executive programs led us to the
research effort described in this article. The objective was to identify, classify, and prioritize key enablers that supply chain practitioners must leverage to capitalize on the benefits of SCM. As the research progressed, a flip side to the enablers became evidentthese
are the barriers to effective SCM that arise when the enablers are not in place. The challenge for companies is to leverage the enablers while overcoming the barriers.

Reprinted with permission from Supply Chain Management Review, March/April 2000. Copyright 2000 by
Cahners Business Information. All rights reserved.

The Supply Chain Yearbook, 2001 Edition

Research Design
Working in conjunction with a select group of industry practitioners, a University of
Wisconsin team of graduate and undergraduate students in the fall of 1998 set out to identify the key enablers of effective supply chain management. The effort proceeded along
these steps:
1. Search secondary sources of informationjournals, magazines, newspapers, the
Internet, promotional materials for educational offerings, company advertisements.
2. Analyze secondary search information obtained in Step 1.
3. Determine the primary research needed to aid practitioners in implementing supply
chain management initiatives.
4. Conduct the primary research among practitioners, their logistics services providers,
and other supply chain members.

The Four Key Enablers


Analyzing the data and information derived from secondary literature searches as well as
the input from UW program participants and practitioner instructors, the study team
developed the following list of SMC enablers:
Organizational infrastructurehow business units and functional areas are organized; how change-management programs are led and coordinated within the existing organizational structure.
Technologyhow technology (not just information technology but also the physical materials-management technologies for material design, operations, and
materials handling) affects a companys operational and strategic supply chain
processes.
Strategic allianceshow external companies (customers, suppliers, and logisticsservices providers) are selected as business allies; how intercompany relationships
are built and managed.
Human resources managementhow job descriptions are designed, how positions
are filled, how people are recognized and compensated, and how career paths are
directed.
The research team surveyed a group of supply chain professionals to determine their
ranking of the four enablers identified. The survey sample was drawn from past attendees
at UW seminars as well as from other companies, including logistics-services providers,
with proven experience in implementing SCM programs. Approximately 200 responses
were tabulated.
The survey findings contain a few surprises. As Exhibit 1 shows, the respondents
clearly felt that the organizational infrastructure and its associated attributes were the
most important enabler of successful supply chain implementation. It was ranked con

The Four Supply Chain Enablers

4.00

3.44

3.00
2.14

2.07

2.05

Technology

Strategic
Alliances

Human
Resources
Management

2.00
1.00
0.00

Organizational
Infrastructure

Exhibit 1. Relative rankings of enablers (4 = highest importance)


siderably ahead of technology and the other two enablers. (In our survey, a higher rankingwith a 4 being the highestindicates an area of greatest concern.)
These results run somewhat counter to the current literature and conventional thinking that IT solutions are the critical enablers to supply chain management. Yet our findings suggest that the three enablers ranked almost equally below organizational infrastructuretechnology, strategic alliances, and human resources managementshould be
addressed after the organizational issues are resolved.

Attributes of the Supply Chain Enablers


Each of the enablers has its own set of attributes. These are the critical components of each
enabler that need to be in place if supply chain initiatives are to succeed. The attributes
identified for organizational infrastructure, technology, strategic alliances, and human
resources management are discussed below.
The attributes are listed in order of frequency of mentions. Survey respondents were
asked to review a list of attributes associated with each enabler, add additional attributes
they felt were important, and then select their top two attributes from the list. Each of the
two mentions was assumed to be equal in importance. (The percentages in the charts
below indicate the frequency distribution of results for each attribute.) The study team
gained additional insight and information from interviews with SCM implementation
leaders, as identified in the business press and other sources.

Enabler #1: Organizational Infrastructure


Considering the heavy emphasis placed on this enabler, it is critical to understand the specific organizational characteristics considered essential to successful SCM implementation. The research identified the following list of organizational attributes, which the survey respondents ranked in the following order:

The Supply Chain Yearbook, 2001 Edition


Organizational Infrastructure Enabling Attributes

32%
15%
14%
13%

Having a coherent business strategy that aligns business units toward the same goal.
Having formal process-flow methodologies to enable the SCM improvements.
Having people committed to and responsible for cross-functional processes.
Having the right process metrics identified to guide the operating units performance toward the strategic organizational SCM objectives.
10% Having cross-functional design teams implement change.
9% Having business processes shared within the organization vs. being owned by functional units.
7% Having one business function driving the SCM initiative.

The first attribute listeda business strategy that aligns business units toward the
same goalwas named significantly more often than any of the others. The need to have
a sound process-management methodology in place was ranked second in importance.
But how does a company align business units and manage its processes effectively?
The top-management process flow chart presented in Exhibit 2 helps answer this
question. It represents a phased step-by-step approach to SCM implementation developed
by UW in conjunction with industry practitioners, in particular representatives from 3M.
We first developed an academic model and then meshed it with 3Ms supply chain planning and operations procedures to create the nine-step process improvement plan shown
in the exhibit. Note how the four enablers permeate the implementation process.
Because of the central importance of the organizational enabler, the study team conducted a secondary research project to identify how widespread the supply chain title
had become in organizations today. We felt this would yield some insight into how deeply
the concept of integrated SCM had permeated large organizations. The research found
that among those attendees at UW seminars, only 10 percent had a person with a supply
chain title in his or her organization. Despite this low number, 59 percent said that they
were involved in supply chain initiatives.
The study team also randomly sampled 25 pages from the 1998 membership directory of the Council of Logistics Management (CLM), a leading professional association for
logistics and supply chain professionals. Among the 837 names reviewed, only 2.5 percent had supply chain in their title. Given that companies whose employees attend UW
seminars and join CLM are generally large and comparatively sophisticated in their supply chain activities, one might logically expect that the percentage of supply chain managers would be a lot higher. And although the number of such titles is rising at both our
seminars and within CLM overall, the rate of increase has been nowhere near what many
observers had predicted.
Our research suggests that many companies are talking supply chain management,
but comparatively few have progressed beyond that. In particular, they have yet to define
SCM as a specific area of application knowledge that calls for an executive responsible
for championing SCM initiatives. The implication is that companies may have difficulty

Identify
corporate
vision,
mission,
leadership.

Analyze

Redesign

Implement

Define SCM
mission,
vision, and
identify
improvement
opportunities.

Establish SCM
performance
requirements.

Establish
process for
implementing
SCM
improvements.

Select SCM
processes for
improvement.

Redesign
SCM
process(es) and
address
enablers

Select trading
partners and
allied services
to implement.

Implement
pilot and
award the
business.

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

1.1 Corporate mission/


vision sets the
direction for
SCM mission.
1.2 Ensure
that SCM
contributes to
corporate
mission.
1.3 Develop/
implement a
change
leadership
program.
1.4 Select
core team
leader and
sponsor.
1.5 Organize
"analysis"
team.

2.1 Define
SCM process
vision/mission
to meet
management
goals.
2.2 Understand current/
future customer and/or
supplier
requirements.
2.3 Conduct
gap analysis.
2.4 Identify
improvement
opportunities.

3.1 Recognize interfacing, relationship management


processes.
3.2 Define
SCM measures of
performance.
3.3 Define
methods of
measuring
customer
satisfaction.

4.1 Identify
alternative
SCM
processes.
4.2 Develop
an assessment
cost-of-quality
process for
measuring
SCM improvements.
4.3 Establish
goals to
measure and
report improvements.

5.1 Document operational


processes.
5.2 Consider
benchmarking
selected
processes.
5.3 Establish
priorities for
process improvements.
5.4 Organize
crossfunctional
redesign
teams.

6.1 Design
system
specifications.
6.2 Select
ERP and
other related
technology to
implement
SCM process.
6.3 Effect
other
enabling
architectures.
6.4 Select
pilot to
implement.

7.1 Develop
list of thirdparty
providers.
7.2 Screen
and call
companies
together to
deliver/mail
RFPs.
7.3 Analyze
and select
logistics
partners.
7.4 Sell
leadership
team on new
SCM
approach.
7.5 Organize
crossfunctional
implementation teams.

8.1 Implement and test


pilot.
8.2 Report on
results of
pilot.
8.3 Celebrate.
8.4 Roll out
full implementation
plan.

Realize
Monitor for
performance.

9.0
9.1 Monitor
customer
satisfaction
and SCM
processes.
9.2 Implement control
charting and
reporting on
service, costs,
and asset
management.
9.3 Hold
quarterly
leadership team
meetings to
ensure criteria
and services
are being
met.
9.4 Recognize
performance.
9.5 Do it all
over again.

The Four Supply Chain Enablers

Mobilize

Communication and feedback loops for reporting process improvement results and ensuring alignment with mission and resource commitments.

Exhibit 2. SCM process-improvement phases

The Supply Chain Yearbook, 2001 Edition

in implementing initiatives if top management does not understand the supply chain
opportunity and appoint a leader to capitalize on that opportunity.

Enabler #2: Technology


When technology is mentioned in the context of implementing SCM initiatives, most
people immediately think of information technology. But as our research got under way,
a number of supply chain professionals reminded us that technology went beyond information. They pointed out it also related to how products were manufactured and handled
throughout the supply chain. These solutions are extremely important in meeting customer needs and in increasing inventory velocity. Accordingly, the survey questionnaire
was revised to address these manufacturing and materials-management issues as well.
In line with the revised research approach, the discussion on technology is presented
in two parts: information technology and manufacturing and materials-management technology.
Information Technology. Before assessing IT as an enabler, we first had to define the
scope of information technology within the supply chain context. The study team created the following IT classifications to provide that definition. Respondents were asked to
consider these areas as they evaluated the relative importance of IT as an enabler to supply chain initiatives.
1. Data coding and structuresANSI, EDIFACT, CPFR, data identifiers.
2. Data capturekeyboard, bar coding, RFID, OCR, imaging, voice, POS/POU capture.
3. Data collectionhard wired, RFDC (spread spectrum and narrow band), satellite,
GPS.
4. Materials manufacturing, handling and routing connections.
5. Database managementportable, front-end controllers, servers, mainframe, ERP,
GsIT.
6. Electronic commerceEDI, Internet Web-based systems between business partners.
7. Decision-aiding toolswarehouse layout and dynamic re-warehousing, work force
scheduling, regression analyses, routing, sales forecasting, charting, value-added
operations, geo-spatial analyses.
8. Management reportingtabular plus graphical, control, and geographical charts.
Keeping these eight categories in mind, respondents ranked the following key attributes on their importance in enabling SCM initiatives.
Information Technology Enabling Attributes
30%
27%
18%
10%
8%
7%

Having operations, marketing, and logistics data coordinated within the company.
Having data readily available to managers, not embedded in legacy systems.
Having operations, marketing, and logistics data coordinated between companies.
Having SCM linked to ERP systems.
Having state-of-the-art systems in place.
Having state-of-the-art IT thinking.

The Four Supply Chain Enablers

A Practitioner Speaks
John C. Kenny, vice president, worldwide distribution, 3Com:
Clearly, organizational infrastructure is the number one enabler needed to implement supply chain management strategies. You can do all the assessments and redesign
of supply chain processes you want. But if your top management doesnt recognize how
improvements in supply chain processes are part of the businesss key strategic plans,
your chances of success are diminished greatly. You need to mobilize their efforts with
the establishment of a top management leadership team committed to solving supply
chain problems.
Another key point is that if you dont have in place a supply chain process-improvement model similar to that developed by the University of Wisconsin in collaboration
with 3M, then, again, your probability of failure increases. Supply chain improvement
is similar to many other reengineering activities. Top management and the functional
units must have common goals and a shared vision to address supply chain challenges.
If supply chain thinking is shared, then the full-time resources will be committed for
changing critical processes.
As strategies are implemented that truly go beyond the firm and internal functional units to include external suppliers, customers, and third-party providers, executive
leadership becomes even more critical. Common goals and shared visions can now
include trading partners. Trust-based strategic alliances that are often open book must
be developed to address organizational, accounting, and information technology issues.
The consultants will often paint the supply chain picture as an IT solution. Yet no
matter how beautiful the slides and the presentations, what it really boils down to are
top management and trading partner commitment and shared visions.
More than half of the respondents said that the ready availability of coordinated internal data on operations, marketing, and logistics (attributes 1 and 2) was the key IT attribute in implementing supply chain initiatives. The ability to link those systems to the business partners was considered the next most important attribute.
From these responses and follow-on research, it became clear that companies needed
to define their SCM data and system performance requirements before selecting their software solution. Another key finding was that they needed to first integrate their systems
internally before attempting systems integration with their partners.
Manufacturing and Materials-Management Technology. The other side of technology relates to how products are manufactured and handled as they move through the supply chainthat is, the physical technological influences. The study team categorized
these as follows:
1. Basic research and developmentHow to design products and services for flowthrough supply chain efficiency.

The Supply Chain Yearbook, 2001 Edition


2. Process research and developmentHow to make the right volume to meet customer
needs. How postponement and modular manufacturing can be used to speed up the
processes to meet customer requirements while keeping inventories low.
3. Logistics process flowsHow to move products between links in supply chains.
4. Aftermarket flowsHow to manage the flow of parts and returned goods, including
possible use of returnable containers.

With an understanding of these categories, respondents were asked to rate the importance of the following materials-management attributes to SCM implementation. Their
rankings are shown below:
TechnologyManufacturing and Materials-Handling Enabling Attributes
53% Having products (including materials, parts, components, and features) designed
for production flow-through and inventory velocity.
23% Having physical production processes (including equipment design, layout, and
automation) designed to facilitate SCM initiatives.
12% Having products designed for state-of-the-art packaging, unitizing, and materials
handling to facilitate flow-through inventory velocity.
12% Having products designed and unitized for manufacturing efficiencies.
Overall, respondents showed considerably less awareness and recognition of these
technologies than they did of the information technologies. Yet among those attributes
considered, the design of products and physical processes for supply chain efficiencies
topped the list. Perhaps these results would have been different if respondents were primarily located in manufacturing, or if we had drawn our survey sample from the APICS
membership. Had the survey sample been different, we possibly could have measured
concepts such as lean manufacturing and ergonomic and environmental design in support
of SCM. Similarly, had we had more multinational companies, transnational manufacturing issues might have been addressed as well.

Enabler #3: Strategic Alliances with Supply Chain Members


Alliances are critical to supply chain efficiency. Many companies already have made considerable progress toward dismantling the functional silos within their organizationin
effect, forging internal alliances. Now, its time to achieve that same kind of integration
with the other members of the supply chain.
If organizations are to achieve the full benefits of SCM, they must integrate and
streamline the flows of products between supply chain partners. This entails the development of flow-through transportation systems and intermediate assembly and distribution
facilities to increase inventory velocity and meet differentiated customer needs. One
proven approach is to start with the key accounts, which typically require the greatest
attention, and then move on to the other customer segments.
Heres how the respondents ranked the attributes that enable strategic alliances across
the supply chain.

The Four Supply Chain Enablers

A Practitioner Speaks
Robert K. Withrow, general manager, supply chain management, Eastman Kodak:
At Kodak, we are organizing around integrated supply chain excellence and moving away from a functional focus. I report to the corporate VP, United States and
Canada, who is responsible for shared services across regions. We are the stewards of
achieving supply chain excellence. I agree that organizational infrastructure is the most
important factor affecting supply chain implementation. Our present organizational
structure and the impact of technology are forcing us to rethink how we are doing business.
Technology has been a key enabler of supply chain management at Kodak. One of
the biggest areas of impact has been our implementation of SAP. We are in our third year
of global implementation. For demand and supply management, we chose Manugistics
software and interfaced it with SAPs order management and manufacturing modules.
Technology also is going to enable the internal and strategic relationships to develop in this new environment. Human resources and line management will play a big role
in re-skilling our employees in how they do their jobs. We are on a journey that is just
beginning.
Strategic Alliances Enabling Attributes
48%
18%
9%
8%
8%

Having expectations clearly stated, understood, and agreed to up front.


Collaborating on supply chain design and product and service strategies.
Having top management of partnering companies interface on a regular basis.
Having compatible IT systems.
Having top management communicate why strategic alliances are important and
being pursued.
4% Agreeing on a process to incorporate business changes.
4% Developing an alliance partner-selection process.
1% Having lead persons responsible for building alliances on the job for at least one
year.

The enabler receiving the most mentions by far centered on understanding the expectations of the alliance partners. The second most important factor cited was the ability to
partner and collaborate with trading partners on supply chain design and product/service
strategies. The message here is that shippers and receivers alone cannot get the job done.
Strategic alliances that embrace outside suppliers, customers, third-party logistics providers,
and other facilitating intermediaries must be part of the supply chain planning and execution processes. A collaborative approach to these activities is crucial to the success of the
individual enterpriseand the collection of enterprises that make up the alliance.
All too often in the past, the dominant players in the supply chain dictated solutions
and used their leverage to get low prices for their solution. In the new era of supply

10

The Supply Chain Yearbook, 2001 Edition

chain management, however, performance requirements and solutions need to be jointly


developed among the alliance partnersusers, suppliers, customers, and third parties. To
maximize the success of the alliance, the goals, metrics, and solutions must be continually monitored. Any corrective actions needed must be taken immediately.

Enabler #4: Human Resources Management


As a factor in enabling successful supply chain performance, respondents rated human
resources management as slightly less important than technology and strategic alliances,
and significantly less important than organizational infrastructure. Perhaps this ranking is
due to their limited involvement in this area. Many of their companies may not have confronted these human resources management issues in redesigning and implementing their
supply chain processes.
Not surprisingly, the most importantand the most challengingenabling attributes
are finding practitioners knowledgeable in supply chain management and finding facilitators to lead the implementation change process. Apparently, many companies are struggling with the difficult task of finding people who are knowledgeable in supply chain theory and practice. Another important human-resources attribute, ranked third in importance overall, was having compensation and incentive programs for SCM performance.
This can be particularly difficult considering that supply chain management is inherently
cross-functional by natureboth within and between companies.
Human Resources Management Enabling Attributes
Sourcing, hiring, and selecting skilled people at all management levels.
Finding change agents to manage SCM implementation.
Having compensation and incentive programs in place for SCM performance.
Finding internal process facilitators knowledgeable in SCM.
Having the appropriate job descriptions and responsibilities.
Having in place a performance appraisal system for people working in cross-functional supply chain projects.
3% Other.

27%
27%
14%
13%
12%
4%

Technology Is Part of the Whole


The research conducted for this study, coupled with the input of industry practitioners
who generously offered their comments in this article (see accompanying sidebars),
underscores the central importance of organizational infrastructure and the compelling
need for cross-functional processes as enablers to effective supply chain management. Its
more than just information technology. Top management must be sold on the importance
of supply chain management as a promising means of competitive advantage. For this
advantage to be realized, companies must be properly organized and include SCM as part
of the total business planning process.

The Four Supply Chain Enablers

11

A Practitioner Speaks
Steve Lauderbaugh, corporate supply chain manager, 3M:
First, it is imperative that a SCM organizational structure be established at the highest executive level possible to provide a corporate umbrella for the SCM initiative. The
SCM initiative should be one of the top three to five corporate initiatives designated and
sponsored by the CEO or senior VP. Reengineering your business processes for effective
SCM is very difficult and painfulparticularly at the middle- to upper-management
levels. Thus, there will be a lot of resistance to making the radical changes necessary to
compete in a rapidly changing marketplace. This will require top executive leadership
to overcome this resistance.
Because of the many roadblocks to successfully reengineering and implementing
supply chain processes, it is necessary to follow a formal implementation process that
covers all phases of the effort. This process should include feedback loops to ensure
alignment with mission and resource commitments. Also, communications and feedback
capabilities for reporting process-improvement results should be established. A change
leadership program for all management personnel, including all company executives,
should be developed and implemented. It really helps to have an outside consultant facilitate this effort to be able to answer the question Why should we do this?
New skills, training, career paths, and incentives also are required to support the
supply chain vision. Research has shown that implementing reengineered supply chain
processes without making human-resources-related changes in job structures, roles,
and responsibilities is a formula for disaster. Its important that new measures and
incentives be developed. Skill training must include both deep functional knowledge as
well as broad process/business knowledge. Career paths based on roles within the
process team need to be defined. 3M is moving toward a Process-Center Organization
with a pilot in one of our major business units. We think this will be the business structure for the future. A process-centered organization aligns peoples jobs along the horizontal axis toward the customer. The functions remain in a vertical position, becoming
Centers of Excellence. They are responsible for developing the expertise in equipment,
systems, and products of the future and providing the skilled people to work in the
process-centered organization.
Once the company is organized and is being managed for supply chain improvement,
it can then address the other enabling forces. Existing processes need to be documented
as a baseline. They then can be redesigned, and the appropriate enabling IT and communications technology evaluated and selected. Along the way, strategic alliances need to be
formednot only to execute the supply chain operations but also to plan collaboratively
for greater efficiencies. Finally, companies must remember the human-resources management component. When asked to participate in the cross-functional activities of integrated supply chain management, people sometimes respond that Its not my job. Job

12

The Supply Chain Yearbook, 2001 Edition

A Practitioner Speaks
Larry M. Sur, executive vice president, Schneider Logistics:
Very early in the process of starting Schneiders contract logistics business, we
learned the importance of a mutually agreed upon set of expectations. A statement of
expectations (SOE) is a formal document that results from a two-way exchange of the
needs of each partythe customer and the contract logistics provider. An SOE must
contain detail about each objective to be accomplished and serve as a guidepost for
implementation and day-to-day management. It sets the foundation for a trusting relationship and establishes the base for a metric of performance.
Often, it is necessary to develop an alliance with another logistics provider in order
to deliver a complete solution for a customer. In these instances, you need to be specific about the roles, responsibilities, and the interfaces of the parties. Schneider has several customers that require layers of logistics companies. We have found the SOE
process is the key to making these relationships work in a seamless manner. The lead
integrator must be clearly identified. And here, again, an SOE can be used as the tool.
In general, the more parties that are involved, the tougher it is to achieve a successful
outcome. Very few providers, if any, can do the entire global logistics job. Therefore, you
need to have a lead logistics provider who can successfully manage the duties of each
subprovider.
descriptions and performance measurement and reward systems need to be changed to
overcome this resistance.
Companies that recognize the scope of the supply chain management enablersand
the resulting barriers that can form in their absenceposition themselves for business
success. The leaders in a wide range of industries have proven that convincingly.

Acronyms Used in Article


ANSI
CLM
CPFR
EDI
EDIFACT
ERP
GIS
GPS
GsIT
IT
OCR
POS/POU
RFDC

American National Standards Institute


Council of Logistics Management
Collaborative Planning, Forecasting, and Replenishment
Electronic Data Interchange
EDI for Administration, Commerce, and Transport
Enterprise Resource Planning
Geographic Information System
Global Positioning System
Geo-spatial Information Technology
Information Technology
Optical Character Recognition
Point-of-Sale/Point-of-Use
Radio-Frequency Data Collection

The Four Supply Chain Enablers


RFID
RFP
SCM
UW

13

Radio-Frequency Identification
Request for Proposal
Supply Chain Management
University of Wisconsin

This article, which originally appeared in Supply Chain Management Review is reprinted
from The Supply Chain Yearbook, 2001 Edition, edited by John A. Woods and Edward J.
Marien and published by McGraw-Hill. For more information, go to www.cwlpub.com/
scm01.htm.