Supply Chain Optimization Lunch and Learns

Recently in the Wichita area, I led three lunch and learns on area campuses regarding the topic of Supply Chain Optimization.  The events were well attended and reach a varied audience of industry and local government.  Not surprising being in Wichita, the aviation industry was well represented.  Also represented were transportation, utility, power management and agriculture.  All good considering the one thing all these businesses have in common is they all have and are part of a supply chain.  So why Supply Chain?  Why now?  I can give you all the threatening reasons why any organization in any industry should focus on their supply chain.  However, I would prefer to spin in more positively and share the benefits.  As any farmer would say, you reap the greatest harvest from the largest field.  That being said, industry studies suggest on average 60% of a company’s cost is related to supply chain.  Given that alone, would you want to know where 60% of your money is going?  Another reason to focus on your supply chain is your customers.  After all, isn’t that why you are in business?  To serve your customers?  The ones that actually pay you?  How does your supply chain relate to your customers?  Well, you can only service your customers as much as your supply chain will allow you.  Companies attract customers on one of 3 basic offerings - Price, Product Differentiation, or Service.  You can say you are focused on all three, but ultimately only one is paramount and non-negotiable.  Shouldn’t your supply chain be as focused as you are on what you are using to attract customers?  Interesting discussion during the Lunch and Learns as I chatted with some of the attendees.  I asked if they were sourcing raw materials overseas and why.  Some attendees answered yes and stated it was for cost reasons, presumably to get raw materials cheaper.  Later on, I asked the attendees what their market strategy was.  They gave varied answers including quality, product features, uniqueness of product and ability to make 1 of something.  One attendee event stated “We tell our customers up front we are not the cheapest option”.  Anyone see the disconnect here?  How can an organization market on a feature, and not ask their supply chain to do the same?  The benefit of doing so is to align and focus your supply chain on satisfying your customer.  This will serve your company and its customers for the long term.