1. Clarify your supply chain goals. Companies must examine their SCM strategies as essential elements of overall business design. To what extent can your firm's integrated sourcing, production, and distribution capabilities be tuned to drive superior value and customer satisfaction? If the value is there, a company may choose to become an operations-intensive manufacturer. If the value lies elsewhere, the brand management / outsourced supply chain model may be appropriate.

2. Conduct a supply chain readiness audit. A readiness diagnostics is the logical first step. Are your ready for the consumer demands, globalization, and information needs of the coming age? What are you doing to promote supply chain coordination within the firm and with external partners? Are your performance metrics up to date? How do you compare with others inside and outside your industry? Such an assessment can provide a company-specific roadmap for supply chain development.

3. Develop a business case. CEOs and boards of most companies remain unconvinced that an integrated supply chain approach will pay hard-dollar dividends. Making the business case for supply chain integration thus becomes a high priority for managers. The case must be made on both the strategic and practical levels, combining a clear sense of direction with detailed examples of the gains in service and cost to be derived from closer horizontal integration.

4. Establish a supply chain coordination unit. Establish a hard-hitting but thinly staffed SCM team in your company. The objectives will be to provide corporate leadership in the analysis, design, and implementation of solutions that drive service and cost effectiveness to new levels across the organization and with external partners. Functioning almost as internal consultants with top management support, this team will work to take cost out and raise customer satisfaction. The people involved must be trained in all aspects of the supply chain, from procurement through manufacturing to customer service; the latest decision-support tools; the best ways to establish win-win relationships with partners; and in the facilitation techniques essential to collaborative teamwork.

5. Begin supplier integration. A supply chain isn't any good if you're the only one playing. It's imperative that you convince, cajole, even threaten your upstream suppliers and downstream distributors/customers to join the game. Partners are needed to support the new virtual organization. Get your partners to plan now for Internet-driven supply chains. You say your industry isn't ready yet? Either you're missing key initiatives your competitors are already taking advantage of or you're sitting on a great opportunity to be first in your field. Get your marketing folks talking to your supply chain people to see how Internet orders can help drive distribution efficiencies.

6. Develop a performance scorecard. Don't rush to implementation without understanding supply chain measurement issues. Work with your chosen suppliers to come to a common understanding of how the supply chain performance is measured and what performance incentives and penalties should be put into place.

7. Educate, educate, educate. Invest in educating and reorienting employees, vendors, and other members of the supply chain on the practices needed to optimize business processes. No person, team, process, or company ever knows enough. Make a companywide commitment to creating and managing a more complex organization capable of tacking global business issues. Organizations must invest in ongoing training, mentoring, education, and feedback systems to keep their people current with the latest thinking.

8. Learn to manage failure. According to the law of averages, many supply chain projects are destined to fail in the coming decade. All too often project failures are blamed on not involving users, and on vendors promising more than they can deliver. Whatever the reason, managers must become adept at in turning around a problem project is to admit the project is in trouble. This is simple in theory but hard to do because egos, pride, and careers are at stake. But the facts must be faced. You're in trouble if you're behind schedule, over budget, or everyone is pointing fingers. This failure management can get quite complex in an inter-enterprise setting.

A successful internet-based supply chain management model relies on the a well-crafted plan that provides a good understanding of the business model mapped on the technology model. Successful convergence of these technologies requires a top down strategy formulation towards a bottom up execution.

References

1. Bermudez, John, AMR research article on "Private Trading Exchanges: The Cornerstone for $5.7T in B2B Commerce", February 26, 2001

2. Stevens, G.C. "integrating the supply chain", International Journal of Physical Distribution and Materials Management, Vol 19, No. 8, 1989

3. Martin Christopher, 1998, Logistics and Supply Chain Management Second Edition, Prentice Hall

4. Bowersox, D.J., Closs, DJ, 1996, Logistical Management, The Integrated Supply Chain Process, McGraw-Hill International Editions

5. Kalakota, R., Robinson, M., 1999, e-Business Roadmap for Success, Addison Wesley

Biographical Sketch

With a B.S. Industrial Management Engineering minor in Mechanical Engineering from De La Salle University, Raymund Marcos S. Padilla began his career as a Production Planner for a manufacturing firm. Afterwards, he joined House of Sara Lee, a global subsidiary of Sara Lee Corporation, where he held supply chain related positions such as being a Warehouse Supervisor, Logistics Manager and Group Manager for Purchasing.

Raymar was also active in Distribution Management Association of the Philippines (DMAP) where he was a board member and officer for three years. DMAP is a national organization with corporate membership of leading companies engaged in outbound logistics and distribution management. He was awarded as the most outstanding Chairman for three consecutive years due to his outstanding achievement as Chairman in DMAP's Warehousing, Membership, Benchmarking, Technical, Special Projects and Conference Committees.

He is also affiliated with the Institute of Industrial Engineers (IIE), Warehousing Education and Research Council (WERC), Purchasing and Materials Management Association of the Philippines (PMMAP), Philippine Institute of Industrial Engineers (PIIE) and Junior Chamber International.

At present, he is the Retail Industry Manager for SAP Philippines. SAP Philippines is a global subsidiary of SAP AG. He conducts business process evaluations and recommend solutions in the areas of supply chain management, e-business, product life cycle management for the consumer packaged goods, engineering and construction and retail industries.

Based in Walldorf, Germany, SAP AG is the leading provider of inter-enterprise software solutions that integrate the processes within and among enterprises and business communities.