Supply Chain Frontiers Issue #24. Read all articles in this issue
Aligning a company’s corporate and supply chain strategies makes it stronger by bringing the organization in line with its competitive goals. But alignment is not the only payoff, as users of the MIT Center for Transportation & Logistics (MIT-CTL) Strategy Alignment methodology have found. The process forces the organization to rethink long-held views about the business.
The MIT-CTL methodology is based on a framework that brings corporate departments together in a Strategy Alignment workshop. Managers who are thought leaders from supply chain and other disciplines such as sales and manufacturing consider product supply chains selected for the exercise. Attendees are briefed beforehand on the supply chains under review and on associated go-to-market strategies.
A series of breakout sessions follows. The first one focuses on the supply chain strategies required to support, enhance, and be an integral part of the competitive corporate strategy. The second session builds on the first by looking at the operating models and an aligned and balanced set of operational performance objectives. The final session considers the practices that are tailored to the operating model and to meeting performance objectives.
Workshops staged in 2007 by a major manufacturer of microprocessors provoked more strategic thinking on the way the organization designs products in Asia. For example, designers routinely considered bill of materials costs, but seldom took account of the supply chain savings that accrue from using standard rather than customized components. The workshops exposed design specialists to strategic supply chain issues they had previously been unaware of or had paid little attention to.
The workshops triggered broader changes in outlook as well. By encouraging managers to view the electronics company in terms of the commercial universe in which it competes, they questioned its modus operandi. For example, during the workshop, attendees looked at the intersection between customer response, efficiency and asset utilization, and the mix of capabilities they – and their competitors – need to achieve the optimum balance between these crucial capabilities. The exercise “was a sharp lesson for us in terms of where we want the company to be,” said one participant. This broader view of the organization’s goals has become embedded to such an extent that “these concepts now come up time and again in internal presentations,” he said.
After going through the methodology in several workshops in 2007, a market-leading manufacturer in Asia realized that it lacked a clearly articulated business strategy. What also became apparent was that the company needed high-quality data on its customers. In the business-to-business markets the manufacturer served, it had become separated from end customers by various middlemen such as distributors. The shortcoming could prove very damaging in the future, because the enterprise is looking to expand into business-to-consumer markets where an intimate knowledge of customers is essential.
The manufacturer aims to hone its business strategy after further Strategy Alignment workshops in 2008, and then implement a pilot supply chain project that will reflect the lessons learned. “After we have a clear supply chain strategy that follows the business strategy a new organizational structure will follow,” said a senior manager who helped organize the workshops.
Increasing competitive pressure from low-cost manufacturers in China is one factor that is shaping the new direction. One possibility is to move into high-end markets where China’s cost advantages are less problematic, but such a move will also bring a new crop of competitors including some world-class companies. The manufacturer has looked at a number of alignment methodologies to help it make the transition and develop a clearer set of corporate goals. “We did some research and found the MIT framework to be very impressive because the other ones are not linked to the overall strategy of the company. This framework links supply chain and corporate strategy,” said the senior manager.
More information on MIT-CTL Strategy Alignment workshops is available online. You can also contact Larry Lapide, Director, Demand Management, MIT-CTL