Groupe GCL
Conseil logistique & supply chain

The performance gap is widening

The performance gap is widening

The performance gap is widening

One attending conferences such as the CLM and WERC or reading specialized magazines can do nothing but realize that the performance gap is widening between the supply chain in the global marketplace. And the difference can sometimes be scary.

As consultants, we are exposed to numerous business practices and can only testify to this widening gap. Best-in-class companies are always exploring new manners of doing business and integrating their supply chain while the vast majority of companies are struggling, on a daily basis, to stay average. In an article, Mr. LaLonde, professor emeritus of Logistics at the Ohio State University, stated three main reasons for this widening gap.

Management of Technology

Information technologies are playing an ever-growing role in all aspects of today’s business relationships. Everybody agrees that it will also be a key driver within the next decade. We have all heard of companies failing to implement new information systems or falling short of their initial objective, such companies will have to realign their processes quickly if they do not want to be left behind. Management and integration of information technology change is a key factor in the widening gap. Many systems are simply becoming an entry ticket in developing business relationships with leaders.

Change Management Process

Already extremely complex within a company, change management must be achieved with your supply chain partners. Furthermore orchestrating such changes is increasingly complex as the number of players increases. But change management is a pre-requisite for companies wanting to achieve world-class performances. Failure to effectively manage the process can result in a company being outperformed and outclassed in its competition.

“Folklore” within a company

While a company’s past as well as its culture can be a valuable asset, it can also be a bullet in today’s fast moving environment. One can wonder why start-up companies often are considered “best-in-class”; they have no baggage and make up the rules as they go along.

Companies have typically been organized in pyramids and information tends to flow vertically. Today’s business shift towards the customer requires companies to be managed horizontally. Initiatives such as value chains, supply chains and other reengineering processes all focus on the customer to reinforce that need. Too often, conservative companies fall short from shifting their organization horizontally, as the basic organizational structure remains vertical.

Information Technology may well be a lifeline

Although we may sound alarmist, companies that have a tendency to fall behind could find themselves ahead of the others if they surf the information wave. Indeed, changes are happening at the speed of light in this industry and today’s best-of-breed systems will soon be outdated. And everybody agrees that we haven’t seen anything yet as the information pace will keep increasing.

Business decision-makers today must find a way to use technology to become low-cost producers. The challenge will remain to replace highly paid resources by low-cost systems yielding equivalent (if not better) results in specific areas. Such systems will contribute in making the supply chain process a more controlled and chaos-free process.

Successful management and performance of global supply chains will be an absolute business imperative in the future. Every supply chain manager needs to understand this unalterable fact. Business is becoming increasingly global and the rapid explosion of e-business will not allow us to play catch up.

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