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Transforming Your Organization to World Class Supply Management(sm)

Author(s):

David N. Burt, Ph.D.
David N. Burt, Ph.D., Distinguished Professor of Supply Management, University of San Diego, San Diego, CA 92110, 619/260-4868, dburt@acusd.edu

84th Annual International Conference Proceedings - 1999 

Abstract. Supply Management is the systematic process of identifying and describing requirements, sourcing, pricing, and managing their delivery to provide the firm with a competitive advantage. It requires the development and management of collaborative relations among a firm's internal functional disciplines and its supply base. It is a core competency at an increasing number of firms. This is based on supply management's impact on the firm's bottom line, ROI, and shareholder value. Our interactive multimedia pull approach can play a key role in any organizations' efforts to achieve the many benefits of World Class Supply Management(sm).

World Class Supply Management(sm) is an ever-moving process enjoyed by the best of the best ... those who are continuously improving their contribution to the bottom line. It has a major influence on both factors of net income -- cost and sales -- with the bottom line impact of increasing net income. Reductions in purchase price, logistics and risk costs, ownership and use costs, and post-ownership costs combine to achieve major cost savings. Faster time to market, improved quality, lower selling prices, and new products based on supplier technology help achieve sales increases.

As seen in Figure 1, supply management's activities and its impact can be divided into four phases: clerical, mechanical, proactive, and world class.

Figure 1 (Adapted from The American Keiretsu: A Strategic Weapon for Global Competitiveness by David N. Burt and Michael F. Doyle (Homewood, IL: Business One Irwin), 1993) This figure is not available in the text-only version of this paper.

One of the curious aspects of World Class Supply Management(sm) is that every activity is self-evident. Why, then, do so few firms enjoy the benefits of this powerful concept? As shown in Figure 2, there are five major blockages that prevent most firms from converting World Class Supply Management(sm) concepts into reality.

Figure 2. This figure is not available in the text-only version of this paper.

During nearly forty years as a practitioner, student, researcher, professor, and consultant, I have concluded that there are three basic approaches to implementing organizational change:

Outside consultants

  • are expensive
  • create wonderful reports
  • encounter resistance

In-house or self-help approaches

  • are slow
  • tend to be inefficient
  • are unaware of best-in-class practices

Facilitated in-house alliances

  • are fast
  • break down barriers
  • develop internal agents of change
  • result in lowest cost
  • ASSURE GREATEST IMPACT

During the past three years, I have developed a program that we use at the University of San Diego in our supply management curriculum. The program emphasizes an interactive multimedia pull approach that is effective in both the classroom and in commercial settings.

The commercial version of the program serves as the basis of facilitated in-house alliances, and provides adopters with seven key benefits. It:

  • facilitates internalization of world class practices.
  • improves communication within the supply system.
  • enhances teamwork.
  • facilitates development of action plans.
  • creates ownership of action plans.
  • accelerates implementation of action plans.
  • maximizes supply management's bottom line impact.

In the commercial mode, a facilitator works with cross-functional teams consisting of representatives of design, manufacturing, and quality engineering; production, finance, procurement, and suppliers. The facilitator employs the interactive multimedia program - stimulating both involvement and internalization by all participants. On completion of a topic, such as procurement's role in new product development, the participants identify gaps between their procedures and world class procedures. Gaps with high potential impact on the bottom line become candidates for action items. The facilitator then works with the appropriate team to develop and implement an appropriate action plan.

While we all recognize that no one action or approach will solve all of our challenges, I am confident that our interactive multimedia pull approach can play a key role in any organization's efforts to achieve the many benefits of World Class Supply Management(sm).


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