All areas of a business break down into one of two groups – Strategic or Tactical. Most people understand the difference between the two. To use a very broad brush, Strategic is why we do things and Tactical is how we do things. An organization will start with an overriding strategy which then breaks down to departmental strategies (marketing, production, financial, etc). These departmental strategies then start breaking down to tactical decisions on how we will achieve the strategies chosen. As an example, if an organization chooses a “make to stock” strategy to supply their customers, this will inevitably lead to tactical decisions on how much stock, where it is stored, etc. Those areas of an organization that deals with strategic decisions tend to pay more attention to the bigger picture and the longer time frames. As we move into the tactical areas the vision starts to get more detailed, more short term and definitely, more myopic. This “myopia” is one of the major problems organizations run into. As each department concentrates on their issues, tactics and processes they risk losing sight of the larger strategies and, more importantly, they risk developing conflicting goals with other departments within the organization. Once different pieces of any organization starts working toward different goals, communications between groups break down and it becomes impossible for the organization to be as effective as possible. This lack of communications and the risk of conflicting goals is creating a need in modern organizations for someone to stand back & look at the big picture. To ensure everyone is aligned together with the overarching strategies and to work with those groups that are drifting away from solidarity within the larger organization. That need is what has given rise to the modern concept of “Supply Chain”.
Now before you start throwing things at me, let’s segue off to the side for a moment. One of the overriding characteristics of modern times is the shift to specialization. If we look back 100 years or more, everyone admired what was known as a “Renaissance Man” (also known as a Polymath). That is, someone that had a background and knowledge in many different areas such as arts, math, science, etc. Historically, it was perceived as desirable to have a wide-ranging background and look for the linkages between each of these disparate bodies of knowledge. Over time though, as our knowledge, and more specifically, as the amount of detail in each area has increased, it has become difficult for one person to learn many unrelated areas of information. People needed to specialize in order to understand and move forward in their area of expertise. Due to this trend we have become a culture of specialists that are enamoured with details and rarely look up to see the bigger picture. This, in turn, has led to a need for groups of people that specialize in the big picture. One of the best analogies I have ever heard for what Supply Chain does was told to me by Dr Jack Bacon. He is a Futurist (talk about a specialist in the big picture) that I met at a conference a couple of years ago. His analogy was… a tiled wall. Each tile represents a specific specialty but they do not interact directly with each other. Surrounding them is the grout that separates and connects them all together. That grout represents the communications links between each specialty that ensure that they all achieve the stated goal. To put it another way the grouts specialty is connectivity. Supply Chain serves the same role – if each of the tiles is a specialty such at finance, production, HR, procurement, logistics, etc. then Supply Chain is the grout, connecting all the groups together and ensuring that each group gets, and delivers, what they need to make the larger organization successful. To tie these two concepts together, in a culture of specialization, the Supply Chain group specializes in the big picture thereby insuring proper communications and cooperation between each of the other specialized groups, include both vendors and customers.
So what does that mean in terms of what functions and tasks that the Supply Chain people do? For that you will need to wait for Defining Supply Chain – Part 2. In the meantime, take a moment and think about what a culture of specialization means for you and your organization. Do you have the proper tools available to deal with both big picture and little picture issues? If not, what should you be doing about it? Jade Trillium Consulting has expertise in both sides of the question and would be more than happy to talk to you about how to ensure a balanced approach.