The focus of the traditional supply chain organization is cost management.
Saving money does not drive value.
Improving cost also does not necessarily improve margin.
Holistic organizational thinking is a marked departure from traditional functional thinking, shifting the need for new forms of analytics and reporting. For example, today, while most organizations can easily access functional costs, only few companies quickly access total costs across source, make and deliver together.
As a result, it is tough for operational teams to make trade-offs.
Inventory is a sticky wicket—a political hot potato—in many organizations.
Inventory levels at the end of 2021 were significantly higher across industries than pre-recession levels in 2007.
Today, many companies have burgeoning inventories; but lack the right product to ship orders reliably. They are drowning in inventory, decreasing cash-to-cash performance, but have the wrong products to ship orders. This is due to the lack of evolution of processes to manage inventory holistically. Winners focus on the design of inventory strategies while most companies, often laggards, only focus on safety stock levels. The lack of performance in inventory optimization is a significant factor in determining the winners in the Supply Chains to Admire Award.
There is a significant gap in inventory performance between companies that use advanced optimization versus those dependent on spreadsheets.