The Renaissance of Supply Chain Management

Hau LeeWhat characterises a supply chain professional in this new Renaissance period? “He is someone who has an overview of the entire supply chain. In addition, he is a value chain architect, a social transformer and a collaborative innovator,” according to Professor Hau Lee from Stanford University, on 11 February in Eindhoven, The Netherlands. He was speaking during the Supply Chain Renaissance Event, a European Supply Chain Forum initiative.

Written by Ingrid Essenburg, translation by Lynn Radford

 

After the first coffee break, Professor Hau Lee outlined to the packed auditorium the importance of having n overview of the supply chain (both upstream and downstream) – in his opinion a ‘must’ for every supply chain professional in this, the Renaissance of supply chain management. He used the example of the Boeing 787 to illustrate his point. Delivery of that new aircraft suffered severe delays in 2008, partly due to a lack of fasteners to hold the aircraft together. The fasteners accounted for just three percent of the total costs of the aircraft, yet they suddenly became a major issue.

In Lee’s opinion, the problem was caused by a lack of overview of the chain due to excessive outsourcing. Hence, his advice was to ensure that you know what all the suppliers in the chain are doing. Share information with chain partners accurately and in a timely manner, and encourage them to do the same.

However, Lee concluded that the Renaissance period has not yet started for every supply chain professional, based on the results from a 2013 CSCO survey among 742 people. It revealed that the majority of supply chain professionals lack overview after Tier 2: only 13 percent of supply chain professionals look beyond Tiers 1 and 2 and are hence in a stronger position to anticipate supply chain risks.

Navigator and (social) innovator

Apart from being someone who has an overview, a supply chain professional in the Renaissance is also an excellent navigator, manoeuvring between what customers want, between outsourcing and insourcing and between offshoring and onshoring, said the professor. Additionally, he excels in collaborating with chain partners in order to develop new products. And as if that wasn’t enough: he also takes his responsibilities seriously in terms of environmental issues and working conditions among his suppliers.

Lee gave the example of Starbucks and Nestlé who are investing in developing their coffee farmers’ local communities, partly to ensure that they continue to grow coffee for them. Hence, the Renaissance man (or woman) is a social transformer who works closely with suppliers to improve their productivity and working conditions, concluded Lee at the end of his speech.

According to Joop Alberda, the penultimate speaker at the event, imagination will be key in the next supply chain era. ‘Will the supply chain turn red or green during the Renaissance, for instance?’, he asked. As coach of the Dutch men’s volleyball team, Alberda led the team to an Olympic gold medal in Atlanta in 1996. He said that he detests Dutch society’s focus on ‘SMART’ objectives and the fact that so many Dutch people worry about scoring a five or a six out of ten, while the real focus should be on improving an eight.

His critical audience did not agree with everything that he said – but he indicated that he actually appreciated such critical thinking. He concluded that the Renaissance supply chain professional is someone with guts, who dares to dream and looks a step beyond the goal, such as an athlete who after winning a gold medal gets to shake a king’s hand or a modest ‘gold-medal’ coach who gets to hold a presentation in front of a room full of critical supply chain professionals. Because, as he said, if ‘his’ team had not won gold, he would almost definitely not have been invited to the Supply Chain Renaissance Event.