The strategic ascent to competitive advantage

The use of mindmaps in supply chain strategy

Many companies are unclear about their business strategy: which mountain are we trying to climb, and why? It is crucial to find the best route to the top, translated into effective supply chains and communicated throughout the entire organisation. Developing a strategic supply chain mindmap helps to identify obstacles and illustrate each discipline’s role in overcoming them. Completing this strategic and operational cycle periodically can help to ensure a company’s success, both today and in the future.

Why are some companies much more successful than their competitors? An organisation such as Apple started out from the same basis as other high-tech firms, yet its sales and profit figures show that it has managed to leave the rest far behind. Anyone who has seen the video of management guru Simon Sinek on TED.com already knows the answer: Apple starts by answering the question ‘Why?’. “People don’t buy what you do, they buy why you do it,” says Sinek. Winning companies are aware of what they stand for – their raison d’être. The basis of such a company revolves around emotion, such as the beliefs, values, involvement and motivation of its employees. “Do business with people who believe what you believe,” is Sinek’s advice.

One important question that Sinek does not answer is how companies can remain successful. Take Nokia, for instance: the firm was highly successful in the early days of mobile phones at the beginning of this century, but lost the competitive battle when the technology advanced to the next phase. The same goes for Dell, which enjoyed great success at configuring PCs and laptops online in the 1990s. However, just like its competitor HP, around the turn of the century Dell failed to respond effectively when stores and even supermarkets started selling computers off the shelf to consumers who didn’t want to have to wait for delivery.

Scenario planning versus forecasting

Our rapidly changing world ensures that macroeconomic trends feature high on the agenda for CEOs and managing directors. Globalisation means not only new markets, but also new competitors. In a global market, companies are increasingly outsourcing processes in order to specialise and reduce costs, but in doing so they expose themselves to greater supply risks and may also unwittingly create new competitors. The ‘aging consumer’ market is not the only consequence of the greying population; this also means intensified competition to recruit young, talented employees as a result of a mass exodus of older and more experienced workers.

Moreover, companies nowadays need to be able to demonstrate their commitment to sustainability to satisfy governments and consumers alike. Meanwhile, financial volatility is increasing all the time and forcing companies to focus on optimising their working capital, because banks have become less generous in their lending. And last but not least, there is an evergrowing dependence on IT: an online payment facility is crucial in e-commerce.

These macro trends force directors to think ahead. Looking in the financial rearview mirror can be fatal for a company. For the past couple of years Paul Polman, CEO of Unilever, has refused to announce an earnings-per-share forecast for the next quarter. His advice to shareholders who demand such a forecast is to invest elsewhere. Nevertheless, just like all other forward-thinking CEOs, Polman has a clear vision of where the company is and where it wants to be. He and his peers anticipate several different scenarios and provide employees, shareholders and analysts with insight into how they are handling specific current developments and how they conintend to deal with future ones. In other words, we are seeing a fundamental shift from traditional financial forecasts to the strategic application of scenario planning.

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SCM Movement Q3 2013 This article was first published in Supply Chain Movement 10 – Q3 2013

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