The Competitive Tiebreaker

In uncertain global times, strategic planning is often the differentiator that separates the winners from those that are barely hanging on.

By Bud LaLonde -- Supply Chain Management Review, 4/12/2007 7:03:00 AM

There certainly is an ample list of factors on the ten-year horizon that supply chain executives could and should consider. In the external environment, there is energy availability and cost, water availability and cost, compliance to old and new regulations, level and coverage of health care in the United States and around the world, political instability (or just plain hostility) in many oil-producing and non oil-producing countries around the world, India and China emerging as major world economic powers, international protection of intellectual property rights…you can fill in the rest of the blanks.

These are the external factors. How about the internal factors? Factors such as cyber security of the firm’s IT system; new technology cascading out of the software and hardware firms; recruiting, training, and retaining a high-grade team of global supply managers, supervisors, and workers; outsourcing, offshoring, and inshoring; building global supply chains in a rapidly changing world.

By some coincidence, we have been working on data gathered from 92 chief logistics/supply chain executive members of CSCMP (Council of Supply Chain Management Professionals). Included in the data set was the question: “Please identify the factors that will, in your judgment, influence the growth and development of the logistics/supply chain function over the next decade.” The respondents were presented with a list of options and asked to select and rank their top three choices. This is not presented as an in-depth scientific study, but rather as a survey that seeks out broad supply chain trends in executive perceptions and practices. The responses were as follows with the higher values (weighted average points) indicating a stronger overall response:

The results are really no more instructive in helping us identify the “one factor” than the laundry list of factors with which we started our discussion. In point of fact, it would not take a futures guru to figure out that the only way to achieve No. 1 above would be to use No. 2 and No. 4, and then measure the outcomes with No. 3. This probably sounds like typical pronouncements from an academic. However, the bottom line is that all of the factors are connected and the winners will be those firms that can identify, focus, and integrate an increasingly complex array of factors and fast-moving changes in global resources and markets.

Let me adopt a contrarian stance and argue that factor No. 5–Managing Change, although ranked very low by the respondents, could actually be the most important response. In a period of rapid change and high volatility, careful planning is usually the key to successful execution. Planning, especially strategic planning, is more difficult to do when uncertainty abounds. But it’s precisely at this time when planning is most important. The planning discipline should pervade the organization and become as accepted as budgeting. With extended supply lines, country-level volatility and increased potential for geopolitical disruptions, effective planning becomes the competitive tiebreaker. Remember you do not have to be perfect in your planning, you just have to be better than your closest competitor!