I believe that every industry has some good supply chains from which to learn. This is not about learning about a company's so-called “best practices.” It's about learning from things done well as a matter of course in an industry, not necessarily done for competitive differentiation. These practices are industry “competencies.”

During the first phase of the Supply Chain 2020 (SC2020) Project being conducted by the MIT Center for Transportation & Logistics we did a lot of work trying to identify the elements of an excellent supply chain. Some of this effort included profiling and contrasting the supply chain management practices of 21 companies in nine industries.

Toward the tail end of our work, a student researching the pharmaceutical industry told me he concluded there were no excellent supply chains in that industry. He predicated it on the fact that there were no best practices since they were just doing basic “blocking and tackling,” and that was not interesting. In fact, a pharmaceutical company he interviewed told him that. I was taken aback because the industry had been most profitable for a number of years, so they should be doing something well!

The researcher eventually concluded that as a highly-regulated industry the companies in it operate in a highly-constrained environment that gives them little flexibility in what they can do. Government regulations, however, do force them to be masters at ensuring product quality all along the supply chain. For safety, they had developed sophisticated track-and-trace mechanisms to help prevent the counterfeiting and tampering of their products. Comparing to other industries, these turn out to be practices at which they excel, yet every pharmaceutical company has to be good at them just to survive in the industry.

These special and critical practices might only be compared to those in the food industry, which is also highly regulated. Since these practices are industry-wide, they are not what some would call “best practices” or what I would call “tailored practices” (aimed at gaining a competitive edge). They are industry-wide competencies.

If I were at a company in another industry looking for ways to improve product quality and safety, or supply chain visibility, I'd be interested in learning about these competencies from the pharmaceutical industry. Supply chain managers often talk about how they've benchmarked their practices against companies in other industries. A manager from a telecommunications network equipment provider said he was able to improve his manufacturing workstations by looking at the pit-stop operations for racing cars. Another manager from a computer manufacturer investigated the inbound operations of a banana company because he wanted to learn how they rapidly moved their products across country borders—an important competency in offshore-sourced and short shelf-life product industries.

There are a variety of practices that can be improved in supply chains from learning how they are done in industries where excellence in these practices is commonplace just to survive. Some are as follows:

While no means exhaustive, the above examples demonstrate that there are a wide variety of competencies in industries from which to learn. So while many supply chain managers look towards the widely publicized industries to learn from, they ought to also look at the less publicized ones as well. I'm a believer that good supply chain practices exist in every industry. You just need to look for them.