Common pitfalls of a supply chain centre of excellence

Rich Becks
posted by Rich Becks
25 September 2014

Rich Becks, general manager of high technology at E2openIn today’s business world, access to timely, accurate operational information is critical. As globalisation and outsourcing extended supply chains to every corner of the world, a new class of enterprise software emerged: the business network – built from the ground up to solve problems that enterprise resource planning (ERP) systems were not meant to address.

Companies have realised that they need to develop skills outside the confines of ERP and cultivate their own internal skills for supply chain leadership. As companies reassess their strategies for collaboration, continuity of supply, and competitive advantage, the role of the supply chain centre of excellence (CoE) becomes a key part of the organisational model.

A CoE injects innovation into an organisation’s culture through the cross-functional engagement of key stakeholders who actually know how the business works and where the real opportunities are hidden.

Unfortunately, supply chain CoE initiatives launched with high hopes, often fail to deliver tangible business results. The following are a few common challenges that can impact the effectiveness of a supply chain CoE:

Governance. Most companies tend to select the right people from procurement, materials management, inventory management, and planning departments without empowering them to change their organisations.

Change management. Seeding a supply chain CoE with respected subject-matter experts is the best way to gain credibility within an organisation. But this sometimes places members outside of the common interests of their respective functions.

Metrics. The hallmark of a supply chain CoE is a focus on fact-based, data-driven measurements of business performance. But supply chain CoEs often scramble to measure the things that have data readily available.

Collaboration or communication? Many companies confuse collaboration with information sharing. Posting problems for all to see causes stakeholders to tune out supply chain CoE recommendations for lack of context.

Misalignment of rewards and incentives. Though functional goals and objectives may be aligned, measurement systems sometimes are not. Enterprise processes are now strung across the globe with each entity seeking to optimise their own performance metrics that often conflict with one another.

Overlooking technology as a stimulus of supply chain CoE change. Sometimes technology is wrapped around bad processes, and sometimes the wrong technology is chosen to improve good processes. Knowing how one affects the other is important to supply chain CoE success.

Supply chain CoE initiatives start with a potential for a new beginning but soon face adversity, opposition, and ultimately, denial. In order to succeed a cultural bias must be developed toward this end-goal within an organisation. A supply chain CoE giving and taking active direction from engaged stakeholders drives pillars of creativity and resilience deep into the foundation of an enterprise, inspiring all to shine.

☛ Rich Becks is general manager of industry value chains at E2open.

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