Supply Chain Hierarchy of Needs™

Supply chains are the heart and arteries that drive a company’s strategic success.  From raw materials through the full life cycle of the product or service, lean supply chains have constantly changing requirements and have been significantly challenged with the frequency of massive disruptions.  The Supply Chain Hierarchy of Needs™ provides a framework for supply chain practitioners to follow to ensure that the business fully meets the needs of its stakeholders and customers.

Built from Group50’s Business Hierarchy of Needs®, there are three levels of activities that need to be considered when creating a lean, agile, and scalable supply chain that meets the needs of the business.  The first two layers in level 1 give the supply chain strategist the foundational elements required to create a robust lean supply chain strategy. Without these elements, a supply chain strategy may be built incorrectly:  Something we call Anti-Strategy™.

The company’s MIG defines the business performance targets that all strategies must support. The supply chain strategy will need to take into consideration the needs of the customer, properly support each channel of distribution, and implement the company’s value proposition across all products and services.  This tells the supply chain strategist “Where to Play”.

With these foundational elements in place, the supply chain strategy can be properly built. A well-developed lean supply chain will have the following elements:

1. Focus on the Most Important Goal
2. Addresses customer needs in all channels
3. Robust technology that provides both reactive and proactive information across the entire supply chain
4. An organization that is fully aligned and accountable to the lean supply chain strategies
5. Downstream suppliers who are accountable to the company’s Supply Chain objectives
6. Focus on total cost of ownership
7. Lean, agile, and scalable approaches
8. Leverages vendor capabilities
9. A detailed organizational development process – Skills and Team Optimization
10. Well develop KPI structure for measuring supply chain performance
11. Detailed risk mitigation strategies
12. Dynamic management review process

This may seem like a lot of items to consider, but a robust lean supply chain strategy defines the performance of the entire business. 

From this point on (layer 4 and above), it is all about the execution of the strategy: What we call “How to Win”.  Notice that level 2 focuses on change management and team optimization.  Most companies don’t have the appropriate skills and resources in place, or the appropriate accountabilities in place to implement a lean supply chain strategy. They need to build an organizational roadmap that is in concert with the actual implementation. As the strategy is implemented the organizational skill and resource requirements will change. Level 2 is where most companies fail in successfully implementing strategy.  They don’t program/project manage Level 2 effectively and the execution of the project falls apart. They fall short on alignment, skills, and resources!

Level 3 is all about execution. In today’s business environment, the technology backbone is a critical part of execution. When planning the implementation of a lean supply chain strategy, many companies attempt to have the technology automate what they do, rather than take advantage of the millions of best practices that their technology is built from and build organizations and develop business processes around the technology. This lack of foresight is sometimes the cause of failure, but often results in not realizing the full potential of a strategy. Implementation is about leveraging technology, business process reengineering, vendor management, proper planning and continuous improvement.

Developing and implementing strategy is hard work and requires a robust management review process to ensure that supply chain practitioners have the appropriate resources and skills necessary to successfully implement a lean supply chain strategy. You can find out more detail via Group50’s Supply Chain Playbook.

At Group50®, we are supply chain subject matter experts and know how to guide a company through the Supply Chain Hierarchy of Needs™ when creating a lean supply chain strategy.  Call us to find out more at (909) 949-9083, drop us a line at info@group50.com or request more information here.

About the Author:  Jim Gitney is the CEO and Founder of Group50^® Consulting, and the author of “Strategy Realized – The Business Hierarchy of Needs®” which summarizes a framework for creating and deploying successful business strategies (You can find out more about the book and acquire a copy by clicking on the image to the right). He and the Group50® team are considered supply chain subject matter experts and have created and implemented supply chain strategies for dozens of companies leading to over $200M in reductions in costs and working capital.

Founded in 2004, Group50®consulting is focused on working with middle market companies to significantly improve their productivity by leveraging people, process and technology as part of a company’s strategic plan. Lean Business, Lean Manufacturing, business process improvement and process reengineering are Group50® specialties. Group50® consists of consultants who have spent their careers in corporate America learning how to optimize businesses.  We specialize in working with senior leaders to develop and implement programs that leverage people, process and technology to optimize business performance.

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