Let’s get one thing straight, I am not old. ;-P
And yet, I am discovering and signalling issues, similar to the ones that fascinate me in my father. One of those issues is the phrase that starts with “When I was growing up…”.
Fortunately, my daughters don’t mock anything that follows (yet). I do notice, however that these issues usually are things that are really, substantially different and have changed tremendously between the time when I was growing up and now.
One of those things is the availability of all kinds of food products. When I was growing up, we had 3 types of soda: cola, orange and lemon (in my case Coca-cola, Fanta and Seven-up). On top of that, we had the enormous choice in fruit juices between orange, apple, grape and tomato (and indeed, tomato is not fruit and I believe you should just eat vegetables and not drink them, but that is a whole different and personal discussion). Speaking of vegetables, when I was growing up, we had asparagus and strawberries when they were in season (both around May-June, I remember).
These days, availability doesn’t depend on local supply, season or natural forces, it depends on logistics. In ‘my’ supermarket, we have about 40 different options in terms of soda, ranging from 5 cola varieties per brand, light sodas, lychee-guava sodas and cactus-lime drinks. Local demand is getting more sophisticated because of more world market information, because of which supply needs to be less dependent on local factors and more on global opportunities. In December, strawberries come from Israel for example. Regardless of the question, whether they are as tasty as Dutch summer strawberries (“little summer kings”, we call them), it is an example of globalization. And it shows, how in my opinion everything is a consequence of supply and demand, the latter guiding the former.
Now, if I own a cactus plantation with which I produce cacti, I can wonder about finding applications of cacti in any type of product. So if I notice that there is a huge market, halfway around the world from my tropical, dry backyard for cactus meat and aroma, the challenge is to start at the end, at the demand side of things and work my way back to the huge plants on my land. Basically what I am doing, is matching (potential) customer demand with my core competencies.
The last thing I want to do is think in terms of boundaries. Obviously, there is a challenge for me to define the final product and the steps towards it. But mind you, not the final product leaving my factory, the final product that the end user buys! After all, I am at the beginning of a long chain of parties involved in the definition of a final product that satisfies a customer demand: the supply chain.
But before we get too focused on marketing, let’s agree on the fact that when we talk about boundaries, we talk about logistical boundaries too. These boundaries are mostly concentrated around the continuous realization that the biggest challenge is to align all nodes in this supply chain to create that final product. If any one of these nodes underperforms, or even screws up completely, the final product is ruined and end users are not getting what they want.
I love the subsidiarity principle. In almost all situations. It means that I love to delegate authority as much as possible, as long as there is expertise and motivation, to the lowest level possible. When my girls were very young, I taught them how to operate the audio and video equipment already at the age of 2, because, as I saw they were able to deal with that kind of responsibility, they relieved me of a boring task, which usually interrupted my own activities. The planning of our holiday, the decision to buy a new house or the acquisition of any type of pet, to name a few, typically were tasks that I took upon me, as their authority to do them lacked information and experience.
Supply chains, ideally, would be configured, monitored and managed jointly, based on the desired final product. We could call this a macro outlook. Ideally, to define a complete strategy, based on corporate competencies of all nodes in the chain would be the best way to go. However, usually situations are often not ideal, but optimal at best.
If we are lucky, we can take one step down to meso level, where the direct supplier and clients are analyzed. Integration of activities, (half) products, exchange of information, people and processes are examples of approaches to optimize the fit between input and output of individual nodes in the supply chain. Concludingly, at micro level we need to analyze and reassess processes, internal to one node in the chain, to optimize business processes. That is the concept of #ESSC: Excellence in Strategic Supply Chain. We apply as much as possible a subsidiarity principle, in which we look at goals and objectives of (each part of) the supply chain and work our way towards analyzing, improving and integrating goals of links in the chain, ending up with the optimization of internal processes within your organization.
Subsidiarity. Macro – meso – micro. Analyzing the complete chain of value added activities, necessary to reach a market. That will ensure the leanest supply chain, not limited to the boundaries of the organization, which is a direct result of the fit between market and core competencies.
Or: cactus-lime soda with my cacti.
Maybe I will start growing limes as well; let’s hope I am not too old…