Last week I looked at some basic definitions of a Supply Chain and what Supply Chains are designed to achieve. After enjoying the wet UK Bank Holiday, one of my first meetings was with an established FMCG CEO. No names of course, but this is a medium sized player with a broad European base. I have disguised the identity to protect us both but their product range contains nuts which I think is rather apt in the circumstances......

I recall how many companies plodded along with what we now accept as core Supply Chain functions lost amongst other departments e.g. Buying, Procurement and Logistics would often end up reporting to Finance. Ok, these functions consume a lot of the operating budget but with great respect, a Finance team is not best placed to be a dynamic contributor to the extended Supply Chain on a daily basis.

Some are more equal than others

Largely, that is no longer the norm in most cases! Many years may have passed before all the essential elements of Supply Chain were brought together under one, seamless department. Looking back, it hardly seemed like rocket science but it was a painful process as established empires were dismantled and recognition given to what is still an undervalued function, in my humble opinion.

Although many were dragged kicking and screaming into the newly created function there is no doubt those companies operating a truly integrated supply chain have seen huge benefits over several years. Like any significant change, nothing happened overnight as slowly but surely FMCG companies made massive strides in cost, efficiency, service and innovation delivery. Is it naïve to believe that the Supply Chain is now considered as equally important as Finance and Sales?

So, you could imagine my jaw dropping when I heard from No-name CEO that their company had taken the decision to dissolve the Supply Chain and relocate elements across other departments. The SC Director role just vanished off the top table in one fell swoop and with a resounding thud. There must be a leading edge reason for this bold and brave (yes, insert whatever adjective you choose) decision. What was the divine inspiration behind such a step?

The revelation?

There wasn't one! The spurious insight behind the decision was that the company wanted more control over various areas of business and believed that this could be achieved through a dispersion of roles.  No doubt you must have a clear policy for the segregation of roles to avoid fraud and preserve financial integrity but is this really enhanced by scrapping a complete department? I do not believe so. You will end up with far greater opportunity for people to have fingers in the pie which will survive undetected.

Outside of the financial implications, the operational success of the business will quickly diminish as decisions are not taken or taken at the wrong level of seniority or not taken at all! Too many cooks spoil the broth springs to mind.

Answers on a postcard

Why would you make such a decision? Perhaps you have decided on something but this one beats me. I am not suggesting Supply Chain development has reached utopia (far from it) but reverting to an antique approach in an effort to improve control seems to be a clear contradiction in terms.

Help, I need somebody!

If you have any Supply Chain or Route to Market problems or opportunities you would like to discuss, then please reach out to Enchange.com via telephone, email, or live chat.