Strategic Asset?

So much has been written and spoken about the Toyota model of supply chain (aka Toyota Production System) that when using the term in circles outside of other supply chain professionals you learn to be careful. Terms such as “Lean” and the “7 wastes” have become dangerous in the hands of amateurs. For example, I have witnessed “Lean” used as an excuse for staff reductions, and the “7 wastes” distorted to justify working with some dangerously low levels of inventory. When this occurs I like to point out that besides having a word meaning change for the better, Kaizen, the Japanese also have a word for change for the worse, Kaiaku. Staff layoffs for short term gains and ill conceived inventory reductions are usually referred to as Kaiaku.

The current preferred description of cutting edge supply chain, Strategic Supply Chain Management (SSCM), is described by Shoshanah Cohen and Joseph Roussel in their 2005 text “Strategic Supply Chain Management: The Five Disciplines For Top Performance”. This book documents the collective thinking of many serious students of supply chain, including participants from the prestigious Institute for Supply Management, Penn State University, MIT and others.

The first discipline is to view supply chain as a strategic asset - not an overhead function to be endured and operated with the minimum of resources, involvement and information. This brings to mind many questions in the current hospital environment.

• Is senior leadership involved in supply chain
• Is supply chain represented on the senior leadership team
• Is the supply chain executive viewed as a thought leader in their area
• Is supply chain a department or management function or both
• Is supply chain defined as all non-labor expense
• Are all supply chain functions governed by an organization-wide set of policies and procedures
• Does supply chain focus beyond obtaining low prices
• Does supply chain integrate process improvement and standards adherence
• Have key suppliers been identified for collaboration and development
• Are all stakeholders required to participate in collaborative models
• Are there periodic and routinely scheduled supply chain planning meetings involving senior leadership
• Is the supply chain expected to drive strategic results in areas such as marketing and new product line introductions

The questions could go on for another 2 columns, but the message should be clear: Supply Chain as a Strategic Asset is not Purchasing in the basement. Neither is supply chain like any other area. Only supply chain can bring value from outside the organization to meet its primary needs in myriad ways. If your organization has not permitted or encouraged this development then supply chain is an overhead expense – not a strategic asset. This is a pity – and a key reason why many hospitals find themselves unable to turn the bottom line from red to black.