Supply chain organizations focused on improving overall business performance have demonstrated that trade-offs between cost, service and quality aren’t always necessary. Supply chain leaders can drive organizational alignment and collaboration by reframing the objective from cost control or optimization to the delivery of effective outcomes that profitably fulfill demand. Failure to take this type of systemic approach makes it impossible to optimize total supply chain performance and cost.
When engaging the CFO, supply chain leaders must communicate and quantify the challenges associated with operating their complex supply networks to deliver outcomes that support the business strategy by fulfilling demand with competitive service to capture operating margin. Supply chain, business and financial roles must ultimately align and collaborate around operating outcomes that satisfy both commercial strategies and financial performance targets.
When presented with the need to take immediate action, supply chain leaders have an opportunity and responsibility to understand enough about financial performance to develop plans that contribute value. Analyze business financial drivers before taking action, conserve cash and protect service for lagging demand, and comprehensively align demand and supply to improve margins.