Becoming a Supply Chain Leader

Mastering and Executing the Fundamentals

Sourya Datta, Sudip Das, Debasis Bagchi, Sourya Datta, Sudip Das, Debasis Bagchi

• Publisher: Productivity Press
• Year: 2021
• Print ISBN: 9780367220815
• eBook ISBN: 9781000427141
• Topic: Business
• Subtopic: Management
• Index: Business

The book explains how to emerge and grow as a supply chain leader and details supply chain and procurement processes and operational activities in real-work scenarios across multiple supply chain verticals. The book defines what an entry-level supply chain professional must do to excel in various types of supply chain verticals such as IT, electronics manufacturing, pharmaceutical, retail, and consumer goods. Apart from helping professionals understand vertical specific nuances, this book helps them to set both short-term goals for annual performance review and longer-term career planning. In addition, for a mid- or senior-level supply chain professional, the book offers ideas on ways to launch initiatives and demonstrate leadership to foster career growth. It offers ideas about unlocking new values for the organization and creating a data-driven decision support platform to gain financial efficiency for better management of CapEx and OpEx spend, thus improving the bottom line. The book includes a tool kit which includes operational data models, financial models, and presentation templates for creating and socializing proposals intended for cross-functional teams and demonstrating supply chain leadership.

The book is divided into four major parts. In Part I, the book starts with an overview of key concepts in a manufacturing supply chain and procurement organization. It describes current forms of modern global supply chain and corporate procurement organizations.

The objective of Part II is to provide a framework for a self-directed supply chain manager to understand how a large organization evaluates the contribution of supply chain managers and where it expects them to create value. To foster career growth as a supply chain professional, the book identifies six key knowledge pillars for demonstrating supply chain mastery:

• Technical and market knowledge of the end product and its constituents.
• Knowledge of internal product development and sustaining processes and supporting consumption data.
• Health and market condition of the supplier.
• Ability to create value.
• Ability to build internal and external executive relationships with key influencers.
• Ability to obtain best cost without compromising on quality and lead time.

Negotiating cost, sourcing material, and then the logistics of moving the raw material through multiple stages and finally finished materials across the globe are some of the key areas which need continuous improvement. As a sentinel of efficiency, removing any kind of wastage leads to immediate value creation and contributes to the margin by improving the bottom line.

In Part III, the book reviews twelve such verticals namely printer, medical, IT, energy, automotive, cloud, dairy, data management, avionics, biotech, apparel and start up and the supply chain nuances through the lenses of the framework created in Part II.

In Part IV, the book goes back to focus on the professional growth of an individual supply chain person in an industry agnostic way. It provides examples of financial and operational efficiencies that a supply chain professional can create.

Section 1

All Links of the Chain

1

The Original Supply Chain Leader: Marco Polo

Sudip Das

Ishaan Das

DOI: 10.4324/9780429273155-2

Contents

1. 1.1 Silk Road
2. 1.2 Explore and Prepare
3. 1.3 Significance of the Silk Road
   1. 1.3.1 Product
   2. 1.3.2 Demand
   3. 1.3.3 Supplier
   4. 1.3.4 Value Creation
   5. 1.3.5 Relationship
   6. 1.3.6 Execution
4. 1.4 Marco Polo, the Supply Chain Leader
5. 1.5 Concluding Remarks
6. About the Contributor
7. References

1.1 Silk Road

It could be argued that Marco Polo (Polo and Latham 1958) was one of the well-known supply chain leaders in the history of the world. To prove it, let us first understand what is a supply chain and what does a supply chain leader do.

Simply put, a supply chain enables customers to get their desired products. It connects the producers to customers in a continuous manner. By that definition, one of the oldest known supply chains was the Silk Road. Silk was the product and the Silk Road connected European customers in the west to the Chinese manufacturers of silk in the east (Whitfield 2015). The Silk Road was essentially a trade route. It started during the Han dynasty in the second century BC, many centuries before Marco Polo traveled from Venice to Kublai Khan’s capital in China in 1269. So definitely there were supply chain leaders before him; however, due to his chronicles he had become perhaps the most famous one.

The Silk Road itself was actually a network of trade routes between Asia and Europe. Various types of goods changed hands as traders of each region exchanged their products. Spices like black pepper would find their way from Southeast Asia to Italy where it would be used for preserving meat. The finest silks would be traded multiple times before they finally got sold to the nobles in different parts of ancient and medieval Asia and Europe. Horses got traded for royal armies throughout many countries in the route. The Silk Road satisfied the function of the supply chain for many such items during ancient times.

1.2 Explore and Prepare

In this chapter we will explore what it took to deliver Asian products to the European market in ancient times. This gives us an idea about what were the products, who wanted them, who made them, how the market grew, who were all the traders, and finally how this series of continuous trading got managed and executed for centuries. Ultimately, this book is not about what needs to be done but about who does it. We will do an excercise in this chapter. We will consider an example which we will explore through the lens of some logical question to baseline our generic understanding of supply chain. We will, however, dive deeper into these questions in the subsequent chapters in this book.

This chapter will start to scratch the surface of supply chain leadership which will be followed in greater detail throughout the rest of this book. For the moment, we will do an armchair analysis about the roles and responsibilities of the traders who ultimately made the European Kings and Queens look chic in great Chinese silk or enabled them to enjoy the finest cured meats when they threw opulent parties.

1.3 Significance of the Silk Road

Let us dive deep into the Silk Road as a supply chain, using a list of questions. Let us go back in history and imagine ourselves as a young Venetian like Marco Polo in the thirteenth century. Let us put ourselves in the shoes of Romeo, an imaginary young Venetian youth, belonging to one of the noble trading families of Venice. The family might have expected young Romeo to step up and stop being a player and instead getting into the family business. The young man did not know much about the business and had vaguely heard that it would involve going to hazardous places far away from the creature comfort of home and bringing back amazing things like silk and spices. People in Venice were crazy about those goods and therefore as soon as he would roll into the town with bags full of exotics, people would offer large sums of money and would make him rich beyond imagination. Let us put ourselves in Romeo’s place and come up with a framework or a list of things that he had to be prepared for (Haksöz et al. 2011).

1.3.1 Product

First, Romeo needed to understand what were the products that he was supposed to buy. He had to buy at least two categories of items which were spice and silk. There were also various types of spices in the Far East. The two primary spices that could get most value for money were pepper and cinnamon. All natural products have different grades or qualities, price point, shelf lives, local preferences, etc., so learning the differences between different grades was must. He had to learn how to negotiate the price of pepper and cinnamon, what were the locations in the Far East where these two spices would be available, and what would be the exchange rate against gold or some other currencies. Then there would be shipping logistics as both had to be brought in large volume to cover the travel cost. How much cinnamon or pepper could a single horse carry? Similarly for silk, the logical list of questions would be what were the different levels of quality of silk and how to recognize them and negotiate their prices. Silk could be available as rolls which could be cut and tailored or could be available as finished and beautifully embroidered dresses. Minerals were used to dye the silk and price could vary based on color. Romeo needed to understand what type of silk he would have to procure and their prices and how to bring them back or ship them.

1.3.2 Demand

After understanding the product the next critical item was to develop an understanding of the demand of these items in the Venetian market. What would happen when he brought in pepper, if another supplier also brought in pepper? Would that make the price of pepper fall and impact the profit margin? Would Romeo need some statistics like what was the annual amount of peppercorn sold in Venice and were there many traders with back-end suppliers or was the Venetian market always undersupplied and the demand always stayed high? What were the shelf lives of the peppercorn and cinnamon bark so that they would survive the journey plus the amount of time it would take to sell them? Similarly how much silk should he buy? Should he buy only premium silk or buy a mix of top and medium-grade silk? Should he buy equal worth of these three items? The young Silk Road supply chain rookie needed to understand what were the demands of the market to balance his target portfolio of products. There could be additional options like procuring some precious stones which were a lot less bulky with high return on investment and also in high demand.

1.3.3 Supplier

The first two sets of information were available in Venice itself. Walking around the Venetian market or by mingling with the Venetian high society, Romeo could develop the necessary understanding of the product categories and their sources of demand. However, identifying the sources was the next challenge. One way of procuring would be going to the kingdom of origin and buying the products at their lowest cost. For example, silk would be available inside China where the weavers had set up silk weaving looms next to mulberry farms for the silk worms. Cinnamon on the other hand came from Ceylon or Indonesia and both were far away from China. So as a supplier manager, young Romeo had to understand the strategy, whether to procure from the manufacturer at the lowest cost or from an intermediary like a wholesaler at an outpost on the Silk Route. There could be traders in Kerman, Persia, who got supply of peppercorn and cinnamon but the price would be higher than Ceylon but still relatively low compared to Venice. On the other hand there could be traders at outposts all along the Silk Routes who might be selling silk but in Khashgarh at the border of China; Afghanistan could be the biggest wholesale market. Silk from different parts of China was available in one spot. The next spot for buying silk would be Khanbaliq or modern day Beijing which could offer maximum choice at the best cost but would also add months of distance in both directions. There were suppliers in each of these locations and there were different kingdoms and different rules of trade and different selling prices. Understanding and being aware of political situations, possibilities of wars breaking out or possibilities of seasonal disruption like flood, etc. were important as these could cause disruption in the Silk Route.

1.3.4 Value Creation

The goal of a supply chain was not necessarily to go to sources for the lowest cost with a target of maximizing profit. After understanding what to procure, how much to procure, or from where to procure, Romeo must decide how he could be the best. However, that would beg the question – best in what? What would the young supplier manager desired to be known for? Would he like to be known for being the best source of silk in Venice, as the purveyor to the Doge of Venice? Or would he like to be remembered as the peppercorn king of Europe? The bottom line is there should be something unique or special like finding a new source of silk which was better than what was available before. Or it could be about discovering a sustainable supply chain so that peppercorn and cinnamon could arrive on time year after year. There could be opportunities to create value like bringing in extremely rare jewels from Ceylon or bringing in exotic porcelain or jade figurines from Khanbaliq. It was not about being another trader in the Silk Route but doing something innovative or unique. For example, Romeo might want to be the fashion trendsetter of Venice by discovering a new silk supplier who had created new dyes and produced silk in colors which were never seen before in Venice.

1.3.5 Relationship

Ultimately success of all supply chain activity boiled down to people and knowing the right set of people. From being able to finance the whole journey, to being able to travel to distant land and procure highest quality silk and spices, to being able to safely bring them back to Venice and getting permission to sell, every step involved working with an enormous number of people. So getting their trust and cooperation were pivotal. For example, the banker would be investing a large amount of money which had not only an extremely high risk of return but also a very long waiting period. Similarly, the outpost where the spices and silk were available had kings and lords who could make their lives easy and provide access to the bazaars and safe passage instead of robbing them. Even coming into Venice, the political situation could change in Venice or it could be at war with another town. Selling the goods would need contacts and permissions. Relationships were built based on trust and track record. Being young, Romeo had to use his family’s track records and connections built by his father and uncles. The young supply chain manager had to make a list of people whom he should meet before leaving Venice and the key contacts made by his family in previous journeys. He had to understand the depth of relationship, which one was strategic and which one was transactional as he would be leveraging those and would be investing and building new ones as well. He would need to understand how personal the existing relationships were and how were they forged and how it had grown. For example, working with a gemstone trader in a distant outpost would require not only trust but extreme security and could be a...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• Preface
• Editors
• Contributors
• Section 1 All Links of the Chain
• Section 2 The Supply Chain Leader
• Section 3 Practices, Perspectives and Leadership in Different Industries and Their Key Nuances
• Section 4 Case Studies in Supply Chain Management
• Commentary: A Path to Cognitive Leadership
• Index