Assignment task:
The serenity of a Caribbean sunrise contrasted sharply with Doug's thoughts as he pondered the challenges of the coming week. Doug and his new bride Charlene were at the end of a weeklong Caribbean honeymoon and would be leaving for the airport in a couple of hours. As director of logistics at Olympus Inc., a leading manufacturer of consumer-packaged goods, Doug's opportunity to sell his vision of supply chain management (SCM) was set for first thing Wednesday morning when he would meet with Joe Andrus, CEO of Olympus, and the company's executive steering council. Doug knew that he had only 2 days to put out any fires that had flared up during his absence and finalize his presentation. Doug was chagrined that the meeting had, at the last minute, been rescheduled for just a couple days after his honeymoon. Yet the realist in Doug acknowledged that sometimes you don't get a second chance to make a difference in a company's performance, culture, and future.
Doug had first become intrigued with the supply chain concept a year earlier, when he and Charlene were copresenters on the topic of alliance management at the national meeting of the Council for Supply Chain Management Professionals. Charlene, a partner at TDG Consulting, had pointed out that, in theory, companies in a well-run supply chain should work together as flawlessly as a well-choreographed Broadway musical. Certain that Olympus's logistics operations could benefit from better "choreography," Doug immediately began researching SCM, looking for evidence of its applicability to Olympus. Charlene pointed him to the results of a supply chain initiative management approach known as Collaborative Planning, Forecasting, and Replenishment (CPFR). Through CPFR implementation, Wegmans, an East-coast grocer, and Nabisco had increased sales of Nabisco's product line by over 50 percent while reducing inventory by one-third. The fact that a rival achieved such outstanding results through supply chain coordination riveted Doug's attention.
Doug began to tout SCM's competitive benefits. At first, nobody listened. A few colleagues suggested he stay focused on the day-to-day challenges of reengineering Olympus's distribution network. But Doug had persisted, seeking to learn as much as he could about SCM so that he could make the business case for pursuing a supply chain strategy. Anecdotes were plentiful, but hard data were hard to find. Doug knew that this would make it difficult to overcome skeptics' objections. Doug himself was not totally sure where to begin, but he was certain that adopting SCM would require significant, even painful, organizational change at Olympus. Doug had therefore assembled a set of SCM success stories from world-class companies. His three favorites-Wal-Mart, Dell, and Honda-came from diverse industries.
Wal-Mart was Olympus's largest and most demanding customer. Wal-Mart and Kmart were founded in the same year. Yet in 2001, when Kmart filed for bankruptcy, Wal-Mart became the nation's largest grocer with $56 billion in grocery sales. By 2003, Wal-Mart topped the Fortune 500 with $248 billion in sales. Wal-Mart's secret of "everyday low prices" on a huge variety of products was made possible by an inventory replenishment system that combines information technology and unique logistics processes.
Dell was the world's largest and most profitable personal computer manufacturer. Amazingly, Dell had launched a brutal price war at the beginning of the 2000-2001 economic downturn. Leveraging its
Charlene interrupted Doug's thinking as she entered the room, asking, "Why the serious look? You're not thinking about work already?" Doug could only say, "You know me." Glancing at his watch, Doug suggested, "If we hurry, we can take one last walk along the beach before we head to the airport."
Consider As You Read:
1. What is supply chain management? Note: Wal-Mart, Dell, and Honda each take different and unique approaches to SCM. If you were Doug, how would you go about defining SCM?
2. How would you suggest Doug organize his presentation to capture senior management's imagination?
3. Looking ahead, what do you think Doug's biggest challenge is?