The CEO of the consumer goods multinational put me on the hot seat.
“Why aren’t we serving these pending orders?” He pointed to the pages of computer printouts on the conference room table.
I didn’t understand why I was the only one there. Where was the chief supply chain officer or the logistics director? It was just me and him.
I was the shipping manager of a consumer goods company. I was in charge of serving the orders as we received them from the sales department. ‘Serving’ meant allocating or reserving inventories, picking products, loading them onto trucks, and invoicing & delivering to customers.
The CEO wanted to meet an immediate goal: meet the monthly sales target. He wasn’t out there to intimidate me (that would be flattering myself, I thought). I just found it perplexing that I was the only one in the room with him, trying to solve the problem of serving pending orders.
I answered his questions one by one from the printout. There’s not enough available inventory. Some inventories are still in-process or not yet turned over from production. Although we have been working overtime, some customers close at the end of the day so we could only deliver the day after.
The CEO wasn’t satisfied, of course. He cited the need to meet revenue targets so the company could meet financial goals. Not serving orders fast enough was therefore not acceptable.
The CEO didn’t scold me, but I got the message. But there’s only so much I could do. At the end of that long day, he dismissed me.
The next day, I asked the shipping crew to continue working overtime so that we could load & dispatch as many trucks as possible. I personally took over the tracking and allocating of inventories to orders as my office staff printed out pick lists quickly so my warehouse team to retrieve items & load them on the trucks.
The shipping department was able to dispatch the volume needed for the company to meet the monthly sales target. We even beat it. The CEO congratulated the sales & marketing teams. He never did once mention the shipping department.
For supply chain professionals, fulfilling demand by serving orders is a paramount task. It’s how they define success in operations.
Enterprise executives, however, don’t necessarily share the same sentiment. They’d argue for the bigger picture of meeting strategic goals like sales targets, increased market share, and higher profits. Serving orders is an enabling objective; it’s not the end-all aim.
Many supply chain professionals, therefore, have trouble reconciling their employers’ strategic goals with the supply chain’s reason for existence, which is to productively fulfil demand.
When supply chain professionals fulfil demand, they contribute to the success of the supply chains they are part of. They also contribute to the success of the enterprises they work for.
Conflicts arise when the enterprise executives prioritise their goals versus that of the supply chain’s purpose. There were instances, such as in the example of my experience as the shipping manager, executives would prioritise shipments even if it meant sacrificing complete on-time deliveries to customers. Executives would tell supply chain managers, for instance, to ship the larger orders first before those with smaller quantities.
There shouldn’t be any conflict between the goals of enterprises and the supply chains they are part of. If there is any, it’s likely rooted in gaps in productivity. The more productive enterprises serve orders, for example, the closer enterprises would attain their basically higher-end goals such as increased revenues and greater market share. Enterprises benefit when supply chains are productive.
Enterprise executives have come to recognise the importance of supply chains but must figure out that serving orders is not only an enabling task towards meeting their enterprises’ goals but also it is a key part in the supply chain’s raison d’être, which is demand fulfilment.
Ellery's Essays 