Last week I was in Kuala Lumpur and Singapore and had the opportunity to present to several CIO's on the subject of how to manage a global Supply Chain through a downturn. I know, a number of you may start argue whether we are in a downturn or not, but that was not the objective of my talk. I started out by highlighting three objectives that most companies have today, reducing costs, increase revenues (which in a downturn means taking market share away from the competition) and mitigating risk.

As Martin Christopher from Cranfield pointed out a number of years ago, "Companies are no longer competing with companies, but supply chains with supply chains", it is important to look at the end-to-end supply chain to address those three objectives. Companies need four key elements to truly operate at a supply chain level; these are visibility, responsiveness, collaboration, and risk management. I'd like to address these points in a series of blogs I hope to post over the next couple weeks, but before that I'd like to emphasis the importance of operating as an integrated supply chain.

Let me take a practical example. The Japanese invented the concept of "lean", and worked a lot at making their factories and operations lean. But in their traditional, collaborative manner, they worked at the same time to help their suppliers and partners to also become lean. As a result of this, although each company was focused on its operations, the whole supply chain quickly became lean. This is one of the key reasons of the success of companies such as Toyota and others.

European and American companies have taken a different approach. Yes they have been working hard at making their factories and operations lean, but they often have done that by pushing the "waste" up and down the supply chain. Unfortunately, the end consumer has to pay for the waste, regardless of where that waste is along the supply chain. Unfortunately, because they neither have the close relationships with their suppliers, nor the visibility of what happens across the supply chain, they often do not spot the problem, while asking themselves why they cannot make a given product at the same price point as their Japanese counterparts.

I used this argument to open my presentation and was actually surprised how much agreement I got from the audience. To me this sounds obvious, but it seems many companies have not thought about it, nor have they looked at how they could address the issue and improve their competitiveness.

In the next post I will discuss the importance of a win-win collaboration for the success of the relationship.