Supply Chain Practices are key to Organizational Alignment and Improved Corporate Performance

When organizations are aligned, they are faster and more efficient. As a result, the organization can achieve higher levels of results and better withstand the pressures of demand and supply volatility.

A recent study by Supply Chain Insights found that the gaps in functional alignment within the business functions of sales, marketing, finance and supply chain are far greater than the gaps between IT and line of business. The greatest gap in alignment is between the operations and sales functions.

The study found that when companies focus on the following three things they can substantially improve organizational alignment:

1) Have a Clear Definition of Supply Chain Strategy. While many companies state that they want to be “agile,” it requires proper definition. Companies need to design a supply chain with this in mind. When the organization has a carefully crafted definition of agility, it is able to improve organizational alignment. The definition of “shorter cycles” is not sufficient. Also, the term “supply chain” needs to be clearly defined by the organization as an end-to-end process. This change in viewpoint allows the organization to gain business advantage through greater organizational alignment.

2) Sales and Operations Planning. Organizations with a mature S&OP process are more aligned. The study found that 61% of respondents report having an S&OP process, but only 48% rate their process as effective. For a more detailed analysis of S&OP.

3) Supply Chain Center of Excellence. Organizations with a supply chain center of excellence are more aligned. The greatest impacts are between marketing and finance, as well as operations and Corporate Social Responsibility.

Alignment requires work and leadership
Improved alignment will only happen through focused leadership over a period of three to five years. The largest gaps are executive leadership understanding to guide the process and the lack of technology to model organizational capabilities and drive alignment.

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