Everyone has heard the expression, “a chain is only as strong as its weakest link.” This piece of wisdom has increasingly far-reaching implications as companies devote more and more attention to their supply chains.

Supply chains are no longer viewed simply as a means to plan, source, make, and deliver, but also as key strategic weapons that can reduce costs, increase revenues, and provide a sustainable competitive advantage in the marketplace.

Although most large companies understand supply-chain management (SCM) and are aware of the potential economic benefits of improving the supply chain, few companies have shown a great degree of success in actually doing it.

Over the past several years, only a handful of companies have come to the forefront. Proctor and Gamble, Colgate-Palmolive, Boeing, Wal-Mart, Intel, Kraft Foods, General Electric, and Target are most frequently cited as companies that have achieved supply-chain excellence. They have successfully designed, built, and implemented best practices that other companies are using as benchmarks for their own organizations.

Overcoming barriers through leadership and openness

SCM as a strategic business tool is still in its adolescence. Only a few organizations, like those mentioned above, have fostered an environment in which strategic SCM has been able to evolve, thrive, and overcome the barriers that hindered the efforts of less tenacious competitors.

One such barrier is not having buy-in at the top and a leader to champion the cause. Because SCM isn’t well understood outside of those directly involved in the supply chain, a good deal of training and information-sharing must take place before any supply-chain initiatives are started. Top-down communication from the president or CEO to the enterprise should be the driver. The champion must clearly articulate the vision for such initiatives and the benefits sought.

Another obstacle can be organizational design. If the company operates in a highly departmental, function-based structure and culture, supply-chain initiatives are doomed to failure. Successful initiatives must cross functional lines, replacing rivalries and territorialism with cooperation and open communication. This facilitates leveraging appropriate functional expertise from throughout the enterprise. Human resources, marketing, and information technology, in particular, play an important role in building an effective supply-chain infrastructure and efficient operating strategy.

Moving from the inside out

By its very nature, the supply chain involves entities outside of the company to provide the materials, goods, and logistics that make up the chain. The goal for world-class SCM is to advance the relationship with these outside entities, transforming them from mere vendors into strategic partners. This generally means narrowing down the list of potential suppliers and carefully selecting just a few that share the same vision, culture, and objectives. It is also vital that such suppliers-turned-partners be at or above the same evolutionary level in terms of SCM.

The first thing that a company wishing to build strategic partners in the supply chain must do is establish open communication. All supply-chain partners must be willing to share otherwise proprietary corporate data with each other. This data commits all partners to each other and gets them all going in the same direction toward a common vision.

The more highly evolved SCM initiatives, then, involve not only the various internal functional areas or business units; they also involve sources outside the company. All parties can then contribute to the initiative utilizing their particular area of expertise while having a view of the big picture.

Here’s where technology comes in. Companies that successfully leverage technology to build and develop strategic partner relationships and streamline processes are those at the very peak of the evolution revolution. What the technology “looks like” varies greatly from supply chain to supply chain and is rarely an off-the-shelf solution.

The secret is understanding that technology is not the solution itself, but an enabler. Many companies have implemented what they thought was a technology solution but achieved results far short of expectation. Generally, it is a case of putting the cart before the horse. That is, make sure the process and infrastructure are in place and operational first, and then bring in the correct technology to support and elevate the process.

The common theme: communication

As with almost anything, successful SCM really comes down to open, effective communication: communication from the top down, communication within the enterprise, and communication between strategic partners. With it, trust, mutual respect, common goals, and shared values can make for a strong, long-lasting relationship.