There are two dimensions to the supply chain strategy:

• the optimization of the organization of flows from suppliers to customers, to improve economic performance, customer service or flexibility:
  • changes in the principles applying to the control of flows and stocks (creation of decoupling points, pull and push flows, etc.),
  • re-allocation of flows and changes to structures: concentration, sharing or specialization of production and logistics resources, levels of outsourcing,
  • etc.
• The governance of the supply chain:
  • changes in roles and responsibilities between the supply chain and other parts of the company (manufacturing, marketing, sales, finance, development),
  • changes in the degree of centralization of supply chain management decisions (central, regional, local),
  • changes in the models of cooperation with other internal or external players: mutual commitments, key processes and performance indicators.

The definition of the governance of the supply chain in the company (organization, responsibility for stocks or processes, internal service level agreements, etc.) is an essential prerequisite for any improvements in performance.

We are convinced that supply chain models exist that are organized mainly according to the complexity of the supply (the industrial complexity) and the demand, and that the most efficient companies are those that succeed in defining a governance system that is coherent with these models.

The target supply chain model of the company, or of one of its business units, is defined mainly according to two fundamental criteria: 

• the complexity of customer demand,
  • complexity of management of the demand,
  • distribution channels,
  • management of shortages,
  • distribution levels,
  • vitality of the product portfolio,
  • etc.
• the complexity of managing the industrial offer
  • managing the offer,
  • level of multi-sourcing,
  • sensitivity of capacity to the product mix,
  • impact of production campaigns on capacity,
  • criticality of suppliers,
  • etc.

The positioning according to these two criteria determines which governance model(s) is best suited to the arbitration processes involved in managing the supply chain:

• the position of the supply chain function in the company organization chart:
  • reporting to senior management, sales, manufacturing, or a distributed function
  • level of centralization of the supply chain functions (central / regional / local)
• the model of ownership of the supply chain KPIs, in line with the levers for action: e.g., who is responsible for which stock?
• the model of cooperation:
  • which information is exchanged between the players to manage demand, capacity and stocks?
  • the mutual commitments made on the basis of this information and for how long,
  • the KPIs used to measure whether these commitments are honored.

These supply chain models can be applied to all the main links in the company’s global supply chain: procurement and supplier relations, manufacturing of semi-finished and finished products, distribution of products on the various levels of the distribution network.

Argon Consulting helps its customers in the governance of their supply chain:

• organizational diagnostics (roles, responsibilities, KPIs, models of cooperation),
• definition of the supply chain governance target model, according to the applicability to the specific context of the company and is a great accelerator to speed up design cycles and align the stakeholders,
• application of this governance model to the definition of the supply chain management macro-processes and the cooperation contracts,
• support in implementing the target model of the organization and cooperation.