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Supply Chain Transformation: Practical Roadmap to Best Practice Results by Richard Sherman

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Chapter 7

Okay, We Need Management Commitment; So, How Do We Get It?

Did you skip to this chapter early? If you did, go back and read the other chapters. There really aren't any shortcuts to transformation. It's a journey that you will have to be prepared for. The Demand Performance structure simultaneously fuels the Demand Creation and Demand Fulfillment structures and is driven by them. It's more than finance and accounting. It's the executive office, human resources, and information technology. It's the enterprise enablement and accountability structure that's responsible for the strategic direction of the company and, ultimately, its financial performance and health.

So, here's a common scenario. The supply chain vice president (SCVP) presents to the chief executive officer (CEO) and chief financial officer (CFO) that he believes he can reduce inventory by 30 percent.

“Wow, that's great!” says the CFO. “How are you going to do it?”

The SCVP responds, “We can implement a new software application for inventory optimization. It will only cost $100,000 and the ROI is less than nine months.”

“Really?” counters the CFO. (The CEO has stepped out to take a call.) “We don't have $100,000 in capital at this time. And there are at least four other projects already in the capital appropriation process that will take priority over you doing your job, which is to reduce inventory.

“And, by the way,” the CFO adds, “one of those projects will also reduce inventory.”

“Really?”

“Yeah, the VP ...

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