Worley Blog


Posted on: April 22nd, 2019 by Clifford F. Lynch

Twenty-two years ago, Supply Chain Management Review published an article entitled, “The 7 Principles of Supply Chain Management.”. The authors’ insights then are remarkably relevant to the modern supply chain, and companies that have followed these guidelines, or variations thereof, continue to find them valid and timely.
In the event you have never read them, these principles were:

  1. Segment customers based on the service needs of distinct groups and adapt the supply chain to serve these segments profitably.
  2. Customize the logistics network to the service requirements and profitability of customer segments.
  3. Listen to market signals and align demand planning accordingly across the supply chain, ensuring consistent forecasts and optimal resource allocation.
  4. Differentiate products closer to the customer and speed conversion across the supply chain.
  5. Manage sources of supply strategically to reduce the total costs of owning materials and services.
  6. Develop a supply chain-wide technology strategy that supports multiple levels of decision making and gives a clear view of the flow of products, services, and information.
  7. Adapt channel-spanning performance measures to gauge collective success in reaching the end-uses effectively and efficiently.

While the state of the supply chain concept has changed drastically since 1997, particularly in a technological sense, the guidelines are as appropriate today as they were then.
We have seen other rules of 7 since then. For example, the late Steve Jobs, formerly CEO of Apple and arguably one of the most brilliant management minds of recent years, said:

  1. Customer comes first. Cost cutting comes second.
  2. Set impossible targets.
  3. Prioritize actions based on importance.
  4. Adapt process view of organization.
  5. Simplify products and process’
  6. Make radical al changes when necessary.
  7. Enhance relationships via face to face meetings.

Naturally, in today’s environment, the usual question is, “What about Amazon?” For that answer, we turn to Jeff Bezos’ seven philosophies.

  1. Put yourself in customers’ shoes.
  2. Don’t be distracted by the competition.
  3. Keep an eye on the ball.
  4. Go the extra mile.
  5. Plant seeds and watch them grow.
  6. Learn to improvise.
  7. Build the dream team. **

While none of these principles are exactly the same, all three lists emphasize the importance of the customer above all else. While I won’t be presumptuous enough to add my own rules of 7 to this distinguished list, I do think there are several other things besides customer orientation we can learn from these experts. We should be technologically literate, process driven, collaborative, flexible, and risk takers – not afraid to make the hard choices.
** Bezos’ dream teams are small. He has said if it takes more than two pizzas to feed them, they are too big. Often there will be an empty chair at the table, representing the customer.
(Sources: Supply Chain Management Review; Supplychainopz.com.)