The Four Languages of Supply Chain

A former Secretary of Commerce liked to tell of how a high-ranking official once responded to a subordinate's request for a raise by saying, "Because of the fluctuational predisposition of your position's productive capacity as juxtaposed to governmental statistics, it would be momentarily injudicious to advocate an incremental increase."

The staff person said, "I don't get it."

The official replied, "That's right."

Say what?

Many of us have experienced funny situations when it comes to language.  This is particularly true when it comes to speaking and understanding foreign languages.  In consulting with many organizations over the last number of years, there are people talking about similar topics at the same table in conference rooms but they are speaking in different business languages.  While funny in social contexts, not understanding and speaking a common language in a business environment can create confusion and disengagement.  Often there are much more significant consequences in the form of customer, financial, and operational inefficiencies and loses. 

If supply chain is the most strategic asset available to the C-suite to achieve corporate objectives, then the team needs to be able to effectively communicate—that is talk, listen, and understand the same content with the same meaning. 

To begin getting to a common language, let’s first understand The Four Languages of Supply Chain. 

1. Dollars 
2. Metrics 
3. Process 
4. Projects

These are spoken in cascading order through the organization by four people groups.  

1. C-suite 
2. Vice presidents 
3. Managers 
4. Frontline personnel

We can look at this model in a picture format.

These languages are not contained in defined boxes.  There is some understanding across these groups but there is a primary vernacular for different segments of the business.  

So what

Different supply chain language dialects impact timely and effective business decisions.  Revenue, customer service, and profitability are all opportunities or risks.  Sales and Operations Planning (S&OP) meetings are the common place where this can be measured most easily.  Just listen to the language being spoken.  The meetings are often filled with the next 12 weeks worth of firefighting topics primarily in the languages of process and projects.  Questions are often asked about the lack of C-level sponsorship.  There is little to no content shared in the language of finance and thus little involvement.  Unfortunately, decisions are made in other limited exposure sessions that leave the balance of the supply chain team confused and frustrated. 

Gartner's executive survey identified growth as the CEO's top priority, yet this research found only 14 percent of supply chain leaders feel they are recognized as revenue growth generators.¹ While the CEO and CFO mandate growth, achieving a more strategic relationship with the rest of the business remains an elusive goal for many supply chain executives. 

Gartner research recommends strengthening and communicating the case to drive business growth to internal business partners to show how the supply chain strategy aligns with the business strategy to promote growth.² To do this, the communication will need to be in the language of finance rather than operational or process metrics such as pallets, units, boxes, or widgets. 

Speaking a common language will require an understanding of the links between operational metrics and financial performance metrics.  We will look at a few of these primary models in the coming weeks to begin building a bridge in establishing a common supply chain financial language.

  

(1)   “CEO and Senior Executive Survey 2013: Supply Chain Implications to Support Global Growth Goals” March 2013

(2)   “Survey Analysis: Chief Supply Chain Officers Conquer Organizational and Capability Challenges to Grow” November 2013