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Our Take: Gartner Center of Excellence Research – Part 1

By Mike Detampel  August 26, 2015

Last spring Gartner released research on the implementation and success of “centers of excellence” in the supply chain industry (“Centers of Excellence Are Critical Enablers of Success in Supply Chains”, 21 April, 2014, Ken Chadwick). Their findings demonstrated the value of the model as those who have implemented centers of excellence can cite the following results:

  • A broader supply chain span of control
  • Are more often viewed as “partners to the business”
  • Have greater implementation of more advanced supply chain practices such as segmented supply chains, end-to-end business planning or product/service portfolio management
  • Report greater success in meeting their goals with respect to revenue, margin and return on assets
  • Are twice more likely to have their revenue and margin targets than those without a COE

It’s well established that centers of excellence offer organizations wide-ranging benefits and LLamasoft has been helping organizations of varying sizes and industries implement the right supply chain design center of excellence for their team. But what this term really means and the best plan for execution differs from organization to organization. And while the Gartner research focuses on supply chain centers of excellence more generally, LLamasoft believes we can narrow the scope even more to supply chain design centers of excellence.

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So why are companies considering supply chain design centers of excellence and what are the basic tenets of the practice?

One key reason is to move from ad-hoc project based design to adopting supply chain design as an ongoing business process. This move to offer numerous benefits from being able to track long-term initiatives and progress, to having actionable data at-the-ready to launch a new strategy as well as having visibility into the supply chain to regularly make adjustments to drive savings in cost, service, sustainability and risk. Check out our Ebook “Ten Tips to Elevating Supply Chain Design from Project to a Differentiating Business Process” to learn more.

Another is the leverage best practices across business units and geographies. By centralizing your supply chain design teams through a center of excellence, organizations gain visibility of their supply chain across various business units, geographies and ultimately, enterprise-wide. This can allow leaders to identify some best practices to apply to the broader team.

Organizations can reduce “time to value” by leveraging proven/validated models, processes and data sets. With centralized data that is consistently updated to reflect real-time use there is no longer the need for the laborious and long process of collecting and preparing data whenever you want to launch a new project. This allows teams to more quickly and accurately calculate results and put models to practice.

COEs enable organizations to build internal competence to reduce reliance on external resources and build a deeper supply chain design “bench strength”. We often talk about the value of the people part of a successful supply chain design and it cannot be overlooked. Building the right training programs, career paths and coaching are essential to get your team up to speed and keep them.

And lastly, COEs can help organizations remove resources from day to day execution to make room to look down the road and scale the business. In order to make large-scale improvements businesses need to be able to take the time to analyze the big picture. By creating efficiencies in the day-to-day, you will have the freedom to think bigger.

In part two we’ll examine potential challenges and considerations when preparing to launch your own supply chain design center of excellence.