The Supply Chain Centre of Excellence Advantage

Sam Phipps

Last updated: January 5, 2024 | 4 min
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It’s never been tougher to stay competitive. With the ever-evolving, ever-meandering world of business, you never know what’s around the corner. But whatever it is, being one step ahead will always be a smart strategy.

One step that a huge 80% of businesses have taken is to create a Supply Chain Centre of Excellence (CoE). The reasons there’s been such a huge uptake in specialist functions of this kind are obvious.

Attempting to instil effective collaboration and innovation across your supply chain isn’t easy. But it’s made a far less weighty undertaking when you have a department dedicated to its improvement.

But have these businesses done all they can?
Some only focus on IT. Some on logistics. And some, occasionally, on both.

And while this is an admirable start, it’s highly likely that this limited scope will impede the potential outcome.

A Supply Chain Centre of Excellence should involve and empower your whole company. It should help you train your people and improve your operations. It should help you build more resilient, data-led processes. And yes, it should involve IT and logistics too.

Ultimately, your Supply Chain Centre of Excellence should be intertwined with your business goals. Manage that, and you’ll be on the right path.

However, as with any transformative business journey, the hardest part is knowing where to start.

How can you build a winning Supply Chain Centre of Excellence?

In this article, we’ll delve into the advantages that a supply chain CoE can present to your business. We will explore how it can help you collaborate and innovate. More importantly, we’ll demonstrate how you can create an edge over every one of your competitors.

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What is a Supply Chain Centre of Excellence?

You first need to understand what a Supply Chain CoE is. Whether you call it a hub, a team, a department or a collective, your Supply Chain Centre of Excellence should be a unit of people who work together to drive collaboration, knowledge-sharing and innovation with a ‘supply-chain-first’ mindset.

The primary objective of a Supply Chain CoE is to be a driving force behind supply chain improvement initiatives, aiming to achieve operational excellence, cost savings, improved customer satisfaction and a competitive advantage in the marketplace.

And in your pursuit of improved supply chain efficiency and agility, an effective Supply Chain CoE should enable you to deploy proven best practices and implement standardised processes that you consistently improve upon.

Set up well, it should serve as a knowledge hub, providing guidance, support and thought leadership to various functional areas within the supply chain. However, your Supply Chain Centre of Excellence should also strategise with your company’s other teams and link your supply chain seamlessly with your overall business goals.

What kind of company does a Supply Chain Centre of Excellence suit?

The origins of Supply Chain Centres of Excellence can be traced back to the mid-1990s when one of the world’s largest brands launched its so-called “Horizontal Process Network”. With the core mission of developing “machine equivalent” ways of managing work, the goal was to develop processes that deliver reliable, predictable, repeatable performance, no matter who is doing the work or where in the world it is being done.

The concept of Supply Chain Centres of Excellence has come a long way since then. And businesses across every industry are reaping the rewards of a specialist function for supply chain excellence.

Whether you’re distributing raw materials, parts or finished products, or selling directly to the end consumer, there’s a potential benefit.

It doesn’t matter whether you’re an SME, large enterprise, multinational or conglomerate. Regardless of whether your supply chain operation is relatively small and simple, or is a hugely complicated beast with hundreds of moving parts, creating a Supply Chain Centre of Excellence can yield fantastic results.

How can a Supply Chain Centre of Excellence bring value to your business?

Your Supply Chain Centre of Excellence should be strategic. It should focus on the entire business and wind those bigger goals around the supply chain core. That means identifying top priorities, setting performance targets and KPIs, and establishing a platform for driving improvement across the entire supply chain.

Let’s explore some of the main focus points your Supply Chain Centre of Excellence should cover.

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Process Standardisation and Optimisation

Even in the simplest of businesses, different departments work in very different ways. Add in the complexities of disparate business divisions or international teams, and ensuring consistency is often an uphill battle.

Having one common truth in your supply chain processes eliminates the possibility of missed opportunities or avoidable mistakes. Your Supply Chain Centre of Excellence should enable you to standardise your processes wherever possible.

However, a Supply Chain CoE should also allow you to capture ideas and best practice that deliver results in one area of your business and deploy them with speed to bring value to other areas of your operation.

Collaboration and Communication

Communication and collaboration go hand in hand. And you need collaboration if you’re to revolutionise your supply chain. One department working hard on its own success is great, but in isolation from the wider business, these efforts are ultimately flawed.

Your CoE should actively encourage and facilitate this collaboration. By promoting information sharing, and supporting cross-team coordination, you’ll harbour the capacity to overcome challenges that would never normally be possible.

Innovation and Continuous Improvement

Both innovation and continuous improvement are worthwhile causes to ‘throw your business operations at’. An established Centre of Excellence can help you with both.

You can identify new and emerging technology, investigate proofs of concept, lead pilot projects, or simply set an ethos of learning and education. With a central hub to collect feedback, monitor KPIs and instil actions to correct any missteps, you’ll encourage continuous improvement across the company.

Knowledge Management

People fatigue and staff retention are prominent challenges for many businesses.

As supply chain leaders struggle to keep up with the workload, supply chain professionals are leaving the industry at record levels. With 48% of supply chain leaders now reportedly concerned about the loss of critical skills that low retention rates bring, it’s vital that your business takes every step to capture and enhance the knowledge of your people.

Your CoE should celebrate the sharing of information and facilitate its use throughout the supply chain. Through creating platforms or systems worked into the fabric of your business, you’ll give your people the very best chance of becoming better at their jobs. And the better they are at their jobs, and the more they’re armed with the most up-to-date information and intel, the better your company will be. You’ll also be much better equipped to know where training and development might help to address any skill gaps.

Data Management and Integration

To make effective supply chain decisions, you need a vast amount of data. Typically this data is sourced from across the supply chain, your wider business and even your supply chain partners.

Data management, much like knowledge sharing, is one of the best reasons to develop your Supply Chain Centre of Excellence. You’ll be able to create data governance frameworks, collect and integrate supply chain data and ensure your supply chain actions are driven by real, quantifiable insight. You should find that efficiency, agility and competitiveness are all increased as a result.

Change Management and Transformation

You cannot expect to achieve game-changing performance improvements without revolutionising the way your supply chain works. However, forging change rarely comes easy.

By recognising these challenges and addressing them proactively, your Supply Chain CoE should help you to navigate the complexities of change, minimise resistance, and ensure a smooth transition to a transformed and optimised supply chain.

Through providing strategic guidance, stakeholder engagement, training, performance measurement and continuous improvement, a Supply Chain CoE should play a pivotal role in your transformation journey.

How to set up your Supply Chain Centre of Excellence for success

Arming your business for success with a Supply Chain CoE is an obviously beneficial undertaking. But it doesn’t happen quickly or easily.

It takes multiple stakeholders, a lot of effort, the desire to improve, investment and time. But wanting to improve is a worthy goal. Here’s a checklist for getting started.

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1. Set a clear mission

“Taking over the world” might work well as a plan for an evil genius, or a secret ambition you write in your diary, but it won’t pass muster as a mission for your Centre of Excellence.

You need a mission that’s clear, measurable and achievable.

Your mission should harmonise your company’s goals and desires with effective supply chain actions. It should provide direction and define a focus that everyone can see and get behind.

With a well-defined mission your smaller goals will be easier to contribute to the bigger plan. However, without a clear mission, the goals you set will be flimsy. Your resources won’t be allocated sensibly, and your performance metrics will either be wrong or misplaced.

But use your Centre of Excellence to support your mission, and you’ll find a guiding principle to drive the company’s success. Success that ultimately will be much easier to achieve.

2. Measure the current state of play against your desired outcome

You won’t understand how achievable your goals are if you don’t appreciate where you are at now. Your knowledge of the status quo is crucial to your future insight.

You’ll find a much deeper appreciation of how lofty your targets are, and whether they can actually be accomplished.

Starting or improving your Supply Chain Centre of Excellence must begin with facts, not assumptions. Just by taking stock, you’ll find gaps, areas for improvement and inefficiencies you otherwise wouldn’t have spotted. More importantly, you will understand where the pains and priorities lie.

And once you know everything you can about where you are, a roadmap to success will be easier to develop.

3. Attain Management buy-in

Developing a strategy to higher performance requires every leader in the business to be a cheerleader for the new strategy and the goals. The former facilitates the latter.

You need every bit of help you can muster in this project. Have it, and you’ll be far more likely to succeed. With the support of your Senior Leadership Team, your Centre of Excellence will have greater credibility across the business, and resources will be easier to attribute to the cause.

You won’t be able to find success without the right budget, support, talent and technology. And if the Board and Department Leaders aren’t fully behind the plan, you might find those harder to come by.

Get the Leadership Team on board, and you’ll find other staff further down the chain of command far more likely to contribute.

4. Win the hearts and minds of your people

View this centralised function very much as an ‘all-hands-on-deck’ approach.

Once you’ve got buy-in from management, it’s critical to filter that enthusiasm down the chain to give you every chance of success.

If your Centre of Excellence has investment, support and faith from every member of staff, you’ll all be working towards the same goals, with a shared understanding and a strategy that aligns with your overarching ambition.

And that might well be enough for you to take over the world. Or at least your market.

But fail to win the commitment of your employees, and you can forget reaching that goal altogether.

It’s also fair to say that just because someone isn’t in a management role doesn’t mean their ideas and concerns aren’t worth listening to. You never know who might contribute worthwhile details until you give them a chance.

Widespread adoption and acceptance are key requirements for your Supply Chain Centre of Excellence. Attain them and you’ll be well on your way to success.

Final thoughts on your Supply Chain Centre of Excellence

If you’re one of the 80% of businesses who’ve already started developing your Supply Chain Centre of Excellence, you’ll be well on your way to understanding the benefits it can provide.

But the likelihood is that there’s still some way to go before its potential is maximised. It’s not an easy task. But as we’ve shown here, it’s an incredibly worthwhile goal for any company which relies on its supply chain operation to create competitive advantage.

A firing Supply Chain CoE can transform your business, by helping you acclimatise to change and find the edge over your competition.

It’s not enough to do just a quick check in with your supply chain team at the end of board meetings. For their goals are your goals.

And the realisation of that sets the understanding of its importance for every single stakeholder in your business.

So, share the strategy and the drivers. Ask for feedback. Collect data. Develop change management techniques. Learn. Adapt. Share successes and work around failures.

Change is the only thing you can rely on in today’s business landscape. Once you appreciate that, you’ll see the power a Supply Chain CoE can give you.

And if you need guidance in starting down this path, Slimstock can help. Speak to one of our experts about building your own Supply Chain Centre of Excellence, right here.

Supply chain centre of excellence FAQs

What is a supply chain centre of excellence (CoE), and how does it differ from a traditional supply chain operation?

A supply chain Centre of Excellence (CoE) is a dedicated and specialised team or unit within an business that focuses on driving strategic initiatives and best practices with a supply chain first mindset. Unlike the traditional supply chain set up, which focuses on day-to-day operational tasks, a supply chain CoE takes a more holistic and strategic approach. It serves as a hub of expertise, knowledge, and innovation, providing guidance, thought leadership, and support to the broader supply chain organization and wider business. The CoE aims to optimise processes, develop and implement new strategies and leverage technology advancements to continuously improve supply chain performance.

What are the key objectives and goals of establishing a supply chain CoE?

The primary goal of a supply chain CoE is to align the supply chain strategy with the broader organisational vision. Focusing on standardising processes, streamlining workflows, implementing best practices and fostering innovation and collaboration, a supply chain CoE should position the supply chain function as a strategic enabler for the overall success of the business.

What strategic benefits can be derived from implementing a supply chain CoE?

Implementing a supply chain Centre of Excellence (CoE) can yield several strategic benefits for organisations including:

  • Enhanced operational efficiency
  • Increased agility and responsiveness
  • Improved collaboration and knowledge sharing
  • Greater risk resilience
  • Enhanced customer satisfaction

What role does technology play in supporting the activities of a supply chain CoE?

Supply chain technology plays a crucial role in supporting the people, process and initiatives that make up a supply chain Centre of Excellence (CoE). Technology solutions such as supply chain planning systems, advanced analytics tools, and automation software enable efficient planning, execution, and monitoring of supply chain activities. More importantly, technology should facility better communication and collaboration, create visibility and enable continuous improvement.

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