Supply Chain Management and

Cross Functional Teams

Cross function teams (CFTs) can be defined as the collaboration of experts with different
technical and functional knowledge to solve a complex problem or complete a complex
task. In a best practice organization CFTs are the normative method of doing business.
Supply managers must understand the purpose and composition of CFTs, and how best
to manage them.
CFTs have been applied to supply management for a variety of purposes. They include:

General Project
Procurement (RFB/RFP)

Commodity

Product Development

Process Improvement

Quality Assurance

Strategic Alliance

Supplier Assessment

In general CFTs come in three different variations: project, continuous and virtual. Each
is defined below:
Project teams have a defined beginning and end point. They are created to address a
specific problem that needs to be resolved. Key tasks of the team include planning,
scheduling and control. Like any project the team's performance is evaluated as a
function of how well it has managed cost, time and project scope. Project teams are
often used during a reengineering initiative.
Continuous teams are on going having no set ending date. They tackle a series of
problems and processes through to resolution. Continuous teams are common in quality
improvement (QI) initiatives.
Virtual teams have a defined beginning and end point. They address a very specific
problem of narrow focus and exist for a short duration of time.

The following illustrates the different applications of CFTs in the supply

management arena:
General Project Examples

Implementation of a Disadvantage Business Program

Design and implementation of supply management system

Procurement/Commodity

Procurement (Project). Completing market price research, supplier selection,

performance criteria, delivery, warranty and other required terms. The completion of a
complex RFP/RFB would be a common example of a project.
Commodity Team (Continuous). These teams address all procurement issues noted
above as well as long-term productivity and quality issues, and long-term market
tracking.
Product/Service Development
Key to the viability of an organization, product and service development presents a
number of opportunities for CFTs to translate an idea/concept to production and then to
market. Contributions from the following technical experts could benefit the effort.

Design
Engineering

Purchasing

Manufacturing

Quality Assurance

Finance

Marketing

Determining the role of supplier(s)

Early supplier involvement

Determining the role of customer(s)

Customer research and/or customer initiated development

Concurrent vs. sequential task completion

CFTs may enable tasks to be completed concurrently resulting in a compressed timeline.

For example, designers and engineers may work together in the creation of a design and
its translation into a prototype. Supply managers may be included at this stage to
research different raw materials or parts (value analysis).

Concept
Design

Prototype

Low-volume manufacturing

There are a number of advantages in using CFTs in product development. They include:

Early problem identification/resolution

Increase/accelerated organizational learning

Customer orientation

Decrease product development cycle

Decrease manufacturing cost

Decrease customer service cost

Process Improvement Examples

Implementation of Procurement Card Program

Improve link between procurement and asset management

Implementing an automation initiative

Quality Assurance.

Best practices mandate that supplier participation be a component of any

serious quality assurance effort.

Supplier Assessment.

CFTs are an effective mechanism in completing supplier assessments. One point of

caution is that a large CFT may intimidate a supplier. It is important that the supplier
understand why specific individuals are included on the team. Benefits of using a CFT
for supplier assessment include:

Increased scrutiny in both depth and scope of the assessment

Raised expectations may lead to improved performance

Distribution of tasks will increase the probability that all assessment related
tasks would be completed.

Organizational learning will increase as a variety of technical experts work

together.

Improved communications both internally and with the supplier

Improved relationships. If relationships are strategic efforts may result in an

alliance1.

Establishing CFTs/CFT Charter. The establishment of an effective CFTs does

not come easily. A methodology comparable to project management should be
followed. Effective teams require executive management support, an
executive sponsor and a clearly defined methodology.

Executive management support must be top level, visible and consistent. The
executive sponsor must be knowledgeable, in a position of influence and
ultimately held accountable for the team's efforts.

The CFT methodology should include a charter. The charter is a plan that documents
critical information and is a point of reference throughout the life of the CFT. Specific
charter components include:

Mission
Goals/objectives

Roles

Authority

Performance expectations

Mission

The mission documents the reason for a CFT's existence. It is a broad statement that
addresses the questions of what must be done, for whom, why and how.
Goals/Objectives
The CFT's goals and objectives must be defined and prioritized. They should be:
SMART (Specific, Measurable, Achievable, Realistic, Time-Based); comprehensible,
meaning that they should be understood by a lay person, document the terms of
deliverables and the desired end results
Roles.

The following roles should be defined.

Executive sponsor

Team leader

Team members

Support

External parties

Authority.

The decision-making hierarchy must be clearly defined. Delegation should be

encouraged as much as possible.

Performance Expectations.

The performance expectations must be aligned to the established goals/objectives.

Budget, timeline and deliverables must be clearly defined.
Methodology. The success of a CFT is dependent on its make up. Appropriate
representation must be achieved. The composition of the team should result from a
needs assessment. The size of the team must be kept to a manageable size. Technical
experts can always be brought into the team as needed.
The team leader should be chosen based on their knowledge of organization, authority
and team management skills. An effective leader must demonstrate confidence without
arrogance, lead by example versus dictation and be an effective communicator.
Member Selection.
Member selection should be based on skills. This is far more important that having
functional representation although the latter may be deemed to be politically expedient in
an organization. Desired skills include technical knowledge, creativity, risk taking, and
the ability to communicate and build relationships. Individuals with a non-political
organizational perspective are best.
Other issues to address in member selection include:

Financial Vested Interest - Suppliers

Vested Interest - Employes (monetary, personal and psychological)

Member Training.

Training is often overlooked. Technical, process and interpersonal skills must

be developed if not already present.

Resource Commitment.

No team will succeed if it is not given the necessary resources to achieve its
goals. Resources include the members, team support (clerical, consultants,
etc.) and expenses (research, travel, equipment, etc.)

Team proximity to one another is important to building a team. Given existing

technology a great deal of work may be accomplished in a virtual environment
(email, teleconferencing and video conferencing). That said, the ability to meet
face to face cannot be underestimated as a contributor to a team's success.

Periodic Team Assessment.

The executive sponsor should conduct regular status meetings. In addition,

benchmarks should have been established in the charter or soon thereafter.
Benchmark reviews must be conducted to ensure progress and to address
any concerns early in the life of a team.

Rewards.

Team members must be cognizant of the rewards inherit with working in a

CFT. They include exposure, career development, public recognition and
consideration for future assignments. Teams should be rewarded as a whole.
Financial rewards must be distributed equitably2.

Supply Management's Role. Supply managers should not wait to be asked to join a
CFT. Supply managers must be proactive, taking the lead to establish teams or to insert
themselves into teams that would benefit from their expertise. Where supply
management issues reside on the periphery (which is less and less often), supply
managers must offer themselves as an on call technical expert to an existing CFT.
1. Strategic Alliance: Bilateral business and technical exchange between buyer
and supplier that benefits both parties. Alliances will maximize leverage and
synergy of resources.
2. Financial rewards may not be available. The public sector does not always
enjoy the same flexibility exercised by the private sector in distributing
bonuses or merit raises.

Supply Chain Management Process

Supply Chain Management Process : Supply chain management is defined as the design,
planning, execution, control, and monitoring of supply chain activities with the objective of
creating net value, building a competitive infrastructure, leveraging worldwide logistics,
synchronizing supply with demand and measuring performance globally.
SCM draws heavily from the areas of operations management, logistics, procurement, and
information technology, and strives for an integrated approach. The theories in Supply Chain
Management include Resource-based view (RBV), Transaction cost analysis (TCA), Knowledgebased view (KBV), Strategic choice theory (SCT), Agency theory (AT), Channel coordination,
Institutional theory (InT), Systems theory (ST), Network perspective (NP)Materials logistics
management (MLM), Just-in-time (JIT), Material requirements planning (MRP), Theory of
constraints (TOC), Total quality management (TQM), Agile manufacturing, Time-based
competition (TBC), Quick response manufacturing (QRM), Customer relationship management
(CRM), Requirements chain management (RCM) and Available-to-promise (ATP).

Supply Chain Management Process

Supply Chain Management Building Blocks
The building blocks of Supply Chain Management are Strategic Planning, Demand Planning,
Supply Planning, Procurement, Manufacturing, Warehousing, Order Fulfillment and
Transportation business processes.

Supply Chain Planning and Supply Chain Execution

1. Strategic Planning Process

Strategic Planning Process involves the strategic supply chain design and strategic sourcing.
Strategic Supply Chain Design Process: Strategic Supply Chain Design is the design, evaluation,
and optimization of the supply chain model used in the planning applications. Every part of the
supply chain such as locations, transportation lanes, resources and products are modeled to
execute planning based on this network. This helps to respond immediately and accurately to the
new developments by tracking alert situations in the supply network.
Strategic Sourcing Process: Strategic Sourcing Process helps to identify a minimized set of core
suppliers with whom to establish strategic relationships, and also define the parameters that
drive procurement execution. Vendor analysis and purchasing statistics are used to evaluate
potential suppliers. Performance management through spend and contract compliance analytics
are also done for enabling the strategic sourcing process.

2. Demand Planning Process

Demand Planning process involves Forecasting, Lifecycle Planning , Promotion Planning and
Consensus Demand Planning.
Forecasting Process: Forecasting predicts future demand based on historical and judgmental
data. Forecasts can be created in using different methods such as statistical methods, causal
analysis, human judgment or combination of all the above. Forecast accuracy can be improved
using statistics and the overall performance management can be analyzed through forecast
accuracy
analytics.
Different statistical forecasting methods are available such as exponential smoothing, holt,
winters, croston, moving average, linear regression, and seasonal linear regression

Lifecycle Planning Process : Life cycle planning involves planning the product life cycle. Lifecycle
Planning simulates based on the forecasting data the launch, growth, maturity and
discontinuation phases of different products.

Supply Chain Management Process

Promotion Planning Process: Promotion Planning Process enables to plan promotions or other
special events separately from the rest of your forecast. Promotion effect is calculated using
causal techniques to measure past promotional impact and projected into designated periods in
the future. Promotion planning can be used to plan one off events such as the millennium,
repeated events such as quarterly advertising campaigns, trade fairs, contests etc.
Consensus Demand Planning Process : Consensus Demand Planning Process creates a
consensus demand plan by integrating all available information. This is a result of combining
various data such as Forecast, Promotions Budgets, Sales plans etc.

3. Supply Planning Process

Supply Planning process involves Safety Stock Planning, Supply Network Planning, Outsourcing,
Distribution Planning, Customer Collaboration and Supplier Collaboration.
Safety Stock Planning Process: Safety Stock Planning Process arrive the appropriate level of
safety stock inventory for all intermediate and finished products at their respective locations to
meet a target service level.
Supply Network Planning Process: Supply Network Planning process calculates quantities to be
delivered to the locations to match customer demand and maintain desired service level.
Outsourcing Process: Outsourcing process enables outsourcing of manufacturing facilities to a
third party, known as the subcontractor.
Distribution Planning: Distribution Planning process determine the best short term strategy to
allocate available supply to meet demand and to replenish stocking locations.
Customer Collaboration Process: Customer Collaboration process allows vendor to assume
responsibility for planning the levels of inventory at the customer location.
Supplier Collaboration Process: Supplier Collaboration Process enables supplier to receive
demand and stock information and performs replenishment planning tasks for manufacturer

4. Procurement Process
Procurement process involves Purchase Order Processing, Receipt Confirmation and Invoice
Verification.
Purchase Order Processing : Purchase Order Processing fulfills the direct procurement
requirements through the sourcing, issuance, and confirmation of purchase orders.
Receipt Confirmation processing: Receipt Confirmation processing informs other departments
about the received and confirmed quantity of ordered goods.
Invoice Verification process: Invoice Verification process receives, enters and checks vendors
invoice for correctness.

5. Manufacturing Process
Manufacturing Process involves Production Planning / Detailed Scheduling, Manufacturing
Execution.
Production Planning / Detailed Scheduling process: Production Planning / Detailed Scheduling
process supports the process of assigning production orders to resources in a specific sequence
and time frame.

Supply Chain Management Process L

Manufacturing Execution: Manufacturing Execution process supports the process of capturing

actual production information from the shop floor to support production control and costing
processes.

6. Warehousing Process
Warehousing Process involves Inbound Processing, Outbound Processing, Cross Docking,
Warehousing, Storage and Physical Inventory.
Inbound Processing: Inbound Processing comprises all the steps of an external procurement
process that occur when the goods are received.
Outbound Processing: Outbound Processing prepares and ships goods to their destination
Cross Docking: Cross Docking Processes merchandise in a distribution center or warehouse
where the goods are brought from the goods receipt directly to goods issue without being stored.
Warehousing & Storage : Warehousing & Storage Processes warehouse internal movements
and storage of materials.
Physical Inventory: Physical Inventory supports all activities for planning and executing the
physical inventory

7. Order Fulfillment Process

Order Fulfillment Process involves the sales order processing and billing business process.
Sales Order Processing: Sales Order processing allows the order entry, pricing, and scheduling
order for fulfillment.
Billing Process: Billing process considers all activities from issuing the invoice to the incoming
payment.

8. Transportation Process
Transportation Process involves the transportation planning, transportation execution and freight
costing processes.
Transportation Planning Process: Transportation Planning process creates an optimized,
executable transportation plan for the enterprise.
Transportation Execution Process: Transportation Execution process covers the complete and
integrated solution process to create, execute, and monitor shipments
Freight Costing Process: Freight Costing process calculates and settles the freight costs.

Procurement and supply management involves

buying the goods and services that enable an
organisation to operate
You may be responsible for sourcing raw materials from suppliers worldwide and bringing them
into the organisation to enable the production of goods for customers. Your role could involve the

procurement of marketing, advertising or IT related services. A company can spend more than
two thirds of its revenue on buying goods and services, so even a modest reduction in
purchasing costs can have a significant effect on profit.

Procurement is the process of getting the goods you need, while supply chain is
the infrastructure (extensive, in many cases) needed to get you those goods.