Best Practices in the Supply Chain: Three Levers that Ring Up Solid Bottom-Line Improvements

In recent years, many companies have been focusing on achieving productivity gains in their internal operations. Most have improved internal processes, reduced overheads and eliminated redundant activities. With TQM, Six Sigma and other related methodologies, they have improved the quality of their products and services and rid their operations of profit-reducing mistakes. Many companies have introduced Enterprise Resource Planning (ERP) systems and other productivity-improving forms of information technology, albeit with sometimes-mixed results. As worthwhile as these initiatives have almost certainly been, however, the 80-20 rule would suggest that companies will ultimately begin to run into declining returns in their further efforts to improve internal operations. For some companies, 20 per cent of the most promising internally oriented initiatives may already be delivering 80 per cent of the potential gains to be had. Fortunately, realizing productivity improvements at the edge of the enterprise — at the interfaces with customers and suppliers — represents a largely untapped frontier of opportunity.

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