Six Tips for Developing an Effective Center of Excellence

If your business is undergoing significant change, has fluctuating levels of complexity or multiple independent supply chains, it’s hard to achieve supply chain alignment across divisions. Essentially a center of competency, a center of excellence (CoE) focuses on supply chain design and flow-path analysis, route planning, inventory deployment and related analytics to bring supply chain silos together across an organization. A CoE is an asset that produces long-lasting benefits.

Fast-moving consumer goods (FMCG), consumer packaged goods (CPG), retail and electronics companies are especially prone to vulnerable, misaligned or fractured supply chains. But they can also benefit from setting up a supply chain center of excellence (CoE). CoEs strengthen supply chains by optimizing operations and inculcating enterprise-wide best practices for companies that sell across multiple channels, serve volatile or shifting markets, conduct frequent contingency planning, develop supply chain strategies to address ecommerce demands or need to build a unified, optimized post-merger-and-acquisition supply chain.

How to get your CoE up and running

1. Start with a CoE readiness assessment. Ask yourself some key questions: Do you have both the critical mass of work and the financial resources required to justify establishing and maintaining a CoE? Are you capable of developing high-performance teams? Can your culture attract, mentor, develop and retain people with analytical skills in mathematical, inventory, network-design or transportation modeling and mentor, develop and keep these highly skilled professionals?
2. Ensure strong executive sponsorship and guidance. Your CoE will need leaders with both technical and soft skills and strong executive sponsorship and guidance, or the CoE won’t thrive. Your high-performing CoE team needs to report to a senior-level executive sponsor who has the power to carve out time to focus on supply chain improvement projects.
3. Provide good analytical tools. We often task the CoE team with reviewing different supply chain technologies and analyzing critical technology gaps and priorities for the organization’s short- and long-term supply chain needs and business requirements. CoE experts will analyze a supply chain solution’s time to value, its return on investment (ROI) and the time needed to close capability gaps. They’ll also be able to address business-critical issues, like linking supply chain technologies and strategies to large customers’ needs and demands.
4. Bring core CoE team members together in one place. Can you run your CoE from a centralized location? Your CoE team can be more effective when co-located, ensuring both their credibility and the most efficient use of this limited talent pool.
5. Develop a clear and meaningful career path for CoE team members. While many companies guide would-be supply chain executives through rotations in functions such as inbound logistics, distribution and procurement, a better career path for CoE experts challenges their technical competency and protects those rare and valuable members who have both strong technical skills and high management acumen.
6. Know when to call in reinforcements. Short timelines sometimes accompany demanding CoE projects, and almost any team can become overwhelmed or confront a technical challenge beyond their expertise. When a project’s demands outstrip capacity, or when projects differ from those the CoE has previously managed, CoE leaders may want to consider supplementing the center’s capabilities with external resources.

If you determine you have the right business needs, culture and resources, the potential benefits of establishing a supply chain center of excellence may well justify the cost and effort.

— By Jonathan Whitaker