The 7 Principles of Supply Chain Management

The most requested article in the 10-year history of Supply Chain Management Review was one that appeared in our very first issue in the spring of 1997. Written by experts from the respected Logistics practice of Andersen Consulting (now Accenture), "The Seven Principles of Supply Chain Management," layed out a clear and compelling case for excellence in supply chain management. The insights provided here remain remarkably fresh ten years later.

By David L. Anderson, Frank F. Britt, and Donavon J. Favre -- Supply Chain Management Review, 4/1/2007

*Principle 1: Segment customers based on the service needs of distinct groups and adapt the supply chain to serve these segments profitably.

*Principle 2: Customize the logistics network to the service requirements and profitability of customer segments.

*Principle 3: Listen to market signals and align demand planning accordingly across the supply chain, ensuring consistent forecasts and optimal resource allocation.

*Principle 4: Differentiate product closer to the customer and speed conversion across the supply chain.

*Principle 5: Manage sources of supply strategically to reduce the total cost of owning materials and services.

*Principle 6: Develop a supply chain-wide technology strategy that supports multiple levels of decision making and gives a clear view of the flow of products, services, and information.

*Principle 7: Adopt channel-spanning performance measures to gauge collective success in reaching the end-user effectively and efficiently.