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Six lessons in supply chain strategy from Genghis Khan

BOSTON/LONDON: Supply chain strategy can be a squishy topic. Basically, we try to keep costs down and service up, but what does this really say about how to win in a competitive business? Working harder at the same things is not a sustainable strategic advantage.

True strategy means finding ways to use and combine tactics and resources to achieve a goal in conditions of uncertainty. For supply chain leaders, it demands thinking laterally about everything that happens from the customer back and then placing bets to gain an operational edge.

In addition to modern thinkers like Peter Drucker and Michael Porter, some of the best lessons on this topic come directly from the playbook of Genghis Khan, the 13th century Mongol who conquered nearly all of Eurasia.

Here are six that apply today.

1. Use the skills of others. The Mongols made no products, farmed no crops and built no buildings, but still saw the value of engineers, miners, doctors and scholars. Specialists like these were not only spared death, they were pressed into the Mongol army for use in campaigns everywhere with devastating effect.

In supply chain this means seeing skills, however unfamiliar, as potential competitive weapons. Are there data analysts in your company’s marketing department who can help with network modeling? Are there logisticians at your 3PL who can assist with product postponement techniques?

2. Communication is essential to power. Having armies spread over thousands of miles led Genghis Khan to establish a sort of Pony Express that was designed and maintained centrally. It was fed by a diverse set of legacy communication systems meant for shorter distances including torches, flags, smoke and whistling arrows.

For supply chain leaders the modern must-have equivalent is something like an SAP backbone with solid master data and good integration to various point systems. Without such a system, speed, consistency and ultimately authority are all lost in a global supply chain organization.

3. Embrace technology. In the year 1206, when Genghis Khan was born, his tribe had no metal and lived in felt tents. Fifty years later, they had mastered siege technologies like catapults and trebuchets as well as early firearms and cannon. Critically, they wedded these new technologies with traditional steppe battle techniques based on speed and surprise. The result was an unbroken string of victories from Baghdad to Bukhara.

Supply chain leaders considering advanced automation, 3D printing or artificial intelligence should look for technology that changes the game, but less as a substitute than a complement to existing capabilities. 3D printing, for instance, may be worth more to transform a manufacturing process than just as a cheaper, faster way to prototype.

4. Never stop learning. Genghis Khan’s genius was not the result of some epiphany but came rather, in the words of biographer Jack Weatherford, “from a persistent cycle of pragmatic learning, experimental adaptation, and constant revision”. His mission to preserve and protect the Mongol people stayed true, but his approach was ever changing.

For supply chain strategists this quote sounds eerily like something one might hear about Jeff Bezos, a leader whose willingness to make mistakes along the way is deceptive since the onward march of Amazon seems inexorable. Continuous improvement without stretch is meaningless.

5. Cherish diversity. Atypically among history’s great empires, the Mongols allowed complete religious freedom and employed almost all of their conquered peoples’ best minds in the imperial administration. In part this arose from respect for others’ ideas, but more important was the institutional strength conferred by diverse perspectives on matters of governance.

Many supply chain leaders today are working to retrofit diversity into their operations. Some like Intel, Kaiser Permanente and Merck are ahead and beginning to see benefits of better decision making.

6. Swallow your pride. Genghis Khan cared nothing for appearances and would often feign retreat to draw enemies onto more favorable ground. This is the exact opposite of what he encountered in Germany, Poland and Hungary where 125,000 knights in shining armor died foolishly chasing the Mongols.

For supply chain people this is a vital lesson. You may always be right, but giving in is sometimes the best way to win an argument.

-  Author Kevin O'Marah is the chief content officer at research institute SCM World

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