Table Of ContentDYNAMIC SUPPLY CHAINS ARE AT THE HEART OF 3RD EDITION 3RD EDITION HOW TO GROW YOUR
YOUR BUSINESS. YOU NEED TO GET THEM RIGHT. BUSINESS WITH DYNAMIC
SUPPLY CHAINS
Are your supply chains equipped to compete for a faster, more fl exible future?
Supply chains are not just part of your business: in many ways they are your
John Gattorna has been working in and around Supply chains are at the heart of competitive advantage
business. They are made up of living, active people, and to really get supply
corporate logistics networks and enterprise supply in business today. If you manage your supply chains
chains for over three decades. In the late ‘80s, chains right you need to capture the dynamism that people can bring to the successfully, you will be able to deliver your products
disenchanted with the lack of predictive power in the fl ow of goods and services, both inside and outside your business.
and services to your customers in a smart, cost-
logistics theories and practices of the day, he set out to
effective way. And the key to successful supply chain
In this third edition of Dynamic Supply Chains, renowned international expert
fi nd a new business model that would better inform the
management is recognizing that supply chains are so
design and operation of enterprise supply chains. And John Gattorna gives you a practical and effective new model for supply chains
much more than warehouses, transport and technology.
he succeeded. It has taken a lot of fi eld work to uncover that will help you get closer to your customers and suppliers, and set your
In fact it’s people who really drive the dynamic supply
the secret sauce he was looking for, but the results of business on a new path to growth. John’s ‘outside-in’ philosophy is based on
chains that are at the heart of your business. To make
this journey are fully documented in this, his latest book.
‘Design Thinking’ principles, underpinned by business analytics, visualization,
the most of them, and deliver what your customers want,
Those familiar with John’s work freely acknowledge that and the passion to get things done. This is indeed, supply chains by design.
when they want it, you need John Gattorna’s dynamic
he is one of the most infl uential contemporary ‘thought
alignment model.
leaders’ working in the supply chain domain. Indeed,
many of the best global companies have already started
to adopt his ‘dynamic alignment’ model, with signifi cant “ There really isn’t any other work of this calibre generally available to senior supply This new edition of Dynamic Supply Chains, which has
positive results: a doubling of margins; big increases in chain executives without spending millions on high-end consulting and strategy been completely revised and updated, includes four
sales revenue through increased customer satisfaction; consulting engagements.” new chapters on:
and lower cost-to-serve across the board as a result of
DONALD A. HICKS,
identifying and eliminating unnecessary over-servicing. (cid:127) Campaign supply chains, which covers the unique
Founder, President & CEO, LLamasoft, Inc.
How to design, build and issues facing large-scale capital projects and the
John’s books have been translated into Chinese,
challenges of linking suppliers and project sites
Russian, Spanish, Portuguese, Polish, Romanian, Korean,
manage people-centric
“ Dynamic Supply Chains impressively captures the way any business must reinvent
Japanese and Italian. Apart from being a prolifi c writer (cid:127) New outsourcing business models that drive value
its supply chains in today’s volatile, uncertain and complex world.”
on the subject, John teaches at several universities value networks
around the world, speaks regularly at international (cid:127) Service sector supply chains and why they should
PIER LUIGI SIGISMONDI,
conferences, and advises boards and the C-suite of adopt the practices that have been more readily
Chief Supply Chain Offi cer & Executive Board Member, Unilever PLC
JOHN GATTORNA
several multi-national companies on how to apply accepted for tangible products
alignment principles to their businesses.
(cid:127) The major supply chain issues facing enterprises
“ Gattorna’s thought-provoking book is a must-read for business professionals.”
John lives in Sydney, Australia, is married, and has G J over the next decade, including the challenges
two sons, two granddaughters and two grandsons. YACOOB PIPERDI, A O posed by growing customer expectations for
Previous books by the author: Executive Vice President (Gateway Services), SATS T H sustainability and corporate social responsibility
T N
Managing the Supply Chain: a strategic perspective, £45.00 O
1996 (with David Walters), Palgrave Macmillan Business. BUSINESS
R
Living Supply Chains, fi rst edition, ISBN 978-1-292-01681-8 N
2006, Financial Times Prentice Hall.
A
Cover design: Rob Day
Dynamic Supply Chain Alignment,
2009, Gower Publishing. Visit our website at
“ Dynamic Supply Chains is a masterpiece
www.pearson-books.com 9 781292 016818
Dynamic Supply Chains, second edition, in the fi eld of supply chain management.”
2010, Financial Times Prentice Hall.
Dr Rakesh Singh, Chairman, Institute of
Visit our website at
Supply Chain Management, India www.pearson-books.com
FTP_T_234x153_FLAPS.indd 1 25/02/2015 21:26
Praise for Dynamic Supply Chains
‘With 40 years of experience in supply chain development, John Gattorna still is one of
the most important thought leaders in the domain. Not only is his broad experience on
show in this new book, but also his clear thinking about the development of supply chain
management, which is truly dynamic. This requires clear leadership from current and
upcoming supply chain executives. For them, and also for their colleagues with other
functional expertise, this book is an excellent guide to the (near) future of supply chain
management and potential success of their organization.’
Edwin Tuyn, Founder and Managing Director of Inspired-Search
‘John Gattorna has been studying supply chains for as long as they have existed in their
modern-day manifestations. He has followed, interpreted – and indeed influenced – the
dramatic ways in which operating environments and business models have changed over
the years. His book reveals deep knowledge and understanding of our multi-faceted and
complex supply chain universe. Gattorna’s book should be read by all practitioners.’
Dr Victor K. Fung, Group Chairman, Fung Group; and Founding Chairman, Fung
Global Institute
‘This 3rd edition of Dynamic Supply Chains, is comprehensive and an easy read about
leading-edge supply chain techniques and methodologies. The combination of thought
leadership insights and best practice examples provides the reader with knowledge and
inspiring input on how to create competitive advantage through the application of supply
chain management.’
Bo-Inge Stensson, Senior Vice-President Purchasing, SKF Group
‘Does our future depend on supply chains? For over 40 years Professor John Gattorna
has answered in the affirmative. But never without questioning the nature and evolution
of supply chain design in an increasingly complex and interdependent global economy. In
this book, Professor Gattorna draws on a deep well of research and experience to provide
a unique understanding of supply chains which incorporates a “dynamic alignment”
framework linking market conditions, strategic choices, internal capabilities and effective
leadership behaviours. The objective is to move thinking from the “logistics operations”
mind-set of the 1980s to a more comprehensive “business transformation” mind-set, taking
into account pressures for sustainability and corporate social responsibility. The book has
been written to be as accessible to the practitioner as it is to those with a more specialized
academic interest. It succeeds on so many levels as the culmination of the author’s “journey
of discovery through the maze of logistics and supply chain networks that pervade our lives”,
and can be strongly recommended as such.’
Professor Roy Green, Dean, UTS Business School, University of Technology, Sydney
‘Dr Gattorna’s thought-provoking book is a must-read for business professionals.
He articulates an insightful, practical and congruous work-culture roadmap which
invariably will help many companies in different businesses to achieve significant levels of
success. Dr Gattorna demonstrates a practical approach towards implementing a resonant
and profitable supply chain. I thoroughly enjoyed reading the book.’
Yacoob Piperdi, Executive Vice-president (Gateway Services), SATS
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‘The ever increasing speed of change in customer requirements makes it impossible for
companies without dynamic supply chain capabilities to be competitive. John’s latest book is
the perfect handbook for C-level and Supply Chain executives, describing the alignment of
your supply chain, to ever changing customer requirements. The new insights into strategic
supply chain management are also of great value.’
Burger van der Merwe, Director, Pick n Pay
‘Businesses have been shifting to “horizontal” for decades – eroding the conventional
one-size-fits-all and pyramid views. Supply chains are a key driver of this shift, changing
everything – boundaries in and between organizations as well as how we conceptualize,
design, work in, and lead enterprises. And, even though technology and capital play a big
role, the secret ingredient is the human side of the enterprise. John understands this and
puts his deep knowledge to work in this wonderful and accessible book that is really about
the emerging enterprise and how to ensure its success by an intelligent and multi-strategy
weaving of technology, relationships, people, and assets. Leaders at all levels as well as people
in the supply chain need these insights and knowledge.’
Patricia McLagan, author of Change is Everybody’s Business and The Age of
Participation: New Governance for the Workplace and the World
‘Anyone who has led a company and/or worked in what we traditionally call the “Supply
Chain” function knows that human behaviour is at the core of making things work. In
his thinking John brings in some of the most poignant observations on how culture and
behaviour affect supply chain efficiencies. When you hear of the challenges in IT system
implementations in the supply chain, they generally lead you to people, structures and of
course leadership. “Supply Chains are your business.”
The Dynamic Supply Chains framework is detailed and implementation focused, but will
take you time to fully understand and digest. To start understanding our world, firstly it
is really important to be alive to the fact that we deal with multiple supply chains within
our o rganizations, even with a ‘seemingly’ homogenous customer base. The second is that
systems must be designed and people must be aligned to deliver to these differing pulls from
our customers. The good news is that there are five dominant types of such customers that
we need to deal with, which John goes into great detail to describe and investigate.
This is a must read for individuals designing new supply networks, diagnosing the
effectiveness of their current operations, or leading transformational efforts in any part
of their businesses. In this latest edition John brings “Campaign supply chains – how to
deliver in full on time to project sites” which is an important new addition to our Supply
Chain thinking.’
Vivek Kamra, President and CEO, NatSteel Holdings Pte Ltd
‘Dynamic Supply Chains impressively captures the way any business must reinvent its supply
chains in today’s volatile, uncertain and complex world. A real business view about agility
and responsiveness that can only be provided by a veteran like John Gattorna.’
Pier Luigi Sigismondi, Chief Supply Chain Officer and Executive Board Member,
Unilever PLC
‘In Dynamic Supply Chains, John deftly illustrates the multiple iterations of supply chain
models while cautiously underscoring the urgency of designing with the end goal in mind.
His unique and fresh perspective on dynamic supply chains is a cogent read for senior
leaders who need their value chains to drive continuous, customer-driven growth.’
Kevin Brown, Chief Supply Chain Officer, Dell Inc.
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‘Should you transform your supply chain? Which supply chain should you design and adapt –
Collaborative, Lean, Agile, Campaign, Fully flexible or a hybrid? Is your supply chain balancing
an “outside-in” perspective with the reality of your internal culture and capabilities? And can
you lead the dynamic supply networks needed for success in today’s turbulent global business
environment? The latest edition of John Gattorna’s book answers these and related questions
with clarity, brilliance and the authority of deep practical and theoretical knowledge. It is a
MUST read for any corporate leader since the implications of the book go beyond the traditional
field of logistics and supply chain, to the needed transformation of most businesses.’
Yoram (Jerry) Wind, The Lauder Professor of Marketing, Director, SEI Center
for Advanced Studies in Management, Academic Director, Wharton Fellows
Program, The Wharton School, The University of Pennsylvania
‘This book is not only a remarkable historical survey about the evolution of supply chains,
but Gattorna also gives us a focused view in the different and heterogenic layers of corporate
actors and framework conditions. This all leads to an innovative and convincing analysis and
development of a dynamic approach for the explanation of the supply chains at the time.’
Professor Dr-Ing Herbert Sonntag, Head of Transport Logistics, TH Wildau,
University of Applied Sciences
‘In a world of pundits and talking heads, John Gattorna is the real deal. He’s the voice and
the vision that CEOs are listening to and thinking about to get ahead of the competition.
Many leading organizations around the world have started to realize that truly
understanding the nature of demand is the key to designing resilient and robust supply
chains. What they don’t understand is that John has spent decades fleshing out the
implications for technology, strategy, and even organizational design. Dynamic Supply
Chains lays out these strategies like a blueprint for enterprise excellence. Save yourself
millions on consulting strategy and read this book.
John Gattorna is unique among thought leaders in the supply chain space. In this 3rd
edition of Dynamic Supply Chains, John continues to define and refine his insight and wisdom
regarding how to design supply chains and organizations around the concept of segmented
demand signals. This would be important theoretical work, but John bases his framework
and design imperatives on actual case studies and real companies. He has n umerous
examples collected from senior executives and CEOs. John Gattorna’s work bridges and
synthesizes the theoretical and practical, making this book an invaluable resource.
There really isn’t any other work of this calibre generally available to senior supply chain
executives without spending millions on high end consulting and strategy consulting
engagements. John Gattorna’s Dynamic Supply Chains stands out as a truly invaluable
mountain of knowledge, observations and guidance for those who want to transform their
supply chain organizations in the future.’
Donald A. Hicks, Founder, President and CEO, LLamasoft, Inc.
‘Dynamic Supply Chains is a masterpiece in the field of supply chains. It will broaden the
understanding in terms of designing the right supply and delivering value through people. It will
help Supply Chain leaders to build ‘outside-in’ capabilities in their supply chains. It will widen
and deepen classroom teaching, and add a much needed systems view to discussions and
learnings.’
Dr Rakesh Singh, Chairman, Institute of Supply Chain Management, India
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‘Those of us that have drunk the Dynamic Alignment Kool-Aid know that the design and
management of an enterprise supply chain is not just another functional responsibility
within the business, it is the business. John Gattorna’s thinking brings clarity to the need for
supply chains to be the operational catalyst for aligning the enterprise to the ever-changing
buying preferences and behaviours of customers. Further, the beauty of this “next chapter”
of Gattorna’s model is that he now more clearly defines the importance of balancing
flexibility with the need for creating clear pathways for delivering on the many discreet value
proposition commitments made across markets. John does not pretend this is a simple
A + B = C formula – without compromise or apology for complexity, he more strongly than
ever before demonstrates that supply chain performance reflects leadership’s understanding
of the customers they serve and their willingness to invest in resources and networks that are
accountable to delivering on their promises.
This book is not about creating new terminology or processes – John’s breakthrough is more
based on creating parameters for supply chain design thinking. That is, he provokes leader-
ship to be less dependent on traditional organizational rules or boundaries, and to raise their
consciousness for the importance of having a culture and operating model that can respond
as needed to today’s “new normal”. So, if you buy into the theory that your supply chains
will continue to be uniquely challenged by the ongoing advancement and volatility of the
customers and markets you serve, you will find this book a bridge to helping you lead your
organization into a future where supply chains are considered the “transformation engine” of
the enterprise.’
Bill Marrin, Executive Director, World 50
‘John has cracked the code in the same way that Billy Beane of the Oakland A´s and
Paul Azinger in the 2008 Ryder Cup did in their fields. But here he has done it for a
customer-centric supply chain. He puts the customer at the heart of everything, and then
builds the supply chain around customer behaviours, with a number of different s olutions
based on this behaviour that runs through the whole supply chain from the customer,
through the sales organisation, manufacturing, right back to suppliers.
The trick is not the alignment of this behaviour, but rather how the organization builds
multi-functional teams aligned to these behaviours, by focusing on organisation design,
the people that fit into these chains, and aligning individuals’ natural behaviours with the
behaviour of the supply chain. And then be able to dynamically re-adjust and re-configure.
The book contains some fantastic examples, from the lowest cost, most basic, but highly
efficient and effective supply chains of the Dabbawalas of Mumbai, through to the most
expensive example of Formula 1, via the most sophisticated supply chain that is Inditex, with
its global Zara brand.
We have here the most complete set of analysis and solutions for today´s business ecosystem,
that must adapt to its customers and be constantly adapting to meet their changing needs.
It offers a complete set of tools to analyse our supply chains and develop solutions to gain a
competitive advantage.
This is the most insightful book ever written on supply chains. Fact.’
Duncan McIver, VP Operations Iberia, General Cable Corporation
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‘It was a pleasure reading this book. John has done an outstanding job of framing chal-
lenges and complexities that leaders are facing today. His usable approach to dynamic and
tailored solutions to address complex supply chains is most valuable. I like the emphasis
on strong organizational culture and leadership as a prerequisite to intentional design of
robust supply chains. John’s point of view on lean and agility is most impressive and helpful.’
Mehran Ravanpay, Director, Supply Chain, Google Inc.
‘In his new book, John Gattorna not only reminds us of the fundamentals of the “dynamic”
way in which supply chains operate, he also challenges us to adapt these principles to deal
with the complexity and volatility of the environment we find ourselves in. Perhaps the great-
est achievement of the book is how the various components of the “dynamic alignment”
framework are integrated into a fully connected whole that both extends our thinking and
inspires us to act. As before, John reinforces that the true driver of change and source of
value are the people that inhabit not only our own organizations, but also those within our
customers and suppliers. This book will become an invaluable resource to help in under-
standing how to align and connect organizations and people across boundaries in ways that
make sense to them, and will also allow us to truly achieve the potential of our investments in
marketing collateral, new products and services, and smart business models.’
Dr Christine Pitt, General Manager, Value Chain Innovation, Meat & Livestock
Australia
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Dynamic Supply Chains
How to design, build and manage people-centric
value networks
3rd Edition
John Gattorna
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PEARSON EDUCATION LIMITED
Edinburgh Gate
Harlow CM20 2JE
United Kingdom
Tel: +44 (0)1279 623623
Web: www.pearson.com/uk
First published 2006 (print)
Second edition 2010 (print and electronic)
Third edition published 2015 (print and electronic)
© Pearson Education Limited 2006, 2010, 2015 (print and electronic)
The right of John Gattorna to be identified as author of this work has been asserted
by him in accordance with the Copyright, Designs and Patents Act 1988.
Pearson Education is not responsible for the content of third-party internet sites.
ISBN: 978-1-292-01681-8 (print)
978-1-292-01683-2 (PDF)
978-1-292-01684-9 (ePub)
978-1-292-01682-5 (eText)
British Library Cataloguing-in-Publication Data
A catalogue record for the print edition is available from the British Library
Library of Congress Cataloging-in-Publication Data
A catalog record for the print edition is available from the Library of Congress
The print publication is protected by copyright. Prior to any prohibited reproduction, storage in a retrieval
system, distribution or transmission in any form or by any means, electronic, mechanical, recording or
otherwise, permission should be obtained from the publisher or, where applicable, a licence permitting
restricted copying in the United Kingdom should be obtained from the Copyright Licensing Agency Ltd,
Saffron House, 6–10 Kirby Street, London EC1N 8TS.
The ePublication is protected by copyright and must not be copied, reproduced, transferred, distributed,
leased, licensed or publicly performed or used in any way except as specifically permitted in writing by the
publishers, as allowed under the terms and conditions under which it was purchased, or as strictly permitted
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All trademarks used herein are the property of their respective owners. The use of any trademark in this
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10 9 8 7 6 5 4 3 2 1
19 18 17 16 15
Cover design: Rob Day
Print edition typeset in 10/14 and Plantin MT Pro by 71
Print edition printed in Malaysia
NOTE THAT ANY PAGE CROSS REFERENCES REFER TO THE PRINT EDITION
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To Simon, Nicky, Tim and Alison, in recognition of your hard work and life’s
achievements – we are very proud of you all
A01_GATT6818_03_SE_FM.indd 9 2/24/15 3:36 PM
