“We joke that one of the results of the supply chain crisis has been that our parents finally understand what we do,” says Kristi Naidech, chief operating officer of SCM Connections, a leader in technology-enabled supply-chain transformations that joins McKinsey this week to strengthen our expertise in supply-chain strategy, value creation, and growth.
The disruptions of the last few years have pushed this “back-office” function into the spotlight, making supply chain transformation one of the top five priorities for many CEOs. As businesses grappled with crises including plant shutdowns, bottlenecks in shipping lanes, and labor shortages, they quickly realized that moving things from A to B efficiently was no longer enough. Supply chains needed to be flexible, resilient, and sustainable.
“This is what we had been helping clients with for years; if your supply chain has a hiccup, your company can shut down,” explains Mike Raftery, CEO of SCM Connections. “Today, supply chains require multiple backups, redundant options, alternate sources. Do you have a backup plan for your backup plan? The ability to manage this complexity with ‘what if’ scenarios is a requirement.”
The proven technology skills and capability building from SCM Connections will complement McKinsey’s strategic insights, planning-process acumen, and deep organizational, cultural, and mindset transformation experience. “With this acquisition, we can help clients with their advanced planning transformations, from step one to step ten, with no handoffs and complete ownership of impact, which has been an unmet need for many clients,” explains Mike Doheny, the McKinsey senior partner who leads our manufacturing and supply chain work. “This includes developing the organizational capability and mindset shift necessary to capture and sustain the value. In addition, we will enhance these processes with our QuantumBlack expertise in artificial intelligence and machine learning.”
In business for almost a decade, SCM Connections has more than 45 experts, many of whom have experienced or led major software and ERP deployments as both clients and systems integrators. The firm managed extraordinary demand during the pandemic, helping numerous companies convert bricks-and-mortar stores into e-commerce channels almost overnight, reinventing networks, digitizing processes, and building resilience into infrastructures. “What we like about SCM Connections is that they often get called in to fix tech-enabled transformations that have gone wrong,” says Ketan Shah, the McKinsey partner who leads our supply chain planning work and technology alliances in the supply chain space. “This takes a real understanding of the supply chain and experts who know what they are doing with the technology and the process.”
McKinsey and SCM Connections have a proven relationship. For example, during the pandemic we helped a billion-dollar enterprise lay the groundwork for its upcoming advanced planning and scheduling (APS) implementation. “We brought very complementary strengths,” says Ketan. “We like the ‘popcorn’ of ideas, the excitement of problem solving, and figuring out how insights from our research and experience will translate into concrete next steps to create value for our clients.”
Working together confirmed that both firms share a culture that values client service above all. “We’ve always judged our projects on the results: Were we able to improve transparency? Is the algorithm delivering better insights? Are the KPIs improving? This focus on delivering value makes us an incredible fit with McKinsey,” observed Patrick Green, chief technology officer of SCM Connections.
In addition to complete transformations, the newly integrated team will help clients across industries stand up SCM initiatives with early-phase diagnostics, business-case development, and road mapping, as well as undertake interventions in existing SCM transformation projects to unlock untapped value.
With this acquisition, we can help clients with their advanced planning transformations, from step one to step ten, with no handoffs and complete ownership of impact, which has been an unmet need for many clients.
SCM Connections has built a diverse talent pool, supplementing supply-chain planning skills with experts in mathematics, industrial engineering, and economics; and 45 percent of the team are women. “Such different perspectives make our solutions stronger, more creative,” Kristi says.
Mike Doheny can attest to the effectiveness of that creativity. “Advanced planning software tends to be 50 percent customizable and their experts know it inside and out. They are incredibly adept at tuning the software around business processes that need to change, creating the opportunity to actually capture the value.”
The SCM Connections team will now have a chance to work on exciting new challenges, gain access to greater resources, and expand on a global basis. “What really excites us is that with McKinsey we have the potential to change our business away from an hourly-based, transactional, tech implementation model into a results-based relationship,” says Mike Raftery. “I think this is way overdue, and we’re hoping this new relationship can help lead the industry in that direction.”