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Bring expertise together
Operations, technology and commercial teams tackle the same supply chain problem.
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Put ideas to the test
Try a change in a working facility and measure what happens.
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Give other teams a head start
Turn the findings into practical guidance other sites can adapt.
Where did ‘Centers of Excellence’ come from originally?
- The expression has been used informally since the 19th century. But in the 1960s the U.S. government was concerned that a small number of universities were being awarded almost all of the research contracts from the Department of Defense, resulting in many of the country’s best scientists flocking to a few coastal cities.
- To remedy this, Project Themis sought to establish centers of excellence at colleges throughout the country. These would bring together interdisciplinary teams of researchers to do highly specialized work that could be of value to the D.O.D.
- The concept has evolved since then. It’s still used extensively in academia, healthcare, and by the military, but is now increasingly common in business. The modern business practice has inherited the idea of cross-functional teams.
What’s the Purpose of a CoE in Business?
Businesses use the term ‘center of excellence’ for several different arrangements. These five models show how specialist expertise can be organized to improve the wider business.
A ‘company within a company’
This model gives the CoE enough independence to preserve its agility while remaining part of the company.
Company leadership
- Business unit 1
- Business unit 2
- Business unit 3
Center of excellence
Its own reporting structure
- Marketing
- Operations
- Technology
A high-performing facility sharing best practice with other sites
The CoE remains a working facility with its own operations. Its wider contribution is to help other sites adopt the practices that make it effective.
Center of excellence
A high-performing site
Other company sites
Visit the CoE
Managers and staff make short visits to learn best practice.
Bring the coaches to you
CoE staff visit other locations to coach their teams.
An experimental business unit
A company can duplicate an existing line of business to create a place for testing new ways of working.
Leadership
Business unit 1
Business unit 2
Business unit 3
Center of excellence
Ordinary performance metrics
The existing business units keep their operating goals.
Experimental goals
Replace ordinary performance metrics to pilot new ways of working.
A change team working across the company
The team may be permanent or assembled for a temporary assignment, depending on the scope of the change.
Center of excellence
A change team reinforced by high-performing experts or managers.
The team’s remit may include:
- Measuring performance
- Driving continuous improvement
- Defining best practice
A regional CoE in a new market
A regional CoE helps local customers or suppliers expand their capabilities and harmonize business practices, often in a developing region.
This approach fits naturally with nearshoring logistics, where shorter lanes can make feedback loops faster.
All five models aim to encourage innovation and improvement while limiting disruption to everyday operations.
Timeline of Supply Chain Centers of Excellence
- 2003: MIT launches its Global SCALE Network, partnering with academic institutions around the world to conduct deep research on international supply chains.
- 2006: Lenovo establishes a CoE in Asia, a cross-functional team working on supply/demand forecasting, pricing, sales and product mix strategies, inventory management, and performance measurement. Other computer hardware companies quickly follow suit.
- 2008: Pfizer reconfigures its supply chain to outsource more manufacturing, and establishes a center of excellence in Singapore to manage the transition.
- 2009: Then-editorial director of Supply Chain Brain Jean V. Murphy coins the term ‘Supply Chain Center of Excellence’, tracing the phenomenon to Procter & Gamble’s “horizontal process networks” and Dow Chemical’s specialized teams of material handling experts.
- 2010: KRAFT creates a ‘supply chain SWAT team’ with the goal of freeing up capital by reducing inventory. Each business unit is allowed to maintain management of its own supply chains, but has access to the advice of this internal consultancy.
- 2012: Gartner begins championing Supply Chain Centers of Excellence - highlighting Johnson & Johnson in its Supply Chain Top 25 for the year. The emphasis is still on procurement and supplier management rather than logistics.
- 2013: A survey by Lora Cecere finds that 37% of manufacturers have a supply chain CoE, but half of those are disconnected from business realities and fail to deliver real value.
- 2015: “Supply Chain Center of Excellence” has now become synonymous with a logistics data analytics consultancy, internal or external. This model is championed by software companies like IBM and professional services firms including KPMG.
- 2017: Food manufacturer Lamb Weston Meijer reveals that its Supply Chain CoE team considers possible global marketplace changes over the next 8 years in order to spot potential threats and opportunities.
- 2021: Gartner says that “most supply chain CoEs are focused on IT systems design and technology enablement,” advocating that they should instead specialize in change management or talent development.
A Maturity Model for Supply Chain CoEs
Supply chain CoEs have evolved from their academic origins toward a stronger focus on business value. These eight shifts describe the broad trend over the past two decades.
How the CoE’s role evolves
AcademictowardPractical
Experienced practitioners, rather than researchers, lead the CoE. Its contribution is evaluated on the business results it delivers.
ExternaltowardInternal
The CoE recruits expertise from within the organization, reducing its dependence on external consultants.
Shared servicestowardConsultancy
The CoE becomes more clearly distinct from a shared services pool. In some organizations, it concentrates on analysis while individual business units remain responsible for execution.
TransactionaltowardStrategic
The CoE looks further ahead, concentrating on long-term strategic risks and opportunities rather than immediate cost savings or efficiency gains.
Technology orientedtowardPeople oriented
The CoE specializes in change management and stakeholder engagement, shifting its emphasis away from systems architecture.
AdvisorytowardActive and piloting
The CoE takes a hands-on role in testing new ways of working. It may run experimental business units or facilities to try out new processes or technologies.
IsolatedtowardCollaborative
The CoE works with customers and suppliers to understand their systems and processes. Together, they work toward harmonizing best practice.
ProcurementtowardLogistics
The CoE treats logistics as a complex system and a source of competitive advantage in its own right, rather than simply a part of procurement or fulfillment.
The CoE’s remit involves trade-offs
The eight shifts above are connected. Moving further along each one does not automatically make a CoE more effective: its logistics expertise, relationships with external partners and authority within the business need to work together.
These three situations show where tensions can arise.
expertise
relationships
A pull toward central ownership
The CoE specializes in logistics and works directly with suppliers or customers. It is likely to become the company’s central supply chain owner, taking on more than an advisory role.
Less scope for complex logistics planning
The CoE works with external partners, while business units retain control of their own supply chains. The CoE has limited room to plan complex logistics across the network when decisions remain with individual units.
A harder path to shared data
The CoE acts as an internal analytics consultancy, finding insights for the business. Those insights can be valuable, but the CoE may struggle to harmonize data with suppliers and customers.
Judge the CoE on both time horizons
A CoE needs to deliver value in the short term while creating room for long-term improvement. Focusing too heavily on either horizon carries a risk.
Idealistic
A vision of the future can lose touch with what the business needs today.
Stuck in the weeds
Immediate demands can leave little room to experiment with better ways of working.
The right emphasis depends on how urgently the business needs supply chain transformation. An organization that can afford to sustain a highly experimental, forward-looking CoE may gain a profound competitive advantage over several years.
Towards Localized Centers of Excellence
As supply chain management has become a more pressing concern for many companies, it has become standard to retain a chief supply chain officer.
An unfortunate side-effect of this executive purview of logistics is that many centers of excellence have been transformed into centralized teams. Some of the experimental potential and flexibility of CoEs has been lost.
The earlier understanding of a CoE as a ‘company within a company’ or a particular facility is now vanishingly rare. When it does exist it tends to be focussed on automation technology, or occasionally tactical IIoT applications, not supply chain visibility, talent or management practice.
A CoE team can be much more effective when it’s on-site. This can be a manufacturing facility or even a warehouse—a proving ground that helps ambitious managers become a warehouse director—as it quickly becomes apparent what data is missing and what kind of technology will help the people working in the facility. The team’s stay can be long-term, or it can lead a change project, measure the results and then move on to a new location.
Working like this does not prevent the CoE from seeing the big picture and analyzing the entire supply chain network. On the contrary, it can observe firsthand the transfer of materials between the company and its suppliers, customers or carriers. If cross-organizational cooperation is the key to supply chain visibility, this bottom-up approach is an overlooked way to strengthen those relationships.
How DataDocks Enables Facility-Based CoEs
When change teams focus their attention on loading dock operations—often a bottleneck and a source of unpredictable demurrage costs that drain warehouse motivation and drive turnover—the challenge they face is getting external carriers and suppliers on board. For a deeper dive into the tactical side of that conversation, see our guide on how to negotiate with carriers.
Shipping and receiving processes cannot produce useful data or undergo continuous improvement without effective dock scheduling. But throughout North America, drivers often have no choice but to arrive at facilities whenever they can. Loading dock staff face intense crunches in workload first thing in the morning and again in the evening, especially on Mondays and Fridays. Leveling out these spikes is one of the most effective strategies for managers figuring out how to reduce warehouse turnover. In theory this is difficult to change.
A shared appointment process gives the facility and its carriers a practical starting point. DataDocks connects booking and coordination with a record of what happened during each visit.
That evidence can make turnaround expectations a specific conversation. For example, the team could check whether trucks that arrive on time are being worked and leaving within an hour. The answer depends on what happens at that facility.
More predictable arrivals and handling can also support better OTIF performance across inbound and outbound lanes.
From this local starting point, a facility can become a center of excellence: testing practices, establishing what works and then sharing those practices across transportation, warehouse management and the wider organization.
Live Dock Dashboard
Monitor gate check-ins, loading progress, and dock status in real-time from an interactive, drag-and-drop board.
