As you look forward, it is always helpful to look back and gain perspective. Today’s supply chain is more global, aligned and proactive than it was even just five years ago. Post COVID, we see even more supply chain challenges – yet from challenge comes opportunity. As developing strategies for mitigating the risk of supply chain interruption overtakes economizing, organizations will increasingly need to leverage strong supply chains while stringently considering the bottom line. That balance will drive the success (or failure) of SCM companies moving forward. Although technology and the digital supply chain is on the rise, without the comprehensive knowledge and collaboration of people across the supply chain, we will continue to struggle to find that critical balance.
Typically, even though organizations may be consolidating for cost management and scalability purposes, the walls of the individual functions, channels and regions have become even thicker. As a direct result, it is harder for you, as a leader, to build end-to-end supply chain functionality in an ever-changing global marketplace. It has become increasingly difficult to gain agreement on specific, customer focused initiatives or broader organizational change.
This is not a technology, process or policy problem – it is a people problem:
People control systems…
People make purchasing decisions…
People change processes…
People establish policies…
People decide to build and maintain organizational walls…
People make or break relationships with suppliers, partners and customers…
Although we tend to observe and react to events (or the fires they cause), it is critically important to really look at and assess the root cause of our problems and how people impact outcomes. Go ahead, rip that band-aid off and look at what is really causing the infection –
Your “Core System” Is Flawed
Recently I was speaking with a client in the SCM space. He was trying to understand why he could not consistently get the global business results he was looking for and needed to understand how he could change the organization to drive consistent results. What did we find?
The Organization Was Not Designed For Effective Interaction And Optimization – The “System” Was Broken.
The bottom line – his organization was not designed to function as a unit… a single system. His division was not performing at optimal levels because of suboptimal organizational design. Instead of deploying aligned processes, policies and technologies to leverage various forms of optimization across the spectrum, his organization consistently tried to implement old practices with new tools and technologies – without the support of the people and other organizations that were affected.
They didn’t take the time or make the effort to understand why the old practices were failing in the first place. They repeatedly made the poor assumption that a new process or technology would fix the problem instead of understanding that no policy, process or technology change can be successful without recognizing the people component… and the system as a whole. As a result, my client was not understanding the inherent value in meaningful organizational change – nor the lack of value in neglecting the structural and behavioral changes that needed to happen to drive effective, efficient supply chain operations.
We were able to work together to create a plan around “systems thinking” that incorporated not just his division, but the organization as a whole. He was able to leverage his new knowledge of “the system” to work across functions, channels and regions to get the very best from supply chain operations as a whole. As a result, he is now seeing strong, consistent results on a global basis and the business is growing quarter on quarter.
Interacting With The System As A Whole Provides A Distinct Advantage.
My client is not unique in his challenge – the lack of a systems approach is pervasive in most organizations – just as sub-optimal business results are. However, in the SCM space the lack of visibility and collaborative endeavor inevitably results in not only poorly run operations, but ultimately causes declining supplier, partner and client relationships that lead to declining business outcomes. Many leaders implement policies, procedures or technologies without ever looking at them in terms of the effects on the “system” and its people… and then wonder why they have not gotten the results they anticipated. Millions of dollars are wasted each year on failed projects for this very reason.
The reality is that today the average company has variant policies, procedures and technologies across the different functions and channels that preclude them from realizing exceptional results. Leaders typically focus only on their area of responsibility. Critically important, to be sure. However, the challenge in this methodology is that the organization may have channels or functions that operate well in and of themselves, but they don’t integrate well with the wider system. Consequently, the organization suffers as a whole.
Progressive Leaders Are Recognizing How Important Aligning The Various Parts Of The Organization, And The Interrelations Of Those Parts, Is To Their Success.
As those leaders, we need to ensure our focus is on matters of ongoing organization and feedback across the supply chain. We need to diagnose problems, not by examining just our pieces of the puzzle, but by recognizing the larger patterns of interaction between different parts of the integrated whole:
- Focus on the outcomes needed from the wider supply chain in terms of the customer and overall business results
- Work backwards from the ultimate goal to determine what is needed from the system to succeed
- Understand that we are not an island and in order to be successful, we need to consider and integrate all the moving parts
While most of us like to consider our business as unique and different, the reality is that the more congruency we can build into our organizational systems, the more we increase efficiency, visibility, innovation and knowledge management across the supply chain – the more potential we have to maximize business results.
While there may be functional or cultural differences across the spectrum, the more we can partner to translate and align, the more likely we are to succeed on a grand scale. It is important that we work hard to understand our counterparts and build consistent policies, procedures and technologies together. Each and every disparate instance adds to the challenge of building effective supply chain solutions that support holistic planning and deployment.
What do we have to gain in addition to the obvious? How about:
- An Innovation Incubator
- Connectivity That Breeds Efficiency
- Cross-functional/Vertical Leverage
- Improved Business Results Across The Board
- Competitive Advantage Fueled By Solving Customer Issues Efficiently & Effectively
How Can You Contribute To Creating An Effective “System”?
Please engage the discussion and let us know how systems thinking can help you to exceed your potential. Need A Trusted Advisor to help you become the very best leader you can be while maximizing your supply chain results? Contact me at SheriMackey@gmail.com.