Supply chain management used to be much simpler. With a single and linear network of operations supported by isolated ancillary functions, the focus was to optimize costs for maximum profits. However, adoption of such a simplistic strategy today would not only put margins into free-fall, but also eventually lead to being shut out by both the competition and consumers. The rapid pace of globalization has led to multi-dimensional expansion of networks, while intense competition has only added to the complexities. Moreover, the evolution of digital technologies has disrupted the playing field and heightened customer expectations in terms of better responsiveness and transparency.
The crucial role that supply chain plays in a business’s success today makes it imperative to manage this constant flux in tandem with improving efficiency, cost optimization and customer service. To that end, organizations are implementing supply chain transformation as they look to align their networks with overarching business goals. Driven by deep structural changes through overhauling processes and tools, the purpose is to protect current competitive advantage and extract hidden value for continued strategic growth. While the concept is not new, many organizations still fail in accomplishing these objectives.
With best practices already established and successful case studies available for reference, one is bound to ask: Why such a low success rate? Is it a case of a missing puzzle piece, or the continual failure to address a persistent problem? Or could it be over-reliance on best practices and solutions?
As digitalization heralds the next phase of the industrial revolution, it is unsurprising that many industry experts are accentuating its game-changing role — to an extent that transformation has become somewhat of a misnomer for digitalization. While companies rush to cash in on the trend, supply chain executives struggle with implementation as they are overwhelmed by the rapidly evolving digital landscape.
The current lack of digital maturity suggests that organizations would do well to put their plans for digital transformation on hold. Instead, consider revisiting the basics of supply chain transformation as a prerequisite to digitalization. This entails dismantling the supply chain framework to identify opportunities for establishing cross-functional and integrated synergies between siloed, disparate functions. The ensuing process redesign will help identify the scope for digital applications and provide foundational capabilities to leverage technology for strategic decision making.
Bridging the gaps
Having spearheaded effective transformations for clients from different verticals, our team at B2G Consulting recently supported Schindler Group in a major international supply chain transformation. In fact, an executive sponsor of the initiative, “Transform to Outperform,” was honored with the 2017 APICS Award of Excellence — Supply Chain Leader. Our learnings from this experience clearly demonstrate that a successful transformation hinges upon three C’s: capabilities, culture and the C-suite.
Capabilities. When an organization the size of Schindler undergoes supply chain transformation, it requires a mammoth effort to plan, execute and monitor the program. With a continent-wide scope and business-wide impact, the expertise and energy required are immense. For “Transform to Outperform,” the company sought the capabilities of external consultants in addition to internal team members. Together, they contributed both “hard” analytical skills and “soft” communication and teamwork competencies.
Culture. Process restructuring and solution implementation yield results to a limit. What is essential for a successful program is change management. Providing skills and support to employees is key to their transformation from being cogs in a wheel to empowered to perform their best. Change management expertise should be accorded the same importance as technical expertise. An important feature of “Transform to Outperform” was the leadership-development program, which included the creation of a specific workstream for change management. Several knowledge-sharing sessions with leading companies also facilitated exchange of knowledge and increased awareness. The reasoning was simple: Mindset drives behavior and results.
C-suite. While managers implement changes, ultimate success depends on visionary leaders with the courage to challenge the status quo. As foremost promoters of the program, these people must make its presence felt at key junctures such as kickoff meetings, company presentations, and client or supplier events. “Transform to Outperform” became a prime example of the collaboration and teamwork of the executive team at Schindler. Complete involvement of the managers from day one helped gain buy-in and instilled a common understanding of the supply chain gaps through as-is modelling. Then, with the full confidence of the executives, managers were able to build their own implementation roadmap during the to-be design.
Prepare for what’s next
Transformation does not culminate in a final achievement; it is the ability to constantly adapt to changing market and consumer expectations. While digitalization is essential and most organizations will move toward it sooner or later, few are ready to harness its full potential. The crux of transformation programs is to develop the ability to change, reinvent and transform operations — even the business model, if need be. Digitalization is neither the first or last trend witnessed by the industry. Organizations must be prepared to face whatever comes next.