A willingness to change that is embedded within the organizational culture is extremely important, as is an understanding of the current business successes and desired outcomes of the project. However, from our experience the most crucial aspect is progressive leadership.
By analyzing industry trends, and from the work we’ve undertaken, it’s evident that companies who lead in supply chain performance display distinct characteristics compared to average performers. While those who are considered “best in class” are focused on the strategic management of the supply chain, average performers are more focused on tactical elements of their logistics activities. For instance, a rigid focus on individual rates as opposed to the total delivered cost can lead to inefficiencies in the supply chain and fragmented processes with incremental improvement.
Over the past 18 months, these efficiencies have been highlighted due to the financial pressures brought about by the recession. This has placed a greater importance on supply chain management and resulted in senior leadership being more engaged in the process. This newfound eagerness to address the supply chain should be welcomed but global supply chains are extremely complex, so any attempt at innovation must be successful in the first instance.
One company that has benefited from a change in organizational mentality is a leading technology provider that wanted to break away from its “business as usual” approach to enhance its competitiveness in a consumer-driven market that is built upon product innovation – a sector where overall success is based on the timing of product releases and effectiveness of distribution.
There was an additional and underlying desire to be seen as innovative against its competitors, specifically its biggest rival who was being applauded for its supply chain successes by industry commentators. These factors contributed to the motivation that drove the customer to seek change within its organization.
To meet this need and improve the delivery of millions of units of hardware and software products directly to consumers, as well as to distributor and retail channels, CEVA developed an entirely new, flexible and innovative supply chain solution.
Understanding that the customer’s industry is characterized by complex challenges driven by high seasonal fluctuations in market demand, increased SKU profiles and market channels, and cost pressure from competition, CEVA was able to fulfill the company’s changing needs. The logistics strategy was implemented without affecting current levels of service and worked to support the forecasting, planning, manufacturing, order management, distribution and logistics of the division’s products.
As a result, the company was able to balance inventories for shelf availability while increasing profitability in their product lines through a highly flexible and efficient supply chain. Oh, and it also received peer recognition for its newly redesigned logistics functions.
Finding the way: a roadmap to transformation
One of the biggest challenges a company who wants to bring about change faces is where to start. The idea of transforming a multimillion-dollar unit within any organization can be a daunting task—especially when placed under financial pressures.
Once senior leadership is on board with the proposed transformation, and there is a willingness to learn and adapt within the organization, a change sponsor or manager must be appointed. This is someone who has the time, authority and motivation to oversee the change – from strategy to implementation. This person, usually a member of the senior management team, will support, communicate and monitor progress in order to ensure that the project is being completed as planned.
Priorities must then be established based upon the business case – elements such as service, cost and ultimate objectives need to be determined to ensure that any alterations to the management of the logistics are linked to bottom-line performance. These priorities must then be sequenced in order to drive maximum operational and cost benefits as quickly as possible. In tandem with this, a process review and opportunity assessment needs to be undertaken to define the specific areas that require attention and would benefit from improvement.