In response to the dramatic changes in the business landscape over the past few years, many companies are launching business transformation programs to drive sweeping changes in their supply chain processes. Some examples to these changes are exploring new sourcing networks, establishing collaborative forecasting process, optimizing networks and inventories, focusing on private-label products, and applying customer and supply chain segmentation to reduce complexity and improve margin. In all different industries—from the relatively slow-moving ones such as utilities and cement to the rapidly changing businesses such as high-tech and retail—lean and agile supply chain processes have become critical in achieving competitive advantage.
Taking the journey of supply chain business transformation is no longer an option; it’s a strategic mandate in order to stay relevant in the industry. So clearly, it is crucial to act fast and launch the transformation activities, but the industry’s reality is that 70 percent of all transformation initiatives (programs) fail. Therefore, the effort to improve supply chain results has been short lived, incomplete, or partially succeeded. The low success rate and the scary statistics keep CEOs involved in the transformation programs up at night, and make others who are about to take the transformation journey think twice about going forward with this attempt.
For nearly 17 years, I worked with different companies across different industries, as a strategy director, process consultant, change agent, project manager, solution architect, and planning director. I worked on large- and small-scale processes, systems, and organizational changes. I witnessed both successful transformations and failed ones. The common two themes among the failed ones are: 1) the lack of familiarity with change transformation programs and what it takes to make them happen, 2) and resistance to change due to people-related aspects being poorly managed or altogether neglected. Executives who fail to plan for the human side of change often find themselves wondering why their best-laid plans have gone astray.
A few years back, I was asked to play the executive process advisory role for a global high-tech company. Their largest end-to-end supply chain transformation program was under way. The program included process improvement and technology implementation to the following processes: Sales and Operation Planning (S&OP), Demand Planning, Supply Planning, Order Planning, Inventory Planning, Order Fulfillment, Transportation, and Channel Management. In the first two weeks of my engagement, I came to a conclusion that the transformation was at risk and immediate corrective action was desperately needed. Here are a few of my findings:
First, the employees did not understand why and how the business must change, or their own role in making it happen. There was a clear lack of communication and articulation of the need for change. The sponsor didn’t even have access to the business case to hand to me when I asked for it. I discovered later that the major cost saving element was layoff!
Second, I went over the transformation program structure, and I found out that nine different tracks were identified to execute the program; like program management, process, technology, data, testing, suppliers, and change management track. My role was under the process track. My shocker was that appropriate expertise and resources were identified for all tracks except for change management, it was “TBD”! Basically a major transformation program was 12 months under way, layoff is one of the outputs of the program, the company has not done this type of transformation before, and yet no one is assigned for change management track!
Third, all program tracks were working in silos with little coordination. I was able to notice the mistrust that every team had regarding the other teams’ ability to deliver on time, and the blame game already started. Fourth, there was no supply chain strategy defined to reverse the trend of losing market share.