Building the business case for change is crucial to compel leadership-stakeholders alignment. Three steps should be followed in developing the case: First, articulate a convincing need for change based on the company’s current situation and market opportunities. Second, quantify the expected operational and financial benefits, estimate cost, and calculate the return on investment (ROI). Third, explain how to show progress and measure success, which metrics will be improved to achieve the expected benefits, what will be the new performance targets and deadlines, and who will accountable.
At a recent industry conference, I asked my 80-plus member audience to raise their hands if they are “OK” with their own performance measurement governance (metrics identification and setting targets, tracking, and controlling). Only three managers raised their hands. The widespread feeling among managers is that they are measuring too much or too little, or are measuring the wrong metrics. The majority also feel that their performance measurement governance doesn’t drive good behavior or trigger continuous improvement. In this case, from Lean perspective, it is a waste of time and money. The root causes of these challenges can be summarized under four categories:
- The difficulty in identifying the metrics that would yield the most information on success
- Difficulty in identifying root causes when metrics targets are not achieved
- Lack of clear ownership and responsibilities
- Lack of consistently clean data
Proven Change Management Methodology
Having a structured and proven methodology to show the way in the change transformation journey is a must. Any significant supply chain transformation program creates uncertainty and people resistance. New leaders emerge, job descriptions are changed, new skills and capabilities must be developed. Dealing with these change management issues on a reactive, case-by-case basis puts timeline, morale, and results all at risk. A structured and formal plan for managing change—beginning with the transformation team and then engaging key stakeholders and leaders—should be developed early and executed effectively as changes move through the organization. The plan should be comprehensive to cover planning, implementing, and sustaining the transformation changes.
A structured methodology demands as much data collection and organization readiness assessment as does the redesign of strategy, processes, and systems. There are three common methodology mistakes that executives need to avoid: first, some companies rush things and focus only on IT activities that they cannot shorten and neglect the change management factor.
Second, some spend a huge amount of time on the planning phase, little time on implementing the change, and no time on sustaining it. Third, other companies put significant emphasis on the transformation’s soft factors, such as culture, leadership, and motivation while missing out on the hard factors of change management like financial results, commitment level of executives, the number of resources and skills required to execute the program, benchmarking and gap analysis, and program roadmap and duration.
For transformation programs to work, there must be convergence between the new process, new technology capabilities, people readiness with the required new skills, and organization structure alignment changes.
Maintaining Energy and Involvement
As supply chain transformation programs progress from defining strategy and setting targets to design and implementation, they affect different organizational levels and stakeholders. Disengaged stakeholders can really slow down progress and can be a reason by itself for transformation failure. Supply chain stakeholders represent different functions and different roles (operators, SC managers, planners, suppliers, customers, warehouse receivers, carriers, etc.) which add another dimension to the challenge.
Stakeholders need to know why change is happening, how their work will change, what is expected of them during and after the transformation program, how they will be measured, and what benefits success will bring to them personally. Transformation team leaders should be addressing all of these questions explicitly and keep stakeholders involved in the process and informed to maintain energy throughout the organization.