Stop and think …. with thousands of supply chain articles, blogs, webinars and conferences, there’s an abundance of advice about how to achieve leading supply chain excellence. Unfortunately, this information includes little thought and commentary about the heart of what truly drives alignment and high performance. Many supply chain leaders are “missing the boat” for a key facet of their organizations and value chain ecosystems. There are great technical developments and operational approaches that are essential elements for world-class supply chain performance. These are necessary, but not sufficient, to achieve leading performance and results. To get at the heart of supply chain and organizational excellence, supply chain leaders need to be laser-focused first on purposefully designing their organizations to ensure internal and external alignment, and to capture the hearts and minds of people who are the lifeblood within these engines of value creation.
Let’s be clear – supply chain organizations and their extended supply networks are complex, non-linear, OPEN systems. “Open” refers to the fact that they are heavily dependent on their external environment. They must be able to align and synchronize with their extended network partners, from secondary and tertiary suppliers through to customers and consumers. It’s important to note, however, that highly successful supply chain organizations establish strong internal organizational alignment first; and then extend to integrate outside-in within their value chain networks. Achieving sustained industry-leading results is not possible without first instituting robust internal alignment.
A brief diversion to provide some background ….
As I approach the pinnacle of an amazing career in supply chain management that spans the Consumer Products, Chemical, and Biopharmaceutical industries, you may benefit from my experience designing, implementing and leading high-performing supply chain organizations. I owe a lot of my success in creating and leading high-performing organizations to a friend and long-time mentor, Paul Gustavson. Over time, I’ve assimilated and applied the insights from this leader to drive performance and value in organizational innovation. He has been described as “a true workplace visionary whose expertise in the area of business strategy, organizational design, knowledge management, team development and change management is unchallenged.” Following a series of corporate roles, Paul established his own company – Organization Planning and Design, Inc. – and has gone on to make lasting, transformational impact at many major US corporations, as well as start-up organizations and sports teams. Paul has been one of the most impactful individuals in my professional development. I am very grateful for his mentorship, insights and lessons that have guided my professional journey.
Through a series of articles, I plan to provide insights in two main areas:
A. In the initial series, I’ll lay-out the approaches and lessons that have successfully guided my business and supply chain philosophy, and that have enabled me to test-and-learn, execute, drive value creation and renew organizational high-performance.
B. I’ll delve into successful operational and technical approaches, focusing on supply chain fundamentals and value chain integration for agility and resiliency. I’ll get into areas that are most beneficial to supply chain performance, including collaboration approaches, quantitative supply chain mapping and risk mitigation, demand-driven and probabilistic methodologies, logistics practices and many others that have served me well over my career.
Now, back to the key thrust of this article ….
Supply chain leaders striving to purposefully design their organizations to ensure internal and external alignment will benefit from utilizing foundational principles that distill key concepts. There are five concepts that are essential to keep at the forefront as leaders change their organizations to reach ambitious performance targets. These five foundational principles are simple. However, when applied with skill, they serve as the beacon and the “bonds to the mast” that leaders must employ as they navigate around the powerful forces that act to derail their journey toward high performance. These five foundational principles are analogous to the rope that Odysseus used to secure himself to the mast of his vessel in order to avoid being pulled off course by the Sirens’ song during his epic journey in Homer’s “The Odyssey.”
To begin the journey, strap yourself in by etching these anchoring concepts into your mind and the minds of folks in your organization:
Principle #1 – You get what you design for.
Organizations are perfectly designed to get the results that they get. If your supply chain organization’s results are disappointing, the explanation lies in an understanding of its infrastructure – its strategies, its systems and the resulting culture. The good news is that that’s where the opportunity lies as well, because the way an organization works can be changed. Rules that have been put in place about how to do things can be overhauled. Leaders and their teams can change procedures, remodel, rework, restore, revamp and reconnect. A supply chain organization (and its parent organization, for that matter) can remake itself systematically by making thoughtful choices about organizational design. These choices would include organizational design elements like the goals and principles that provide guidance, work activities and work environment, decision-making processes, as well as approaches to recruiting, training, rewarding and learning for employees. Purposeful, pro-active organization design, using a guiding framework to make synergistic choices, will ensure internal and external alignment and deliver the industry-leading results you want. (I’ll provide details on a powerful framework in later articles.)
Principle #2 – Establish strategic differentiation.
Winning in the marketplace is all about establishing the organization’s uniqueness – in finding the inimitable things it can do – not better than rivals, but differently. As Michael Porter’s groundbreaking Harvard Business Review article “What is Strategy?” points out, finding and reproducing the best practices from competitors will not differentiate your supply chain or organization in the marketplace. Instead, it will enable others to copy you. That is, if you do the same things as your competitors (but better), you’ll be good, but that advantage will not be sustainable. Everything that your supply chain organization does must be done well, but certain chosen activities or processes must be done completely differently to establish true competitive advantage. More on this in a later article.
Principle #3 – Organizations are made of processes, and not all processes are created equal.
Fundamental to the workings of a supply chain organization or team are the activities carried-out every day to create value. Decisions about which activities an organization chooses to do should be strategy-driven, and those that are more relevant to competitive advantage should be cherished over those that provide little marketplace upside. When organizations become set in their ways and take the daily work they do as a given, the work most critical to marketplace positioning can be swamped by the vastness of everyday concerns. It’s a good idea to occasionally pause and “do a reality check.” Reevaluate and revitalize by asking questions such as: What are the crucial activities that are truly worthwhile? Which of them provide the greatest advantage in the marketplace? On what work should you focus your finances and time? What work is most helpful when it is performed as efficiently as possible, or outsourced?
Principle #4 – Knowledge is the purest form of competitive advantage.
What is meant by knowledge is really an organization’s dexterity with knowledge – the assimilation of data, insights, etc. To say that this is the purest asset of a firm means that a handiness with data (structured and unstructured) and insights can support and guide an organization through all kinds of changes. For example, a dexterity with knowledge can support changes in technology, management, markets and the organization’s environment – even help successfully navigate through a global pandemic! The ability to discover, create, codify, diffuse, apply and renew knowledge protects it from being missed, dismissed, lost, hoarded or squandered. There is tremendous power in the minds of the people in an organization, but the organization itself must develop the systems, agreements and networks that spark this knowledge. It is vital to draw-out that knowledge, capture it and apply it to create amazing results.
Principle #5 – Select, develop and promote leadership that captures hearts and minds.
A supply chain leader may be able to picture the future of the organization, but the task ahead of him or her is to communicate this vision to engage and energize employees. Team members need to be ignited by a cause, and they must be involved and unified. If you’re in a leadership position, it’s your job to design the strategic elements and systems so that all employees love their work and work environment. Anything less is leadership malpractice! (See my LinkedIn post which references Simon Sinek’s article, “You have the RIGHT to love your work:” https://www.linkedin.com/posts/bobferlautophd_you-have-the-right-to-love-your-job-simon-activity-6780485656620646401-Qi7h )
Finally, adopt these anchoring principles as a primer to your journey toward establishing innovative supply chain organization design. To be sure, the need for innovative supply chain design / redesign will persist as the post-COVID19 pandemic environment is likely to involve increasingly frequent disruptions – other pandemics, earthquakes, floods, hurricanes, trade disputes – perhaps even human-made disasters. In addition, globalization is expected to present highly unpredictable opportunities that will require prompt action to meet customer needs and demands. Take steps to ensure that you purposefully design to get the results you desire!
In the next articles in this series, I’ll go into some detail on a few of these anchoring principles and provide a powerful framework for guiding your journey. I’ll also include specifics on how to implement your new supply chain organizational design.
About the Author:
Bob Ferlauto is a Senior Supply Chain Executive with more than 25 years of experience transforming and integrating the end-to-end Supply Chain in the consumer products, chemical and biopharmaceutical industries. He has made major contributions creating value in roles spanning the supply chain continuum – from R&D, process engineering, and technology planning to procurement, demand and supply planning, manufacturing, logistics and customer service. Bob received his Ph.D. from Rutgers – The State University of New Jersey; and his B.A. from Hofstra University. He periodically serves as an Adjunct Professor and is on the Advisory Board for the Master of Science program in Supply Chain Management at the Rutgers Business School. Connect with Bob on LinkedIn, e-mail him at firstname.lastname@example.org or visit his web site: bobferlauto.com.