Catch’em Young – Attracting Generation Z to Supply Chain

A Quick Flashback!

Supply Chain field has a serious talent shortage problem – right from the driver to the middle management levels. About 20-25 years back, when Supply Chain field was recognized as an important function in an organization, many people from sales, manufacturing, transportation, warehousing, procurement  moved into this field. It opened new avenue for the people to grow their career as well as provided them the opportunity to do something different and exciting. These people belonged to “baby boomers” category, who have retired by now or Generation X that is nearing retirement age.  Over last 20 years, the industry has not been able to build the talent pipeline commensurate with the growth. This is because people who got into supply chain were so busy finding a ground for themselves, that the talent development was never a focus area.  Today only 1 out 6 supply chain people are professionally qualified for the job they do.

Despite all the buzz created by companies and media, the image and attractiveness of supply chain function remained below what was expected.  If you go to an undergraduate or post graduate classroom in a college and ask people to raise hands for different career options, you will find least number of hands raised for the supply chain! I do this exercise, whenever I get an opportunity to interact with students. The supply chain education and jobs have been perceived as dull, boring, devoid of creativity and excitement. It has been positioned as more operational in nature than strategic. In most of the colleges, supply chain is being taught as part of “Operations Management”. It’s no surprise that supply chain is not a career of choice for many.

How to attract Generation Z to Supply Chain Career

Developing Talent

In order to answer the question, we must understand how does this generation thinks, acts and what it expects.

  1. Gen Z has grown with technology & social media around them, therefore, they look for technology solution to their problems and their life revolves around apps. If your organization is a laggard in adopting technology, there is little possibility of attracting this talent. Secondly, the technology has to be device agnostic so that they could use their own devices at work.  The user interface of the technology needs to imbibe bite-sized, quick response habits similar to Instagram, Twitter, Snapchat etc. to engage this generation.
  2. Gen Z decides much early in life about the career directions, whether it’s music, blogging, mass media, beauty, ethical hacking – there are no rules for what is good or bad. The access to information at an early age plays a major role in shaping their decisions. So it’s important to capture their imagination at the K-12 level. APICS came out with school level Supply Chain STEM educational outreach program to demonstrate the importance of supply chain management and the promising career paths available to them. It involves fun games and activities while learning about supply chain management. Other industrial bodies and trade associations need to take a leaf out of APICS book to launch similar initiatives at the school and college levels. Gen X and Y should proactively reach out to colleges, engage the students through talks, competitions, internships and projects.
  3. Gen Z is money motivated, willing to work hard, looks for financial security but they also equally care for the purpose in life and what they do (from a survey conducted by Monster). Most of them have seen the great recession and possibly their parents or kin losing jobs. They are more practical, entrepreneurial and willing to experiment. The supply chain community needs to change the operational image of supply chain to one that has the potential to transform the business. Advanchainge has tied up with Inchainge BV to conduct supply chain challenge in India, using experiential learning simulation – The Fresh Connection. The heart of the simulation is to turnaround the business by making strategic and tactical decision in supply chain management. It’s currently being done for corporate but we are trying hard to convince many colleges (hope we will succeed one day)!
  4. Gen Z hates to take directions from anyone, be it parents or teachers. However, in many supply chain organizations, the management style is tilted towards authoritative. While that’s understood, given the operational nature of some of the execution activities, it could be detrimental in attracting the talent. Gen Z  prefers participative management style and higher degree of delegation. Micro management is a big turn-off for this group. Therefore, companies would need to create more meaningful roles, involve this group in decision making and create more vibrant work environment.
  5. Gen Z would look for faster career advancements and not follow the beaten down paths for growth. They will want individual career parts and capitalize on the experiences by lateral movements in roles. However, in many supply chain organizations, it is sill not very common for people to move between the logistics, procurement, planning, manufacturing or customer service roles.  Therefore, the organizations will need to focus on end to end supply chain competencies development to enable flexible career paths. It won’t be easy to make this group sit in dull and boring training programs conducted in classroom set-up. They would like to learn on demand – whenever and wherever. The training will have to give way to online, short bite-sized learning capsules, delivered in an interesting manner, using gaming and interactivity.

The war for supply chain talent will not be easy. The organizations, that take proactive approach in adopting these measures, will be able to attract and retain talent better than others. Big names and brands are no longer the passport for attracting the best talent.

 

Collaborate 2 Win

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Collaboration is a buzzword used across organizations but very few have mastered the art of institutionalizing collaborative behavior. Collaboration, in simple words, is creating something as a group that would not be possible working individually.

One of the premise of the integrated supply chain management concept was to foster collaboration within the business as well as with the external partners. The extent to which this objective has been achieved, varies from company to company. Merely creating an integrated supply chain function does not guarantee collaborative approach. That is why, in many cases, SCM function has itself become a silo within the organization. Not just that, it continues to nurture silos within itself in the form of logistics, demand planning, FG inventory management, supply management and so on.

In one such example, a supply planner, who was involved in planning huge quantities of promotion product, did not communicate the plan to the downstream supply chain.  Thus, the warehouses were taken by surprise and did not have enough resources and space to handle the product.  The end outcome was a delay in the launch of promotion and dilution of its effectiveness.

Sales and Operations Planning Process is another initiative intended to encourage collaborative behavior but that too has met with limited success.  The root cause of the problem lies beyond the realms of organization structure, processes, IT tools etc.

How does a leader get to know that collaboration is not working at the workplace? Here are few indicators:

  • People would ask for more resources & buffers e.g. inventory, people, budgets etc.
  • People would come back with problems or the reasons why certain goals could not be met
  • The amount of effort being put in by people is not commensurate with the outcomes
  • In the group meetings, people would not voice concerns or speak in muted voice
  • There is either too much tension or too much bonhomie between people

Key Ingredients of Collaborative Culture

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Shared Vision

People need a purpose for collaboration. It has been found that people, in general, tend to collaborate more in the situations of crisis e.g. war, natural calamities or crisis within a company. The crisis creates a strong and common purpose for people to give up their individual gains for a collective cause.

One of the ways to create a strong purpose is to develop shared vision and goals for the organization. This shared vision should override all other goals and objectives either at individual or functional level. To know if your team members have a shared vision, you can do a small exercise. In one of the group meetings, ask each team member to write down the shared vision and you would be surprised to see variety of responses.  Every individual in the organization should have clear line of sight to these few shared and Wildly Important Goals. The shared ownership reduces the functional or territorial attitude.

Build Trust

One of the reasons why people do not share knowledge, expertise or experience is lack of trust on each other. The fear of misuse of the shared information or credit taken for personal benefit destroys the trust. In one case, the production manager of a company informed supply planner about machine breakdown resulting in production shortfall. Instead of collaborating with the production to re-prioritize and reschedule production, he used the information to blame the production manager. One such instance is good enough to destroy the trust and create barriers for collaboration.

Trust requires building relationships and networks. Getting to know people, beyond their roles and positions, goes a long way in building trust. When the relationship becomes informal and personal, the chances of collaboration enhance. Company focused on collaboration enable these relationships by providing common and informal places for relaxation, breakouts, coffee corners etc. People get to know what other people do, understand each other’s pain points, develop empathy – something that you wouldn’t get to know through official job descriptions. The informal relationships create trusts which in turn makes collaboration smoother.

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Shift focus from Boxes to Linkages

Traditionally, the powers were vested in the boxes that represent positions in an organization structure. As the companies become more complex and networked, the power shifts from the boxes to linkages or interplay between the boxes. What it means that no single position in the structure can deliver the desired results. The performance is a function of the effectiveness of interplay.

For example,collaboration-linkages the product obsolescence is an outcome of the interplay between Sales, Demand Planner, Supply Planner and Production decisions. Therefore, all of them should share the accountability and KPI of obsolescence.

Decision making may require moving along the linkages iteratively. The focus should not be on who makes what decisions but on how decisions are made i.e. whether all the links impacting the decisions have been evaluated. The moment focus shifts to the links, people have no option but to collaborate.

Empower People

People who are not empowered do not tend to collaborate as they do not have the authority to share information and take actions. Leaders must delegate authority and provide enough space to their team members to go beyond their assigned duties and collaborate to solve common problems. They must be allowed and encouraged to choose their battles, be part of cross-functional teams, seek help or provide help to others and take initiatives. While allocating responsibilities, 20% to 30% of time should be provided for working on cross-functional initiatives. It would not only strengthen the bonding but also contribute towards people development.

Community of Practice

In early 2000, P&G was facing tough challenges in terms of productivity and innovation success rate.   The new CEO of the company AG Lafley used collaboration – internal as well as external, as a lever to fight both the challenges. He established 20 cross-functional “communities of practice” within P&G. These collaboration initiatives paid off handsomely. By 2008, P&G had improved its R&D productivity by nearly 60 percent, more than doubled its innovation success rate, and lowered its cost of innovation.

Community of Practice is an informal group that meet at a certain periodicity to share knowledge, experience and help each other solve pressing problems. To know more about how various companies are benefitting from COPs, read here.

Remove the Buffers / Comfort zones

Excessive buffers, resources and comfort zones lead to poor collaborative behavior and vice versa. The moment buffers and comforts are taken away, people have no options but to share resources, information and expertise.  For example, if the supply chain and sales function do not collaborate, it would lead to higher inventory, obsolescence and lower customer service levels. The buffers and excessive flab must be challenged every time to make people reach out to their counterparts for the support. Creating an environment of sharing resources and information to achieve personal or functional objectives helps in fostering reciprocity and collaboration.

Rhythm of formal reviews

Establishing a rhythm of structured cross-functional reviews to plan and execute, fosters collaboration in the organization. For example, an Indian Cement company follows “war room” process to review the sales orders, production, stocks and make certain key decisions on daily basis. These reviews are attended by Sales, Logistics, Plant managers across the organization. A beverages company has a formal Sales and Operations Execution (S&Oe) meeting on a weekly basis that is attended by top management of the company during peak season.

S&OP (or Integrated Business Planning) is another avenue to facilitate collaboration between all the functions of an organization. However, in many companies it has failed to engage the stakeholders and been diluted to merely a supply chain driven process. The problem lies in the way the process has been positioned, implemented and sold to the stakeholders. In order to get past the dead end in S&OP, read here 

In these reviews, people arrive at the common action plan, hold each other accountable for the actions assigned and follow through the plan.

 Constructive Challenging and Consensus

It may sound an oxymoron to use Challenge and Consensus together but are essentially two sides of the same coin. Constructive challenging is important for capturing diverse views and deliberation. However, at the end, the group needs to arrive at a consensus after weighing pros and cons of each choice.

The Sales and Operation Planning process requires both constructive challenging and consensus. However, at times people tend to focus too much on arriving at the consensus because either they lack ammunition to challenge or they are not completely engaged. This could send a false signal that people are collaborating. For example, demand planning review meeting requires challenging the assumptions used for putting together the demand plan. The product manager and demand planner, who are part of the forum, must evaluate and challenge the assumptions before arriving at the consensus plan. It could also mean encouraging uncomfortable discussions to thrash out every possible aspect of decision making.

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Collaborative behavior is a habit that needs to cultivated over a period through both formal and informal means. The leaders need to demonstrate the behavior and be role models. However, it has been found that the biggest gap in the collaborative behavior prevails at the senior level in the companies. They, unknowingly, could send conflicting messages to their team members e.g.

“why are you messing up with someone else’s work?”

“focus on your job, you are not paid for social service”

“don’t get into it else you would be held equally accountable”

In the current world of complexity and uncertainty, Collaboration is not an option but a necessity to win in the market place. If you are keen to know, how we could help you to bring about this change in your organization, please click her or write to contact@advanchainge.com.

Supply Chain Systems Thinking – A Case based Webinar

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What you may expect in this Webinar?

  • Case of a fruit juices company (The Fresh Connection) facing huge challenges –  Unhappy customers, financial losses, high obsolescence etc.
  • Analysis of end to end supply chain, financial statement, reports and key performance indicators
  • Collectively make strategic and tactical Supply Chain decisions for the company
  • Analyze the impact of the decisions on the performance of the company
  • Learn about importance of systems thinking in Supply Chain decision making

Watch this video for the preliminary view of the Case Problem 

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Systems Thinking is a holistic approach to decision making that looks at problems not as isolated challenges but rather as part of the larger system in which a particular function or process operates. 

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See the video below on the importance of Systems Thinking in Supply Chain

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About Fresh Connection Simulation

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Preparing for GST – Are you missing something?

One nation, one tax and one market, GST is staring in our faces. The supply chain folks are busy solving the puzzle of IGST/CGST/SGST and doing maths on the various costs in the upstream & downstream value chain. Most companies have already prepared a blueprint of the supply and distribution network that would require fewer but larger distribution center facilities. It would translate into expansion of the existing warehouses, closing some of the existing ones and opening warehouses in new locations. Some of the questions that are on top of everyone’s mind are:

  1. How to manage services levels from fewer facilities that would result in increased distances and response times to customers? Would 3PLs and transport companies pitch in to create an efficient network with hub and spoke model to fill in the gap?
  2. Given the fact that warehousing facilities will become larger, there would be a business case for automation of facilities. Can companies move from dedicated contract warehouses to shared facilities to create economy of scale?  Would 3PLs invest in the automation without passing on the cost impact?
  3. How to handle increase in rentals and other costs at the locations that appear in almost every company’s blueprint?

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However, amidst these priorities, something very important is being missed out that may hit companies at a later stage. And, this missing piece is developing competency of people engaged in managing and handling logistics operations. Currently, most logistics professionals handle small manual facilities and deal with small time local operators. A typical scene in a warehouse would be labor all over the warehouse, trucks parked in haphazard manner and supervisors shouting at the top of their voices to control everyone.

Now imagine the new scenario, for example, managing a 200,000 square feet facility with multiple zones, with reach-trucks or order-pickers or other sophisticated equipment, dispatching thousands of orders every day. These facilities would require robust process discipline that is independent of the memory and experience of the individuals running the show. Any small error or mistake can quickly snowball into a bigger problem. One can compare the operations in these facilities like that of factories. The logistics professionals will need to develop the competencies of managing people, equipment, throughput, safety and cost efficiency, similar to that of factory managers & supervisors.

The logistics service users would now have to deal with larger and professional service providers. The ability to develop & nurture long term relationships, getting appropriate commercial agreements and managing performance would be the key deliverable. Apart from these skills, the logistics practitioners would need to develop competencies on network optimization, warehouse layout design, transport route optimization, fleet mix optimization and technology interventions to continuously improve the efficiency and reliability of the supply chain.

The period of transition from the existing to new footprint could be very painful and severely impact the business unless the logistics team are well prepared to handle this situation. The skills that would be required to ride over this turbulent phase would be effective planning, program and change management.

The competencies that would be required in the post GST scenario, can be classified as below:

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Do you have a plan to assess and address these gaps in your logistics teams? If not, you may add this to the list of priorities that may need to be addressed sooner than later. Competency building takes time and requires sustained efforts. If you need external help in this initiative, you may reach out to us at contact@advanchainge.com 

We follow a proven approach of sustained engagement and develop interventions that have all the components of 70/20/10 model of competency development. We break down the entire initiative into small bursts or modules. Each module starts with classroom training followed by assignment of on the job projects with measurable deliverable and coaching & mentoring of learners to deliver results. Only when the desired objectives of a module are achieved, the next module is taken up.  This approach ensures that the competencies developed are sustainable and both individuals and organizations benefit from the initiative.

Supply Chain Execution Edge

Strategy is sexy, execution is sweat and blood. The great strategy and execution divide has been a topic of discussion and one of the greatest challenges for the CEOs. While great strategy is an outcome of great leadership and thinking, ability to execute is a part of DNA of an organization. It is a usual practice to formulate long term plans and strategies at the beginning of year. However, the accountability of implementation of the strategies is left to every department and very little thinking happens on what it would take to execute the strategies.

As per a survey conducted by The Economist Intelligence Unit in 2013, less than half (46%) of the respondents felt that their businesses were excellent or good at executing strategic initiatives. On an average 56% of the strategic initiatives were implemented across all the respondents over past 3 years. Only 33% of the respondents fed back the lessons from the failed strategy execution into new strategy formulation.

Execution is a strategy in our business”, says Paul Polman, CEO Unilever. Unilever realized that their customer service was at best average and therefore, declared it as a priority for the business. The appropriate organization structure was put in place along with reward and measurement. Then followed the rigorous following through and holding people accountable. Now, Everyday Great Execution (EDGE) is the mantra of Unilever organization’s culture and processes. Successful leaders understand that the team meetings, town-hall meetings or investments in technology do not guarantee the successful execution of a strategy. It largely depends on how well each employee identifies with the strategy and how well-oiled is the execution machinery of the organization.

Let us now examine the importance of execution capability in supply chain. In the current times, the businesses do not necessarily compete on products and technology. For example, Samsung would know about the new technologies and products Apple is working on and vice versa. The real competition is about who has the better supply chain execution capability to get the products on the shelf quicker while ensuring the product quality. Supply Chain is about 10% strategy and 90% execution capability. Supply chain people, in any company, are the busiest lot but are they really spending their energies on the right initiatives. Most of the time they are fighting day to day fires or trying to get alignment between conflicting interests of different departments. What is missing?

  1. Communication and Alignment

The companies have very well established processes for Annual Planning, Sales & Operations Planning and scheduling. In most cases, the people responsible for executing the plans e.g. delivery, procurement, production etc. get to see only the detailed level schedules and have little idea about the big picture. For them, every SKU or material is equally important and requires same level of attention. They cannot identify with the business critical Winning Goals & Winning Moves and how their decisions and actions would impact the success. For example, if meeting a deadline of an important customer order is the key winning move for the business then every part of supply chain should focus on meeting the most important objective. It requires supply chain leaders and managers to align their teams and communicate the key winning moves of the month, quarter or the year on a regular basis.

  1. Appropriate Lead Measures

We hear and read a lot about Balanced Scorecards and many organizations swear by their system of measurements. What most companies measure are the success measures e.g. revenue growth, profitability, working capital, customer service and so on. These measures are true reflection of the success of the company but are not helpful in understanding the gaps in performance. For example, customer service is a success measure for supply chain performance but the person responsible for order fulfillment needs to know much more than just one figure e.g. stock availability, inventory accuracy, order processing time etc., before being able to pinpoint where the gaps are and what needs to change. These lead measures are the levers available in the hands of people directly responsible for execution. Every part of supply chain should concentrate on the their set of aligned lead measures to steer the business towards winning goals.

  1. Use Performance Gaps for Structural Improvements

Generally, supply chain teams analyze their KPIs on a monthly basis and try to address the performance gaps. However, most of  it happens at a very superficial level without getting into the depth of the root cause and addressing a process or system instead of addressing just one specific problem. As a result the gaps and issues creep back after some time.

While there could be multiple issues needing attention, every supply chain team should be working on 3-4 important initiatives on strengthening their ability to execute winning goals in a very structured and sustained manner until the capability has been ingrained into the process, culture and behavior. The teams should be able to distinguish between day to day whirlwinds that take away their focus and the winds that sail their boats in the direction of the winning goals.

  1. Accountability and Commitment

When companies are small, team members contribute to the success of the company regardless of department divisions. But as companies grow, team members become singularly focused on getting their jobs done rather than focusing on how their jobs help to score the winning goals. Mistakes are blamed on other departments or people leading to silos. It happens when companies focus only at the success measures and no one is held accountable for the leading measures.

Every lead measure should be assigned to a team or individual who commits and held accountable for reporting, analyzing and improving the measure. It should be clearly communicated who takes what steps and corrective actions, should there be any gaps in the performance. The commitments made by the team or individuals should be reviewed on weekly / monthly basis to bring in sense of ownership.

  1. Discipline

Finally, discipline plays a very critical role in execution and is the first casualty whenever there are “whirlwinds” of unforeseen events. People tend to take short cuts and short term decisions not realizing the impact of their decisions on the other parts of supply chain and business.

The discipline is about following the rhythm of the planning and execution processes while ensuring the alignment with the rest of the supply chain and business. It is like an orchestra in which every musician is expected to follow the discipline of playing the assigned piece and stay in rhythm with the rest of the crew.

Supply Chain Execution Excellence requires putting together all the above pieces as a well-oiled machine that continuously moves the performance needle in line with the key business strategy.

We can help your supply chain organization to develop this capability using a well tested and structured Supply Chain Execution Excellence framework. Click here for more details or contact us.

Insights from Gartner’s Top 25 Supply Chain 2016

Gartner has come out with Top 25 Supply Chains for 2016. One of the significant change in this year’s rating is introduction of CSR as one of the scoring criteria.

Top 25 SCM 2016

There are companies that have managed to hold their positions, few have joined the bandwagon for the first time and some have moved up & down the ranking noticeably. See here the list of Top 25 Supply Chains 2016.

The key highlights of the changes in the ranking are:

  • Both Apple and P&G continue to hold their position as the Masters, having attained top 5 position for 7 out of 10 years. Apple’s revenue has come under pressure lately, however, they continue to perform strongly on other parameters.
  • Unilever upsets Amazon to score the top position. A major contributor to this change is the zero CSR score for Amazon (??) and perfect score of 10 to Unilever. Amazon continues to be in top 5 due to its leadership in innovation in products and supply chain.
  •  H&M overtakes Inditex (Zara) on account of higher Return on Assets and Revenue Growth.
  • Walmart drops by 3 ranks due to a low score of 3 on CSR and reduced Revenue Growth.
  • Nestle has jumped up by 7 rankings. The world’s largest consumer food supply chain scored a perfect 10 out of 10 for CSR, including a 99 out of 100 in the environmental dimension of the Dow Jones Sustainability Index for its use of “zero-water” factories and conversion of biowaste into renewable energy.
  • France-based L’Oréal, the world’s largest cosmetics company, ranks at No. 19, up three slots from last year. Its supply chain has focused on improving demand forecasting and supply and demand matching capabilities. The results have been impressive, as it has been able to improve service levels by more than 2%, while holding inventory constant.
  • New entrants – Schneider, HP, BASF, BMW and GSK

What these companies are doing differently to earn their position in top 25? Gartner has highlighted 3 trends of the leading companies:

  1. Customer Driven Partner Integration
  2. Advanced Analytics
  3. CSR and Sustainability

Let’s see few examples of the initiatives taken up by the companies occupying top 15 positions, summarized from the Gartner’s report.

Customer Driven Partner Integration:

  • Apple continues to succeed by offering platforms that ecosystems of partners build upon to meet customers’ needs, whether that relates to core product features such as access through touch-based security, media content and applications or third-party accessories that convert its products into smart diagnostic devices or payment terminals.
  • McDonald’s corporate supply chain team excels at orchestrating the upstream supply network. It promotes and acts as the conduit between outsourced vendors, suppliers, corporate stores and franchise partners. It uses council meetings to collaborate with suppliers on new product innovation and technology, as well as on plant safety.
  • Intel’s supply chain group has proven to be a worthy partner for growth in the past. Over the course of 2014, the team enabled an entirely new ecosystem of China-based technology providers to support the ramp up of new tablet products.
  • Cisco has leveraged technology along with process improvement is in supplier collaboration. The team deployed a cloud-based partnering platform with suppliers that serves as a single source of truth for data, eliminating the bullwhip effect between Cisco, contract manufacturers and suppliers. There is full demand visibility, and suppliers can address shortages through alerts in a more automated way.
  • Nike’s supply chain has extended visibility to outsourced factory production and compliance, as well as to how stores are executing on merchandising, inventory and operations plans.

Advanced Analytics:

  • P&G’s supply chain team is using advanced techniques to drive elimination of truck residence time at mixing centers. The company has also embedded sensors in some of its products, such as toothbrushes and air fresheners. The data transmitted from these products aids the company in understanding consumer usage patterns to support replenishment of supplies for existing products and design features for future offerings.
  • Unilever has made significant investments in regional operational centers that support all facets of the customer order-to-cash process. This work is yielding cost savings through economies of scale and common processes, as well as the ability to better support customer needs by applying analytics to a common CRM system.
  • H&M operates its supply chains tailored by product type, with 80% of volume built to plan at standard, cost-efficient lead times and the remaining 20% that is agile and can respond to fashion trends by going from design to hanger in as little as 20 days, using digital technology.
  • Inditex has set up a planning and analytics team that sorts through real-time sales trends to inform future design and production. Another team converts voice of the customer feedback gathered from the store and district network into prescriptive advice for the design teams.
  • Cisco, as part digitizing the logistics function is connecting logistics to the broader supply chain with data, standards, automated event management and machine agents. Cisco is also bringing new technologies to bear in its warehouses, including augmented reality, telematics and video analytics.
  • Samsung’s supply chain team continues to focus on improving customer collaboration and gaining insight into consumer behaviors through connected devices.
  • Nestlé is investing in predictive analytics for demand planning and enabling growth in its e-commerce business, which includes packaging tailored more for delivery than display in a store.
  • Colgate-Palmolive team has partnered with its enterprise software provider to co-develop supply chain control tower capabilities, including better demand sensing, inventory optimization and supply network planning. The pilot implementation of this capability has enabled daily responsiveness and reduced inventory levels, while minimizing out of stock impacts.
  • PepsiCo’s supply chain is partnering with commercial teams to deploy a total portfolio optimization governance process and tool that allows for data-driven assessment of portfolio health, detailed analysis relative to evaluation criteria and targets, and a process for final portfolio decisions. Pilots of the new portfolio optimization platform are yielding double-digit percentage improvements in profit per volume measures.

CSR:

  • Apple has improved the degree of transparency into its extended supply chain in recent years. In the area of conflict minerals, its 2015 Supplier Responsibility Progress Report states that all of its 242 smelters and refiners of tin, tantalum, tungsten and gold are subject to third-party audits to ensure they are not funding violence in the Democratic Republic of Congo (DRC).
  • Unilever says that it is achieving zero waste through its “four R approach” — reducing, reusing, recovering or recycling — and treating waste as a resource with alternate uses, such as converting factory waste to building materials or composting food waste from staff cafeterias. Longer term, it aspires to be “carbon-positive” by 2030.
  • Intel is the largest U.S. purchaser of renewable energy certificates and when combined with in-house sources, gets 100% of the 3.1 billion kilowatt-hours of electricity its operations consumes annually from green sources.
  • H&M was part of a recent coalition of top clothing companies that called on governments to agree to a strong climate change deal based on concerns that long-term climate effects could harm production of one if its major inputs, cotton.
  • Inditex has set a goal to run 100% eco-efficient stores by 2020. The new Zara flagship store in Manhattan tracks sustainability measures across all of its processes and will consume 30% less energy and 50% less water compared to a conventional store.
  • Cisco is leveraging in-house Internet of Everything (IoE) technology to improve product quality, gain energy efficiency in operations and reach universal order visibility.
  • Samsung has recently received two awards for sustainability from the U.S. Environmental Protection Agency (EPA) for its use of sustainable materials in the Samsung Galaxy S6 and its long-term commitment to the proper disposal and recycling of e-waste in the United States.
  • Coca Cola has set out ambitious sustainability goals for 2020 that include improving water and emissions efficiency by more than 20%, empowering five million women across its value chain and several programs to improve nutritional content and reporting.

While the scoring criteria and weightage given are open to debate, but key takeaway is the breakthrough innovations the leading companies are focusing on to stay ahead of the curve.

Sales and Operations Planning – Getting Past the Dead End

If you were to ask a senior leader of a company about initiatives that are being taken to move the S&OP process in the company to next level, majority of them will tell you that they already do it very well. Some of them may give you an impression that they have, sort of, perfected the process.  The next question I would ask is, “If that is so, then both customers and shareholders must be delighted”. The most common response to the statement is a blank look.

S&OP concept is three-decade old that was originally designed to balance and getting cross-functional alignment to demand and supply plans. The companies adopted the process for varied reasons – some genuinely believed in its greatness and others because they did not want to be seen as not doing the right things. Whatever may have been the reasons, in most cases it was perceived and implemented as a process by supply chain and for supply chain. And, it made sense as the main objective was balance demand and supply.  Other functions i.e. Sales, Marketing, Finance, Manufacturing understood their roles in the process but their ownership has always remained a challenge. The key reasons of disengagement are:

  • Misalignment in the reward system e.g. sales being rewarded on achieving annual targets while supply chain on forecast accuracy, inventory & so on.
  • Silo mindset continues to exist. People meeting for the demand and supply reviews should not be construed as collaboration. Most meetings end up in fixing blames for the past problems and sandbagging the future plans.
  • No clear accountability for the metrics
  • Inadequate process governance. The discipline of the meetings, preparation, data quality etc. take a backseat making the whole process inefficient and burdensome.

It has been found that the business heads, the owners of S&OP process, also lose interest after few cycles. The primary reason for this behavior is too much focus on short term and operational level details. The business heads are interested in answers to three fundamental questions:

  1. How are we performing against the business goals and strategy?
  2. What are the key risks and gaps that can derail the journey towards the goals?
  3. What needs to be done to safeguard against these risks and overcome the gaps?

When the business heads do not see these questions being addressed through the S&OP process they tend to disengage.  They also hate to play the role of referees in the verbal fights between different functions in the executive S&OP meetings.

These symptoms indicate that the S&OP in these companies has reached a dead end. According to a study by Gartner most of the companies are stuck in stage 2 of S&OP maturity.

The only way to get past the dead end is to re-position and reorient the entire process as business focused, instead of demand & supply focused. Oliver Wight, the originators of S&OP process, have rechristened the process to Integrated Business Planning (IBP) – not just a change in the name but it is a change in the approach as well as mindset. Anything that helps in answering the three questions from the business heads, mentioned above, should be part of the IBP scope. All the business reviews and decision making meetings should be merged with and made part of IBP.  Oliver Wight talks about number of differentiators of IBP process, but there are three main drivers of change that can help you to take your S&OP journey past the dead end.

  1. Broaden the Scope

While the demand and supply balancing may continue to play heavy on the agenda but the scope should include key strategic initiatives and projects e.g. new customers acquisition, products phase in and phase out, operational efficiency improvement, new supplier development etc. Broadening of scope will automatically engage and excite all the functional stakeholders.

  1. Change the Language

Supply chain folks speak the language of SKUs and volumes, whereas business heads understand the language of value or dollars. Therefore, a strong financial integration and capability to translate plans into revenue, profit and cash flow is the key to the transformation. Similarly, the sales heads need to be spoken in the language of customers, channels and territories. Marketing heads like to hear the language of products, categories and markets.

  1. Recognize uncertainty

Traditional S&OP has always tried to project one number. We all know, that in the current business environment reality can change significantly between two planning cycles. Therefore, it makes sense to also look at the potential downside or the upside to the plans. By doing so, you may not end up one number but can still have one version of the plan, which is also known as the range forecast. It immediately enhances your capability to recognize risks and opportunities in the business and entrenches the adequate response in decision making. It would also help in reducing gaps between the plans and execution.

In a nutshell, S&OP is a journey to continuously improve the capability of a business to achieve its goals. There is no maturity level that qualifies for the title of “perfect or ideal S&OP”. While supply chain may continue to play a pivotal role in the process but it is a process owned by the business leaders for the business.

Supply Chain Systems Thinking

Few months back I met one of my friends who happened to be the Supply Chain Director of a company. At that point of time I was contemplating to start my independent venture to support the businesses with supply chain capability and talent development. I casually asked him if he had to choose one capability that he wanted to improve within his team, what would it be? I was expecting a usual answer e.g. demand forecasting, inventory management, cost reduction, service etc. He thought for a moment and I used that moment trying to read changing expressions of his face. And then, he surprised me with his response, “if I can somehow inculcate supply chain thinking within my team, it would significantly take frustration off my head.”

The answer got me into thinking, what does “supply chain thinking” mean? How can people be trained to think “the supply chain way“? Is this gap widespread or one-off? It was good enough to motivate me to dive deep into this topic. In this article, I have put together the summary of my findings on all of the above questions.

The answer to the first question – “what supply chain thinking means”, was easy and most of the supply chain practitioners can easily relate to it. It means that every supply chain decision is a trade-off between numerous drivers that exists across the value chain. For example, a purchasing decision is not just about material cost, lead time and quality but also about production cost, flexibility and end product quality as well as working capital management. Alternatively, one can conclude that a purchasing decision is about the whole system consisting of Supply, Manufacturing and Financing sub-systems. Using it as a case in point, I modified the term to “supply chain systems thinking”.

According to the Institute for Systemic Leadership, systems thinking is a management discipline that concerns an understanding of a system by examining the linkages and interactions between the components that comprise the entirety of that defined system. A very close analogy is human digestive system whose behavior depends entirely on the interplay between various organs constituting the system. Any imbalance between the activities of the organs can impact the health of the whole system.

Supply Chain is a complex system for two reasons:

  1. Anything Systems Thinking 1that happens within or outside the business, directly or indirectly, impacts the supply chain behavior.
  2. Where do you draw boundaries of the supply chain system – within the firm; or in
    clude suppliers and customers; or include suppliers’ suppliers and customers’ customers? The farther you move the systems boundaries, the decision making is more robust but more complex and time taking. Therefore, one needs to carefully balance the speed and accuracy of decision making.

We jump to the 3rd question – “is the gap in systems thinking widespread or one-off?” Speaking to various people in the supply chain fraternity, it became apparent that the gap is not one-off. In one of the articles on Systems Thinking and the Supply Chain by David Schneider, the author states, “yet while nearly all of us recognize the supply chain as a system, I will maintain most managers and executives do not really operate that way on a consistent basis”. The root cause of the gap lies in poorly defined supply chain system boundaries and lack of understanding of the cause and effect relationships between supply chain and other business drivers.

To begin with, supply chain people define their system boundaries too narrowly, usually at the beginning and end of their specific roles i.e. purchasing, manufacturing, logistics etc., commonly known as silo thinking. Or, at best they may extend the boundaries one or two steps upstream and downstream of their specific roles. Secondly, they lack either the motivation or capability to zoom out of a problem within a specific area to have a helicopter view of the problem in overall business context.

We now come back to the 2nd question – “How can people be trained to think the supply chain way?”. The first intervention that is required is to develop the business acumen of the supply chain people. They should have a clear understanding of how each action and decision impacts the Return on Investment (ROI) or the Economic Value Added (EVA). Once this capability is developed, people will evaluate their decisions on the business criteria instead of the functional criteria. It will also enable them to dynamically play with the systems boundaries depending on the complexity of the decision making.

Second important intervention that is required is to make supply chain people master the interplay of various business drivers. They should see every decision in supply chain as a trade-off across the value chain and not just within the focused firm. For example, a high customer service commitment can result in high product expiry or obsolescence of a perishable product (I challenge the readers to plot the cause and effect relationships to prove it). Such interventions can be carried out neither by conventional training in the classroom nor by pointing out on the job (that may have a long learning curve and high cost of making errors).

The most appropriate way to make people learn supply chain systems thinking is using the experiential learning within a simulated environment – that provides the ability to make, evaluate and improve decisions in a real life business case. At Advanchainge, we have taken a mission to change the way supply chain talent development has been conventionally looked at. We use world’s best value chain learning simulation, The Fresh Connection, to develop capability on supply chain systems thinking.

If you have any suggestions or thoughts, feel free to pen down your comments below.

Experiential Learning – New Way to Learn Supply Chain Management

Most of us would have attended various training programs at some point of time or the other. How much of the stuff “learnt” during the training did we really assimilate, apply and practice on the job leading to eureka moment? Probably none!

Therefore, training is passé and experiential learning is in.

050g6t8Experiential Leaning is a method of educating through first-hand experience. According to David Kolb, father of experiential learning theory, learning is a process whereby knowledge is created by transformation of experience. It essentially means choosing “doing” over “watching” and “feeling” over “thinking”.  There is no better way of delivering experiential learning but through simulations that allows learners to work on real-life problems, make mistakes, and see the outcomes of their decisions then and there. And not the least, experience the eureka moment and a greater confidence of applying the learning on the job.

The famous Beer Game was the first such simple simulation used to experience supply chain dynamics, bullwhip effect and coordination. It had served its purpose well as long as supply chains were simple and stable. With supply chains becoming global, complex and unpredictable the need of the hour is more sophisticated and wholesome simulation that mirrors real- life situations and problems.

The Fresh Connection is one of the world’s leading interactive team based simulation that provides an exceptional means for learning how to make sound value chain decisions by balancing trade-offs across supply chain. Learners, working in teams, can see the impact of the decisions on the company’s ROI instantly and dive deep to analyze the results. They make mistakes, reflect on the impact of their decisions and take corrective actions. It creates that eureka moment for the learners when they see how their decision finally turn around a loss making company into profitable one and they compete with each other to maximize the ROI. The simulation rewards the teams that work in a collaborative mode and sync their value chains to a common business strategy.

logo-TFC-02No wonder, the simulation has been used by 10000+ professionals from 750+ companies from 25 countries. Every year hundreds of practitioners and students participate in the annual global competition using The Fresh Connection.

Click here for more details on The Fresh Connection

Click here to watch an introductory video on The Fresh Connection

If you wish to explore this simulation to develop supply chain competency for your organization, please write to contact@advanchainge.com or visit http://advanchainge.com/partener.php