February  26, 2010 | Steven LaVoie

Part 4 of a 4 part series

To conclude our series of tips for businesses working to increase supply chain openness with trading partners, I am going to talk about performance goals. As you make significant changes to your supply chain operations and technologies, it’s critical to define and communicate the goals behind these changes. While the senior management team that signed off on purchase orders and read business cases may well understand the motivations and objectives behind major supply chain changes, there are still many people across the entire business organization that might not have that information.

It’s important to make communicating supply chain changes and performance goals to key audiences a formal part of your change management process. Why? Because it helps to ensure that the new strategy and system are embraced and utilized for maximum business benefit. At ArrowStream, we suggest defining your audiences as well as what they need to know and what performance goals are expected and the metrics you’ll use to measure it.

• Supply chain staff - These critical team members need to understand how, when and why the changes are happening, how they will affect their roles and what will be expected of them. Make part of the communications process a formal discussion of performance goals and how supply chain staff will be expected to help measure and analyze the effectiveness of any new supply chain solution or approach. It’s also important that staff members understand performance goals will be regularly measured, analyzed and shared. You’d be surprised how many businesses outline performance goals for the supply chain and its teams but never measure them. Incorporate performance metrics such as issue resolution times and total product and freight spend.
• Business partners - Across your organization, various departments will be affected by supply chain solution changes. Promotions, for example, involves multiple departments from supply chain to purchasing and marketing. Be sure they are well-informed of the changes, how they will affect their operations and what improvements they can expect. Include them in the performance management process by asking them to note improvements and/or performance declines as they relate to the new system. Also, communicate the metrics needed to measure performance. For example, with promotion performance, you’ll want to measure inventory obsolescence, stock outs, and ROI.
• Executive management - Keep executive management keenly aware of progress and milestones achieved as you upgrade and open your supply chain operations. They should have access to high level performance metrics such as, total landed costs, spend analytics, inventory volume tracking and promotions management. Likely major objectives have been defined, but also take time to share insights and anecdotes into information executive management might not be tracking. For example, if team efficiency has greatly increased due to automation or better information, share the story. If new information provided through the more open and trading partner-integrated operations has allowed the supply chain team to make unanticipated but important improvements, share the story.
• Trading partners - As you open up your supply chain operations to more trading partner insight and scrutiny, be certain you are sharing performance goals and expectations. Remember, it’s not just more information you are hoping to gain by increasing supply chain openness, its better business performance. Don’t be shy about defining your expectations for improved working relationships with trading partners, whether that is framed in terms of cost, on-time performance or greater information access. And remember, your trading partners will have performance goals as well and in most every case both businesses will benefit from defining and measuring them.

This blog entry concludes the ArrowStream Tenets of Achieving Greater Supply Chain Openness series. As you consider how to increase information sharing and collaboration across your supply chain and trading partner relationships, keep them in mind. We look forward to hearing how your supply chain operations are expanding and improving through greater insight, partnership and visibility.

February  23, 2010 | Steven LaVoie

Part 3 of a 4 part series

In our ongoing series on increasing supply chain openness, I have shared the first two tenets of success: 1) a broad network of partners and 2) strong supply chain technologies that can integrate trading partner systems. In this posting, I would like to share with you the importance of maintaining effective change management processes, which is the third tenet of supply chain openness.

While few people would immediately select change management tools and resources as vital to supply chain operations, we at ArrowStream have seen firsthand how important they are in evolution of opening up the supply chain. Today, technology plays an important role in increasing information sharing and collaboration among trading partners. With the integration of new technologies and capabilities, many manual supply chain processes are automated, such as contract management and price notifications. Increased automation changes the fundamental roles and responsibilities of supply chain team members.

To ensure supply chain staff evolve with technology and are supportive of efforts better integrate trading partners into supply chain operations, businesses need to establish strong change management processes, which ArrowStream defines in three phases: alignment, incentives and, finally, execution.

Alignment - It’s critical that staff members and your trading partners are carefully educated and prepped for the operational and process changes that come with major supply chain advancements. This includes not only solid training around new technologies, but also clear instruction on how their own roles are evolving, an understanding of your business objectives and the metrics that will be used to measure performance (total freight spend, cost per case, inventory levels, etc.). This focus on preparing and aligning staff and trading partners will win more supporters of the change and alleviates many of the growing pains.  

Incentives - To unite the entire business-from trading partners to executive teams, supply chain and procurement staff-explain the incentives. The whole business stands to gain from supply chain optimization so define what it will look like by communicating the benefits and what the rewards will be. Some clients of ours, will even give bonuses tied to reaching certain metrics and performance goals.

Execution - Once you have aligned all team members to the change and defined and communicated incentives, it’s go time. However, maintaining communication excellence throughout the change process is critical in keeping the organization supportive of the new solution. Send out updates and share when milestones are achieved. Most importantly, let all team members know when benefits (lower costs, greater flexibility, and increased productivity) are realized. Let the entire company see that the change was well worth the challenge.

It’s also important to remember that as supply chain technologies and processes advance, comprehensive and timely information is available to employees across the supply chain. Businesses that prepare their staff for these changes and train them to better manage and understand the information the supply chain provides are cultivating topnotch decision makers. Those that overlook the importance of helping their staff evolve with supply chain technologies are overlooking a fundamental step that will keep them from successfully broadening their supply chain reach, knowledge and effectiveness. 

Please stay tuned for our fourth and final piece of guidance for businesses looking to create greater supply chain openness and integration among their trading partners. I will be posting it in the next several days.