Building Capabilities

The modern supply chain environment is changing rapidly: Shorter lead times. Faster turnaround and response times. More SKUs. Cheaper component sourcing and more effective procurement. Reduced environmental impact from extensive transportation. More regulation and compliance. Perpetual cost management and expense reduction.

Not only do supply chain professionals have to contend with this increasingly complex world, but at the end of the day, you actually need to get components sourced, parts manufactured, and products shipped. And, you probably need to get it done with fewer people spread across more locations in your global supply chain footprint than ever before.

These challenges can seem threatening and overwhelming. Do you try and tackle everything that is thrown at you?  Or do you somehow prioritize – picking the one that offers the greatest return or the one that is the greatest immediate threat?

The good news is that it doesn’t have to be one or the other – there is a way to tackle multiple priorities simultaneously. The bad news is that most people don’t know this.

Flexible Control

First, a bit of background:  Over time, companies evolve and (some) become more successful. That success makes them bigger – and bigger requires more control. This control has been delivered in the form of a well-structured hierarchy that manages resources, budgets and priorities. The hierarchy does this very efficiently. And for a while, this works well.

What the hierarchy delivers in control, however, it takes away in flexibility. So, in an environment with a lot of variables and competing challenges and threats – an environment that requires flexibility – the hierarchy often finds itself unable to maneuver with the agility required to excel.

What’s the solution? The key to being able to get the basics right (i.e., get the product shipped) AND handle the challenges that are coming at you (AND be a great place for people to work AND manage efficiencies AND reduce waste AND … AND …) is to deliberately build an organization and team that can operate alongside the hierarchy. We call this a dual-operating system. It’s a system that provides the management and coordination that is needed to continue supporting the daily operations of the supply chain functioning, complemented by a system that encourages and enables hundreds, if not thousands, of your employees to be able to work on all the other things that you need to get done.

So, how does a company actually create this?  Doing this right requires a process. Before you do anything else, your leadership team must accept the fact that command-and-control isn’t the way to get long-term sustainable results in today’s economy. It’s about embracing the reality that for an organization to do more, it needs more and more people who can help push the process along at all levels. This is about letting go, and accepting that you need your employees’ help to do everything that you need to do.

Urgent Needs

The first step is to create a sense of alignment and passion throughout the organization around an exciting opportunity. You should be able to clearly talk about why NOW is an exciting time for your company to do great things, and how everyone can play a role in making this happen. This isn’t an academic exercise with PowerPoint decks and presentation – this is about igniting passion and commitment around a vision, an opportunity, that is so compelling that most people just want to help to make it happen NOW. This sense of urgency is critical. Why?  Well, it’s a lot easier to make massive change happen if you have employees jostling to get on board to support you, than it is to try and push change down onto people.

Once you’ve created this energy and urgency, and only then, can you start creating this new second structure that can work with your traditional hierarchy to make change happen. How you set up this team is critical. It cannot be the way you usually choose people for initiatives and workstreams; this group of people should be representative of all levels and all functions in your operation. Selection of the people in the network structure should be based on passion and commitment to the exciting opportunity that you articulated, not on tenure, or level, or high-performer status, or who they are connected to. If you step back and look at it, what you’re doing is creating a structure made up of people who actually do the work – people who know what the challenges or opportunities are, and what to do about them.

Once this team comes together, you then empower them to go off and do what they determine will have the greatest impact in catapulting your operations forward.

It’s not about relinquishing control – it’s about letting more people play a role in helping you, as leaders, get to the 36 workstreams and 142 initiatives and priorities that are on your departmental scorecard for the year.

Getting Results

The results can be tremendous. COTY Inc. a global beauty products manufacturer with over $4.6 billion in revenue, recently went through this process. Over 3,600 people work in the Supply Chain division at COTY, with over 30,000 SKUs, 10 production facilities, 40+ distribution centers and 120+ distribution lanes. This organization also manages a large number of TPM alliances and agreements. In addition to the ‘normal’ pressures on the supply chain operations such as managing cost, reducing their speed-to-market, and managing increasing product and market complexity, COTY, Inc. also listed on the NYSE earlier this year.

After some very deliberate discussions as a supply chain leadership team, COTY committed to building energy and excitement across the entire global supply chain function. Once this had been done, they invited anyone who was behind the new vision to apply to join this new structure. For 34 positions they received over 140 applications!  They then selected the members who would represent the overall supply chain function, and now, with their second team approaching the mid-way point of their term, they are rightfully proud of the $40+ million achieved in improved supply chain efficiency, the Industry Leadership Award that they earned, the unprecedented increase in their employee engagement scores (far above the industry norms), and the fact that they have discovered a completely new pool of talent – resulting in internal mobility unlike anything they had experienced before.

COTY’s supply chain division built the capability to innovate from the inside by leveraging their own people.

This example is only one of many that serve to show changes that are hitting every operation in almost all supply chain functions around the world need not be a cause for concern. Instead, they can be a captivating way to engage your whole organization in the process of building the agile supply chain function of the future – a place where you get things done, and where everyone wants to work, and no-one wants to leave.