What is a short way to describe a cross-functional supply chain?
Well really it’s the only type of supply chain there is! That’s why supply chain in itself is challenging because it requires us to engage disparate functional silos in the critical cross functional end to end process that is supply chain.
It requires us to have hard conversations between different types of people, including innovators, across and up and down the organisation.
It is not really about having the Old World of business pit against the New World. It is about picturing an ideal state of your supply chain and how it takes from both worlds to really create a successful supply chain!
But first, let’s define what the two worlds are. In the Old World of supply chains, the largest companies generally followed a rigid, traditional structure of mass production, mass inventory storage and mass marketing via a chain of storefront partners or local subsidiaries, agents and distributors that were on hand to ensure the local market traditions were understood and implemented in the sales and marketing processes, to ensure that they protected their customer base and that they had a strong careful guiding hand on demand and it’s management.
Today, we have been rapidly departing from that. In this New World, the dominance of the internet’s global infrastructure has required mass production to become lean production. Massive inventory has become a costlier liability than ever before. Meanwhile, their storefront partners, agents and distributors find themselves muscled aside as consumers prefer virtual shopping carts to digital ones.
Fundamentally the old structures have allowed for disruption by improved business models and greater segmentation of mass markets leading them to better servicing of old world clients, than the old world companies were capable of delivering.
Still, some semblance of the Old World will not go away simply because they represent ideas and technologies that are both effective and resilient against disruption thus far! Old brands that previously relied on pure retail are quickly incorporating hybrid solutions and thus, we are now moving towards a phase where the ideal state comprises both.
Recently, a good example would be the major shopping buzz that occured between Black Friday and Cyber Monday. Before, these two events were as distinguishable with one representing the mall store and the other an e-commerce site.
Yet as Digital Commerce reported, Black Friday has demonstrated bigger growth than Cyber Monday even as sales for the latter continue to dominate the market. No doubt this is due to a number of factors, such as the use of the Black Friday label in digital marketing efforts and even several online retailers simply holding their discounts on the date. Amazon certainly didn’t hesitate having a finger in each pie, culminating in roughly 25% share of the sales for both days.
One can quickly conclude that the Old World and New World are already converging just from this report alone. The Black Friday phenomenon is of the Old World but is rapidly transforming and expanding itself by extending the storefront to e-commerce.
In a way, it is somewhat similar to innovation initiatives like McDonald’s Experience the Future. It was no great leap from restaurants to food warehouses. They simply put up automated kiosks to further ease their service speed. The Old World’s fast food counter is still there, with a New World upgrade.
Likewise, similar initiatives can succeed for your own organization if your supply chain is really cross-functional, with everyone, including your innovators just focused on ‘what works’. It doesn’t matter whether the idea more heavily impacts the Logistics department or requires the intervention of Human Resources at your manufacturing plant. It should not take away from this focus!
Team heads and managers from across the network should all be on the same page when it comes to generating better value out of their processes. There is no time to waste pitting everyone’s egos against each other to ensure protection of existing organisational power bases! If your organisation is still doing this, find a new one that actually has a future!
That said, here are some areas of common ground that you can spell out and have everyone regard as their topmost concerns.
#1. Customer Experience
In another report, Digital Commerce noted that there was still some distinctions between those who shopped on Black Friday and those on Cyber Monday. It is a classic case of trying to understand customer behaviour in order to provide them a better buying experience. However, to say that this is only a marketing concern is very misleading. It is not even enough to combine marketing with IT and task them to come up with something.
For example, if a certain segment of customers have a particular preference for delivery, then people in charge of transportation/distribution must pitch in. And within that same area, those in charge of production must enhance their processes to reduce the strain on logistics. It is not just the job of one or two departments to create a facade of easy online shopping. The expectations of a new customer experience extends further behind the scenes and affects the entire end to end supply chain processes.
Have you ever actually logged on an pretended you are a client of your business? Why not? If so, what was the experience like? Was the web site easy to find? Did the web site load fast? Was the product easy to find? Was the product easy to order and buy? Was the product delivered on time? How would you define your own customer experience? Would you log on again to your own company website and would you ever buy from yourself again?
The trick is to go looking for the ‘grey’ areas in your supply chain where product, information or funds are being passed from one function to the next, and this grey area is where for a moment in time, no one is responsible or accountable for the movement actually occurring, hence the chain will simply break!
#2. Data Visualization and Interpretation
When it comes to statistics, one should not assume every person in the organization has the acumen to understand a stream of figures. Data that is meant to have an impact on everyone needs to be analysed and presented in a way that is understandable to everyone.
That means taking all data generated by each part of the supply chain network and presenting it in a way that everyone understands its implications. Is production too slow to meet with customer demand? Are the manufacturers reaching their production limit? Have we warehoused enough product to meet demand? Can we distribute enough product to meet demand? Ensure that everyone knows post-haste with a solid combination of big data technologies and analysts who can educate everyone on the situation!
Here, we need to make sure that the supply chain dashboard which connects sourcing (do I have the right product at the right price) with production (have I got the right quantities of the right product in the right place at the right time). Or production (I have made the products that I was asked to make on time) with warehousing(Have I got the right products, in the right quantity, at the right time for pick-up) Or finally, warehousing(I have the products I am supposed to have) with customers (Where is my product, where is the carrier, when will I have my product, why isn’t it on time?) So, you can see in this very basic example that there is oh so much that can go wrong and that nothing short of really sharp analysis and great knowledgeable interpretation of data is what’s needed to isolate pain points and remediate and then test that the remediation used actually worked and did not create a new issue elsewhere.
There will come a point when the old methods of production are no longer sustainable because the material is scarce and/or the product itself has been eclipsed by cheaper alternatives in the market, so alternative products and production methods must be considered. Only the most naive of business leaders would assign an isolated department to seek these alternatives while assuming everyone will quietly fall in line once they have been found.
Resistance from within the organization is very likely when it comes to the topic of sustainability. Some companies prefer the Old World methods of production because there is an unseen merit to their process. Others opt for what only looks innovative on paper but come with hidden waste that is not evident unless given closer scrutiny. Either way, organizations must acknowledge the wider impact the sustainability has across all areas, and each department must eliminate barriers to that goal.
The most resilient and practical remnants of Old World supply chain and manufacturing exist because they are proven to keep systems stable. On the other hand, New World developments must be incorporated if they lead to better results and more satisfied customers.
We all understand that eventually the new world will drive to a ‘tipping point ‘where the old world and it’s ways will be relegated to the past for good. In the meantime, leverage where you can the old and the new, continue to strive for continuous improvement and step change, continue to work with true cross functional teams on better managing your end to end supply chain, and have a clear understanding of your supply chain processes.
From your ‘as is’ state, you can improve your understanding and management of the grey areas where you will be vulnerable. It’s on this ‘as is’ state that you will focus your cross functional team with a new challenge.
The goal is self disruption in ferocious pursuit of the ideal state that will provide to you a strategic competitive advantage.
Use the best thinking and the most advanced tools to create your end to end supply chain ‘ideal state’ and don’t be afraid to lead! You can let the team brainstorm and have a guideline for them to ‘be bold!’ The best ideas are created in this type of environment and we have too little of this inside organisations today! (How do you think the disruptors come up with their ideas? And what are we doing in major corporations, shutting down innovators and those that think differently to the norm! Enough said!)
Once you have this, you can set to work developing the action plan to get from your ‘as is’ state to your ‘to be’ state with a view to actually creating the supply chain of the future, with the cross functional organisation that so desperately needs it!