Friday, October 6, 2017

Why Do Supply Chain Transformations Fail - The Case for Change Management

I have been thinking and reading a lot lately about supply chain transformations.  I have also been involved in many of them throughout my career including the integration of a $5bl supply chain with a $10bl supply chain in the durable goods area and the complete redesign of a major automotive service parts supply chain.

What makes a transformation action great and what can cause them to fail?  Obviously, you have to get the "supply chain technicals" correct.  If you are redesigning the network, redesigning the fulfillment methods or moving to modern leading edge technology you will need to get the technicals right.  However, my thesis is this is less than 1/2 of the success criteria.  Once you have this right, the biggest challenge is change management.  You will need to lead an entire company and team into the new environment and if this is not done well, all the technical genius in the world will not make your supply chain transformation work.

I am going to address this in a series of posts and this first post is going to cover the definition of change management.  Daryl Connor in his book "Managing At The Speed of Change" defined it this way:
"Change management is a set of principles, techniques, and prescriptions applied to the human aspects of executing major change initiatives in organizational settings."
For me, the key words for this are the "human aspects" of change.  While we tend to be deep into the technology, more and more supply chain managers are forgetting the human aspects of change. When you try to transform a supply chain (or dare I use the term "disrupt") every person around you is thinking:

  1. Why do we have to change?  Everything is working fine now and I like what "is".  Why the change?
  2. What is my new role in the new environment?  What skills will I need in this new world?
  3. Do we have the fortitude to "stick with it" or is this just another "flavor of the day"?
  4. Will this really make us industry leading?
  5. Is the rest of the enterprise supporting this change?
There are many methods which you can use to answer these fundamental questions (ADKAR, Kotter etc.) and it almost does not matter which method you use as long as you are honest with yourself and understand the questions above are being asked (whether spoken or unspoken).  I once saw a model for change which displayed the following equation:


Where E=Effectiveness (of the change), T=Technical Aspects and A = Acceptance.  The easiest way to understand this is if A = 0 and T = 100 (Meaning your change is perfectly designed and perfectly implemented however the human acceptance is non existent) the effectiveness of the change will equal 0.  Completely ineffective!

So, given this is there no wonder why most transformations are less than fully effective?  If you are a technical supply chain manager and you are thrilled you got the "technicals" right but you totally forgot about the "A" then your project will fail.  It is that simple. 

Here are some great resources to help with your change management portion of anything whether it be a small project, a larger program or a complete transformation:

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