It was a hot afternoon in Scottsdale on the day after Labor Day with temperatures over 100o F when about a dozen of us assembled for a hike up on Camelback Mountain. The hike was intended to be a networking activity for attendees at this year’s Supply Chain Insights Summit. We had arrived from near and far – some from as far away as Europe. Before starting on the hike, our guides gave us three lessons: First, the journey is itself the goal. Reaching the summit will be nice but it is not our objective. Our goal is to enjoy the experience, to return safely and on time so we don’t miss out on the rest of the conference. Second, you need to go at a pace that is comfortable for you. We have three guides so the group can split up and adjust as needed. Third, you must keep rejuvenating. It is scorching hot out there. You will lose water and salt. You should rest and drink water regularly. As soon as possible, you should also drink some fluids high in electrolytes to recoup the lost salt. As we started walking towards the trail-head, I couldn’t help but think about how much the same lessons applied to supply chain journeys as well.
The journey is the goal
In Arizona, if you wander off the trail, you may meet up with rattlesnakes or killer bees. Frequently, supply chain initiatives also get off course. They can slip into becoming mere IT projects where victory is declared upon going live rather than on achieving sustained improvements in process capability. For a successful journey, we must stay focused on the business value. In my own work, I prefer to delineate project milestones along “business releases” where each epoch relates to specific process changes and associated business value.
This was the approach we used at a major supply chain transformation project[i] that I had the privilege to lead many moons ago at Samsung Electronics. After a formal project kickoff ceremony, my hosts introduced me to the team. The interesting thing was that I had only expected about 6 to 10 people – not the army of 40 that greeted me. The wisdom of overstaffing the first phase of the project was to become clear in the years to come. After living through the first project, these 40 people fanned out and took on leadership roles delivering business releases in supply chain transformation projects across the many Samsung Electronics’ businesses. Today, Samsung makes both the Supply Chain Insights’ “Supply Chains to Admire” list as well as Gartner Supply Chain Top 25. I am sure a good part of Samsung’s success can be attributed to this long term and process centric mindset they took from the very beginning.
Find your pace
Being rewarded with a breathtaking view after every steep climb can sure pump you up for the next leg. A few years after Samsung, I was advising another global consumer electronics manufacturer as they were looking to transform their inventory management practices. In discussions with their executives, I learned that two prior initiatives around inventory optimization had failed. In both cases, after the IT project was over, the business went back to doing the same old things, working around the IT systems and processes. We decided to take a different approach, taking the IT project completely off the foreground to focus entirely on deploying process changes first. A cross-functional team executed a weekly process for a pilot scope of business. The” plan-do-check-act” process consisted of reviewing recent performance, diagnosing root causes for outliers and agreeing on go-forward inventory norms. Behind the scenes, a joint center of excellence was set up where our consultants and the client’s analysts operated as “co-pilots” to run software models on the cloud. We marched to a 30, 60 and 90 day plan where we showed successively stronger and more meaningful results every 30 days. Within the first six months, service levels improved by 15 percent while inventory was slashed by more than 50 percent. There was little doubt left as to the value of the new process.
An occasional push to get over a steep section of the trail is fine, but you can’t sustain the entire hike on adrenaline rushes alone. We must pause at each milestone, rehydrate and build up the strength to go the next leg. The same holds true for sustained supply chain transformation journeys. Perhaps the best exemplar of this mindset is a global food and beverage company I have worked with for many years and we at JDA continue to work with to this day. They started out by building a supply chain center of excellence at their headquarters, where members served as internal consultants helping individual businesses with their projects. With the completion of each program, they are building a pool of expert resources. Now, they have expanded to set up regional centers of excellence around the world. This strategy of talent development affords them tremendous bench-strength to build world class supply chains as they rapidly expand in emerging markets today.
After the Camelback Mountain hike, I had many discussions with attendees at the conference about their supply chain journeys. Some attended to share their experience and compare notes about their own journeys, while others were just getting started. I believe these lessons are useful in both situations. Do you agree? What lessons have you learned? Please do share.
Read my first blog post ahead of Supply Chain Insights Global Summit here and watch my podcast here as I discuss the three paradigm shifts shaping future supply chains with Supply Chain Insights’ Lora Cecere.
[i] This case study and business release approach is documented by Juno Chang and Min-Hyung Kang in the book “Evolution of Supply Chain Management – Symbiosis of Adaptive Value Networks and ICT; Chapter 4: Optimizing Supply Chain in Samsung Memory Division” edited by Yoon S. Chang, et. al. The book is available on Amazon.