BY VIKAS ARGOD AND KARUN ALAGANAN | In essence, supply chain transformation projects are like large highway infrastructure projects. During supply chain transformation, customers expect deliveries, suppliers to continue to deliver, competitors to announce promotions and shareholders to dial into earning calls. Basically, it’s life as usual.
But during a transformation initiative, the supply chain undergoes an irreversible structural change. The end state is always a greener pasture (more lanes in an interstate), but no one wants to live through the dust and rerouting of the transition phase (construction zone, lower speed limits).
Unfortunately, there are no shortcuts to supply chain transformation success. But a robust program management office (PMO), which takes an analytical approach for transition time and resource scheduling, and develops always current and realistic plans, can make the journey both enjoyable and successful.[1]
Like infrastructure projects, supply chain transformation programs are generally riddled with delays, cost overruns and multiple incidents of firefighting. During a recent engagement with a construction services company, a business leader complained that there were far too many crisis situations that diverted critical resources to fixing current business situations rather than working on the transformation initiative.
Due to these firefighting events, resources were either spread very thin in some cases or underutilized in others. Even with an overtime workforce and overnight shipments, customer delivery windows were missed and sales directors started losing confidence in the supply chain. Eventually, project backsliding resulted in a poor quarterly earnings number and the transformation initiative was temporarily halted.
This hit-a-brick-wall outcome is not unique at all. And we all hear of the supply chain disruption that can occur as a result of project delays. The reasons for failure may seem industry- or company-specific at the first glance (“our industry is unique, standard methods don’t work here”).
But underlying root causes are the same in over 80 percent of cases. Unfortunately, most companies can approach their setback with myopic vision, trying to cure the symptoms (ship everything overnight or produce X item at twice the quantity or hire more temps or hire a new project manager, etc.), while the need of the hour is a detailed root cause analysis and corrective measures.
All who seek to transform their supply chains come up with objectives and goals for transformation, but only those who develop good implementation capabilities (or acquire those capabilities by hiring highly competent consultants) achieve their objectives. McKinsey research[2] shows that a well-executed, clear and detailed plan/implementation returns 143 percent at the end of the supply chain transformation initiative’s implementation vs. a not so clear plan/implementation, which returns a much less significant 35 percent.
