“Are we ready for this?” Well, that’s the wrong question

Companies in several industries have realised that supply chain design and operation can have a significant impact on business performance. As they work to improve these areas, several launch ambitious improvement initiatives. Others hesitate to take bold moves because they fear they are not ‘ready’ to absorb the new practices. In fact, both types of companies face risks.

Rushing in to make changes without checking on the availability of talent and the willingness to change is a big risk. However, on the flip side, to wait until everyone is ready and able to make the change is an unlikely event and can unnecessarily delay a much-needed initiative. So, the question executives face is to decide what to do – wait and get everyone ‘ready’ or to rush headlong into change and hope that things will work out.

There is a practical approach that can be taken, which is essentially a risk management approach. In risk management, one doesn’t attempt to completely eliminate risks, but to acknowledge that they are present and to mitigate them. Similarly, companies need to assess skill gaps that exist and take steps to eliminate those gaps.

CGN has developed maturity models to help assess where gaps in capability exist. Each type of supply chain initiative, for example, implementing a scheduling system or a sales & operations planning process, are mapped to different levels of maturity. The dimensions on which these are measured are mainly ‘soft’ factors, but focused on organizational behaviour factors. Various research studies have shown that these organizational indicators are more critical for successful implementation than ‘hard’ factors, such as knowledge of algorithms, technology, etc.

We have found that the critical dimensions are:

• Operational maturity
• Culture of continuous improvement
• Cross-functional team effectiveness
• Large-scale change management capability
• Training

Note that the issue is not one of knowledge or skill, but one of organizational capability. So, while a specific individual might be a brilliant planner, if the company lacks a strong cross-functional working capability, the individual will not be able to deliver great results. As a result, the person will get frustrated or quit, but will definitely not have much of an impact.

As with a risk management plan, the approach of identifying gaps and systematically filling them works the best. It helps for everyone to learn how to work together, even as they individually learn the skills needed to deliver better results. The actual performance improvement as a result of the initiative simply reinforces their confidence in their capabilities.