Invest in People First and Technology Second
A survey of many European companies conducted by London based research company Benchmark showed that those companies who embarked upon Supply Chain transformation programmes and who put people and behaviour change before technology and systems have made significant improvements and out performed their competitors achieving outstanding performance against world class KPIs and critical success factors – CSF’s. Those who achieved the highest levels of maturity reported substantial benefits, much greater than their competitors, giving them a major competitive advantage.
The survey demonstrated that those companies who had reached mature levels of Supply Chain transformation, included the development of Integrated Business Planning (S&OP) improved customer service by up to 30%, reduced costs by 24% and reduced inventory by up to 77%! Guy Washer, Head of Research at Benchmark says “this shows a significant gap opening up in the manufacturing sector” when analysis of UK companies included in the survey versus other European companies, Washer goes on to say “the survey clearly states that the mature companies had outperformed their European wide competitors”.
It was also clear that further improvement could be achieved by UK companies if there was even further focus upon the people and behaviour side of transformation. There is often conflict between functional objectives driven by conflicting KPIs and goals in areas such as supply chain costs, inventory/capacity, responsiveness/flexibility and product portfolio. Part of the supply chain transformation must include the alignment and integration of KPIs, goals and objectives in order to drive a company wide team-based approach.
“It is apparent that mature companies achieved significant gains in all areas at the same time” says Washer “more than just business improvements, the survey reveals that mature companies have fundamentally altered their business practices, leading to demonstrated improvements” says Washer.
The Survey demonstrated:
- Mature supply chain companies who operate Integrated Business Planning as part of their leadership process are 11% more likely to operate a customer driven strategy than their UK competitors
- Mature companies achieve closer supplier partnerships and have an active supplier development programme which resulted in a 55% better supplier delivery performance.
- As a consequence of integrated levels of control, market insight and cost management mature companies understand the product portfolio profitability 40% better than their competitors.
“However mature companies appear to have such confidence in their processes that they have little need for traditional budget and control” says Washer.
This also led to up to 73% improvement in trust, teamwork, respect and up to 70% improvement in the confidence in management.
People are the key
Unsurprisingly to the author the most interesting results of the survey are the cultural and behavioural differences. As part of their supply chain transformation initiatives many companies have invested heavily significantly in systems and information technology. However it has been known for years, although often ignored, that achieving a competitive advantage has always been about people and not systems or even process.
Mature companies strongly emphasise the investment in people through education and training not just systems training on a need to know basis. The survey reveals that 100% of mature companies used education as a critical enabler of change. “This has been one of the most interesting areas of the survey” says Washer. It also appears that UK companies are behind their European counterparts in this area, however everybody could learn from the mature companies in the survey. “Trust, teamwork and confidence in management can be improved everywhere but especially in the UK, mature companies demonstrate more trust and teamwork than their competition, there is a clear correlation between success and the right people attitude” says Washer.
In other recent surveys of top executives the attraction, development and retention of talent appears in the top three business concerns of those executives. Skill shortages are a serious handicap to the success and competitive advantage of any company not least of all manufacturing and Brexit must make this an even more important issue to focus upon. The Benchmark survey indicated that mature companies who have a high people centric focus 44% of mature companies are two and a half times less likely to be affected. “Companies are confident in their processes to the extent that they now recruit people based on their personality and behaviour rather than their skills and experience. They believe that they have the processes in place to educate and train employees” says Washer.
In conclusion those companies who invest in the integration of people, processes and technology will be the winners and most competitive in the future.
“Only when the tide goes out do you discover who’s been swimming naked”
“Education is the most powerful weapon which you can use to change the world”