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Strategic Supply Chain Management
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Order-fulfillment process at Company X before RACI analysis.
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Update Order Information No Correct Yes Verify Product Information No
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No Standard Yes Release Terms & Order Pricing No Approve Contract
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RACI Defined
RACI is an acronym derived from the four potential roles that an individual or function can play relative to a specific activity: R Responsible. Designates the person or function responsible for executing a particular activity. The accountable person determines the degree of responsibility. Responsibility can be shared. A Accountable. Designates the person or function ultimately accountable for completing the activity. There can be only one accountable person for a decision or activity, and accountability cannot be delegated.
CHAPTER 3 Core Discipline 3: Design Your Organization for Performance
F I G U R E 3 8
What an RACI analysis shows.
No R s or A s indicate that you should consider if the function should either gain additional responsibilities or potentially be dissolved
Many A s imply that there is little focus within a given function or uneven balance of authority across functions
Many R s indicate that a function may be overloaded, with insufficient focus
Function Function Function Function Function Function Activity Activity Few empty spaces imply that a person assigned to the role may be involved with too many activities Activity Activity Activity Activity Activity Activity C I R R I I I C A A R R R R I A C A R A I R R R R C C I C C A C A A C R R
C Consulted. Designates person(s) or function(s) that must be consulted before a decision or activity is finalized. This is a twoway communication. I Informed. Designates the person(s) or function(s) that must be notified of the completion or output of a decision or activity. This is a one-way communication. The first step was to redesign the order-fulfillment process to minimize errors, backtracking, and delays. The RACI analysis helped us to group, define, and assign accountability for the major activities and related tasks. The new process included checks and balances designed to flag and resolve problems as soon as possible and to prevent the queuing and batching that typified the old process. Most important, the root causes of any problems were identified, and all departments involved in the order-fulfillment process were made aware of necessary changes.
Strategic Supply Chain Management
A new customer-order oversight position consolidated several departments order entry, contract administration, and order management and had the added responsibility of being the primary liaison between the customer and the company. And the account manager s responsibilities were expanded to include accountability for the accuracy of all customer and product data (see Figure 3-9). At first, progress was slow. The tendency to shift blame for problems to other functions was a hard habit to break, and some people resisted taking responsibility for their new roles within the organization. After a few months, however, the company began to accept the concept of joint ownership and specific accountability. As a result, errors were caught and resolved earlier in the process, and cycle times began to decline. The company continued to refine its supply chain processes and developed automated systems to address several of the newly apparent root causes of order delays. For example, a database of nonstandard but preapproved contract language was developed. It helped cut the time needed for contract reviews from over 5 days to less than 1 day. After 10 months, the company had exceeded its initial goal order-fulfillment cycle time averaged just over 3 days (see Figure 5-4).
F I G U R E 3 9
Order-fulfillment process at Company X after RACI analysis.
Receive Order Update Order Information Verify Customer and Product Data No Correct Yes Yes Review Contract & Pricing Validate Deviations from Standard Approval Needed No Release Order Sales Order Management Approval Exceptions Field Sales Office
Enter Order
Pick Order
Pack & Ship Order
Shipping
CHAPTER 3 Core Discipline 3: Design Your Organization for Performance
This example shows that as supply chain strategy and associated processes evolve, new metrics can help formalize accountability and drive optimal company performance. The next step is to structure the organization in a way that supports these new metrics and ensures that each person has a clearly defined role with a clear set of responsibilities. In general, you should choose key metrics and define target performance levels before you finalize your supply chain process design. Once you ve set performance objectives and the operating processes needed to meet those objectives, you re ready to rethink your supply chain organization, choosing what to do, who should do it, and how. Finally, align your organizational accountability with your key metrics and target levels of performance.
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