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CHAPTER 3 Core Discipline 3: Design Your Organization for Performance
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As a result of these initial efforts, customer service levels and time margins began to improve. These improvements caught the attention of AFC chairman, president, and CEO John Schofield, as well as the company s board of directors. Over the next two years, Rosen was given more responsibility and more resources to continue upgrading the supply chain organization. He replaced many of the people who were focused on dayto-day transactions with people who could design entirely new supply chain processes. My strategy was simple, says Rosen. Start by hiring smart people capable of designing highly effective processes, [and] then let them run the process they helped architect. His first key hires were chartered with defining new processes for procurement, asset management, planning, and order management. Once the basic processes were in place, Rosen brought in several very senior managers tasked with putting in place a mind-set of continuous improvement. He also began a systematic update of the systems that supported AFC s supply chain processes. Like many telecom companies, AFC outsources production to a contract manufacturer and uses sophisticated information systems to provide forecast data and to closely monitor the status of customer orders. Rosen notes that the outsourcing strategy and the new software tools shaped the skills his organization needed. When I started, I had a lot of people who were good at day-to-day transactions and putting out fires. Many of them were uncomfortable with the idea of using technology for processes they were used to doing manually. I needed people who were not afraid to use technology to do their job. Over a two-year period, Rosen completely restructured the organization, merging procurement and materials planning and forming an umbrella organization that included plan, source, make, deliver, and return processes. Old positions were eliminated and new ones created. Rosen chose his team carefully. Today, his cost per head is somewhat higher than in the past, but there are far fewer people, and each one provides critical skills the organization formerly lacked. Matching the right people to vital roles is no easy task. Many managers are reluctant to jettison an employee who has served the company well, for example, even if his or her skill set does not meet the needs of the redesigned supply chain organization. Other companies view the prospect of finding, recruiting, hiring, and training the people they really need as too complicated or time-consuming, so they transfer someone who did well in one position but is a poor fit for the slot being filled. It s important to resist the temptation to force-fit a valued employee into a role for which he or she is not qualified.
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Strategic Supply Chain Management
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Even worse than making wrong fits is designing an organization that is too strongly influenced by the skills and interests of existing employees. We worked with a computer peripherals company that was moving to an outsourced production model. The company engaged two contract manufacturers, each responsible for a major product line. The supply chain vice president created two relationship manager positions, knowing that managing each of these new relationships would be a full-time job. Not surprisingly, several current employees saw the new positions as an excellent opportunity. Although the new jobs called for a more sophisticated set of skills, the vice president found himself lobbied aggressively by internal candidates. He also was under tremendous pressure to just get someone in here. He ended up hiring both an internal candidate and an external hire a seasoned industry expert who had been managing a contract manufacturing relationship for several years. Not surprisingly, the home grown relationship manager struggled with his new responsibilities. After six months, he was replaced by a more qualified individual. The lesson Your supply chain strategy and associated processes will fail to move your company forward if you don t have the right people. Effective execution demands the right skills and capabilities. Define your organization around the end-to-end supply chain processes, identify the skills you need for each role, and then go shopping both inside and outside your company. Don t let the inventory on hand limit the success of your organization.
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