Break down your supply chain functional silos.
This advice is not new. Analysts, consultants, and others have been telling companies to break down their supply chain functional silos for as long as I’ve been in the business, yet those silos still remain tall and strong at many companies.
Logistics, Manufacturing, Procurement, Sales and Marketing — these functional groups, for the most part, continue to operate independently from each other, each driven by their own objectives and metrics.
For example, I remember speaking with the Director of Transportation Services at a large CPG manufacturer a few years ago. One of his biggest challenges at the time was finding out about trade promotions at the last minute. And to make matters worse, none of the product groups would talk with each other, so multiple promotions might run the same week. Simply put, he would always have to scramble and pay above market rates to find enough trucking capacity to meet demand.
The problem is that many companies still confuse cooperation with collaboration.
In a recent Harvard Business Review article — There’s a Difference Between Cooperation and Collaboration — Ron Ashkenas writes:
The odd thing about these examples (and countless others) is that the managers in these companies had been through various kinds of training about collaboration, teamwork, and the like. But despite all of this education, they were still unable to truly achieve the desired outcome because they confused pleasant, cooperative behavior with collaboration. In the insurance company [example referenced earlier in the article], the product developers kept the back office and customer service people informed, but they didn’t actively engage them in a joint effort. In the manufacturing firm [example cited earlier], the design ball was passed from function to function with the assumption that eventually all of the pieces would fit together — each believed the “overall solution” would be taken care of by someone else.
Having worked with hundreds of managers over the years, I’ve seen that very few admit to being poor collaborators, mostly because they mistake their cooperativeness for being collaborative. And indeed, most managers are cooperative, friendly, and willing to share information — but what they lack is the ability and flexibility to align their goals and resources with others in real time.
Historically, supply chain software has mirrored this silo’d organizational structure. Transportation Management Systems (TMS), Warehouse Management Systems (WMS), Demand Planning, Labor Management…all of these software applications, for the most part, have focused on maximizing the performance of a single business process.
Sure, companies and software vendors have invested a lot of time and money integrating these applications, but just like there’s a difference between cooperation and collaboration, there’s also a difference between data sharing, which has been the focus of application integration to date, and intelligence sharing, which involves the sharing and alignment of objectives and constraints too.
So, if companies have not listened to the “break down your functional silos” advice for the past 20 years, why should they now? What has changed?
That was the central question I addressed in a recent webcast titled The Case for Less Silos, More Intelligence in Supply Chain Management, where I co-presented with Dan Grimm, VP of Solution Strategy at JDA Software (a Talking Logistics sponsor). I encourage you to watch the webcast for all the details, but in a nutshell, here’s why the time has come for companies to finally heed this advice:
The pace of change is accelerating — in the competitive landscape, customer expectations, technology, regulations, risks, and more — so companies won’t be able to “succeed despite” anymore — that is, despite having poor visibility and control of their supply chains; despite having outdated and inflexible IT systems; despite not taking a holistic perspective of their end-to-end processes; and the list of “despites” goes on.
Successful companies of tomorrow will make smarter decisions faster and have more accurate, timely, and complete supply chain visibility than competitors. This requires companies to “walk the talk” on breaking down supply chain functional silos, both organizationally and technologically.
Advancements in technology — such as platform architectures, cloud computing, and enhanced analytics — are enabling functional groups to share not just data with each other and external trading partners, but intelligence too.
In case you need to hear it again: Break down your supply chain functional silos.
Continue to ignore this advice at your own risk.