The Great Comeback, Part 9: Organizational Analysis

June 25, 2009
This key aspect in planning for The Great Comeback is like the whole ball of wax. Organizational Analysis involves a total review of all internal processes to define a company's strengths and weaknesses, both during the recession, as well as while on the ...

This key aspect in planning for The Great Comeback is like the whole ball of wax. Organizational Analysis involves a total review of all internal processes to define a company's strengths and weaknesses, both during the recession, as well as while on the road to recovery, and on to growth and prosperity.

There are several major processes within an organization that require this type of analysis that will eventually lead to a Comeback Plan. My expertise, and thus the focus herein, lies in the supply chain processes: Supply Chain Design Buy Make Move Store Sell.

Major processes requiring review during the Organizational Analysis include:

1) Supply Chain Design: Marketing design, manufacturing design, supply design, organizational design and network design. Depending upon the scope and complexity of your organization, the time to plan organizational enhancement will vary from 1 month to 8 months, and implementation time can vary from 2 months to over 2 years.

2) Buy: Strategic sourcing, establishing joint ventures, and merger and acquisitions. Planning time: 1 to 6 months and implementation time: 1 month to 1 year.

3) Make: Manufacturing strategic master plan for facility upgrades, new existing facilities or new non-existing facilities, as well as outsourcing of manufacturing. Planning time: 2-6 months and implementation time: 4 months to 2 years.

4) Move: Domestic freight bid, global freight bid, create core carrier program, transportation transformation, outsource transportation and transform from Move-Store into more of a Flow Model via crossdocking. Planning time: 1-6 months and implementation time: 2 months to 1 year.

5) Sell: Demand planning, sales and operations planning, inventory management and reverse logistics. Planning time: 2-4 months and implementation time: 1 month to 8 months.

6) In addition, to support these processes, the related supply chain technology needs to be reviewed to include: warehouse control system upgrade/replacement, manufacturing control system upgrade/replacement, WMS, TMS, supply chain visibility, demand planning, forecasting, MES and ERP. Planning time: 1-4 months and implementation time: 2 months to 2 years.

The Organizational Analysis should answer questions such as:

Costs: Are my supply chain costs competitive?

Operations: How do my operating characteristics compare to my peers (e.g., freight terms, modes, contract relationships, etc.)? What operating characteristics are found most often in the best performing supply chains?

Performance Measurement: How do my peers measure supply chain performance? Where do they stand in developing measurement processes? What are their goals? Where do they stand in achieving those goals?

Organization: How does my organization structure compare to my peers? Are some organization structures more effective than others? Where is control for key functions vested?

Collaboration: How much real collaboration is there today with suppliers and LSPs? What is being done on performance scorecards, incentive programs and innovative contractual relationships?

Outsourcing: Where and why do my peers use outsourcing? Does outsourcing result in lower overall costs and better service?

Technology: What technologies are my peers using in their supply chain operations? What is working and what is not? Is there a correlation between the use of technology and the supply chain effectiveness? What are the near-term priorities in technology?

Value: How do my peers demonstrate the contribution their operation is making toward overall corporate goals?
Security: What are my peers doing on security? Is there something I should be doing that I am not?

Supply Chain Network: How does the design of my inbound supply chain network compare to my peers? Is my network more or less efficient? More or less reliable?

Certainly, to do this level of analysis well, a formal process of Benchmarking and Best Practices is highly recommended. The process supported by Tompkins Associates is the Supply Chain Consortium:

The application of the Benchmarking and Best Practices resources of the Supply Chain Consortium to your Organizational Analysis will:

Allow you to measure your performance against best-in-class companies and identify improvement opportunities.

Help you understand how your operating practices compare to your competition and impact your ability to gain competitive advantage.

Broaden the thinking of your management team to include issues beyond their immediate responsibilities.

Provide breakthrough insights by looking across performance measures, processes, roles, responsibilities, goals, vendor and customer relationships and infrastructure requirements.

Define scorecards with key performance indicators, data collection processes, goals and reporting formats to track supplier, carrier and third-party service provider performance.

Help prioritize improvement opportunities and build consensus behind the opportunities that are most important for you to address while on the road to recovery and onto growth and prosperity.

The conclusions to be reached from the Benchmarking and Best Practices review will be a list of potential process upgrades.

In addition to the Benchmarking and Best Practices potential process upgrades, leadership needs to encourage the organization to proactively develop innovations that will facilitate the organization's comeback. These innovations can then be added to the list of potential process upgrades.

For each potential process upgrade, a cost/benefit analysis and a determination of lead time will need to be established. The output of the Organizational Analysis includes tabulation of the scope, benefits, implementation cost and lead time, and projected savings for each process upgrade.

This tabulation will feed the fifth and final step of developing your Comeback Plan to be presented in the next blog post. You should be well on your way to your Great Comeback, but keep reading.

Tompkins Associates

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