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Change Management for Supply Chain Management

The transition from the traditional silo-based business paradigm to supply chain management requires traumatic changes in organizational structures, cultures, and business strategy. Unless such changes are properly managed, the firm may suffer from degrading employee morale, frequent bottlenecks, and increased resistance to supply chain transformations. Therefore, supply chain transformation without prepared change management may defeat the purpose of supply chain initiatives.

According to Fries (2005), change management is generally composed of three steps:

  1. Unfreezing, which involves tossing out old ideals and processes to break old habits
  2. Changing, which initiates a new system or major process transformation and creates a team to facilitate the needed transformation throughout the organization
  3. Refreezing, which involves practicing what was implemented, learned, and accepted by the change management team and the impacted organizational units

To elaborate, change management for supply chain transformations may follow the detailed steps described in Table 1.3 (see Hughes et al., 1998; NAPM InfoEdge, 2000; Dittmann, 2013; Min, 2014 for supply chain transformations). Because a vision sets the tone for change management, the supply chain vision should be created with input and feedback from all stakeholders, including affected employees. In general, a vision refers to “a picture of the future with some implicit or explicit commentary on what people should strive for to create that future” (Kotter, 1996, p. 68). The vision goes beyond authoritarian decrees and micromanagement to break through all the forces that support the status quo (see Figure 1.7). To bring about successful supply chain transformations, the change management team may develop the checklist summarized in Table 1.4 and then make sure that they do not get trapped in common mistakes. Per Sambukumar and Vijayan (2011), these mistakes include the following:

  • Falling into the “leading supply chain practices” trap—Each organization is unique in that it serves different customer bases and therefore needs to develop a different business strategy. Although so-called known leading practices of the supply chain leaders (e.g., Walmart and Dell) are helpful for supply chain transformations, unfiltered adoption of other companies’ successful supply chain practices that are not coherent with the company’s business strategy can create unexpected challenges.
  • Falling into the “do-it-all” technology trap—There is no doubt that a state-of-the-art information and communication technology (ICT) helps the company enhance its supply chain visibility and thus increases the chance for successful supply chain transformations. However, many companies may not realize that ICT is nothing more than a catalyst for supply chain transformations and is not a solution for such transformations.
  • Falling into the organizational cultural trap—Supply chain transformations are predicated on the elimination of functional or organizational silos. Due to the remnants of internal politics and organizational cultural barriers, the company may run into difficulty in integrating and synchronizing business activities across the different units and organizations.

    Figure 1.7

    Figure 1.7. Breaking through resistance with vision

Table 1.3. Change Management Steps for Supply Chain Transformations

Step

Action Plans

Key Questions to Ask

Unfreezing

  • Create visions and define goals for stakeholders and supply chain partners.
  • Assess the readiness for change.
  • Develop the change management team and designate change leaders (agents).
  • Create the detailed plan for change and then communicate visions and expected outcomes to stakeholders and supply chain partners.
  • What are we going to accomplish? Why do we have to change the current practices? Who will be affected by a change?
  • What challenges and opportunities do we face during the change process? What resources are available for change? Who will sponsor the change? What is the scope and scale of a change? What type of resistance can be expected?
  • Who will plan the change? Who will lead the change? Who will coach the change? Whom are we partnering with?
  • How do we build awareness around the need for change? How do we communicate with stakeholders about the risk of not changing? Who will be responsible for what? How do we synchronize supply chain transformations with the company’s overall business strategy? How can we make supply chain transformations as simple as possible?

Changing

  • Map key processes for change.
  • Identify financial needs and cost drivers.
  • Define performance metrics.
  • Develop incentive schemes and manage resistance.
  • What will it take to achieve the stated goals through change? Where do we start? What are our next steps for bringing about successful change? How do we deploy new initiatives?
  • How much do we have to invest in new initiatives? Is it worth investing? How do we measure and control costs?
  • How do we assess our progress? What are our desirables?
  • How do we share benefits and risks with our supply chain partners? How do we identify, understand, and manage resistance throughout the organization?

Unfreezing

  • Collect the performance data and monitor the current progress.
  • Analyze feedback from stakeholders and supply chain partners and take correction actions needed to reengineer the processes.
  • Build in new ways of doing business in the corporate culture and create new visions.
  • Celebrate and recognize success.
  • Do we meet or exceed the benchmark standard we set? Is there a sign for a successful change?
  • Can we do better? What needs to be done to improve the current practices?
  • Do we increase the customer value? Are there noticeable cultural changes? How do we stack up against our competitors?
  • How do we reward the change agents and those involved in change initiatives to cement and reinforce the change?

Table 1.4. The Checklist for Supply Chain Transformations

Item

Checklist

1

Articulate reasons for change brought up by supply chain principles.

2

Locate change agents, sponsors, and supporters of supply chain transformations at an early stage. Mobilize commitment through cross-functional and interorganizational diagnosis of the challenges and opportunities for supply chain transformations.

3

Develop training sessions (e.g., workshops, seminars, and briefings) for affected stakeholders (e.g., employees) to raise the level of thinking about available initiatives.

4

Make the benefits of the changes tangible by focusing on quick deliverables and immediate successes (achievement of short-tern goals). Also, set performance targets.

5

Concentrate the initial wave of changes on breaking down silos between functional departments and organizational boundaries.

6

Identify an appropriate and structured change management methodology.

7

Set the supply chain agenda straight and orchestrate the overall impact of such agenda on the organization’s competitiveness.

8

Involve top management directly rather than delegating the implementation of strategic supply chain initiatives to lower management.

9

Prioritize the business missions critical to the supply chain success (e.g., the ones with the biggest financial impact).

10

Destabilize the status quo by shaking up the power structure inside.

11

Ensure the continuous reinforcement of supply chain transformations.

Data sources:

Hughes, J., Ralif, M., and Michels, B. (1998), Transform Your Supply Chain: Releasing Value in Business, London, UK: Thomson Business Press, p.146

NAPM InfoEdge (2000), “Setting Up the Relationship to Succeed,” NAPM InfoEdge, 5(2), p. 13.

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