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Best Practices for Change Management in Supply Chain

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Best Practices for Change Management in Supply Chain Best Practices for Change Management in Supply Chain Best Practices for Change Management in Supply Chain Most business leaders are well acquainted with the maxim, “Change is the only constant.” The events that kicked off this decade—ranging from the COVID-19 pandemic, to environmental disasters, to socio-economic conflicts, to second-day delivery, to localization—exponentially accelerated the rate at which the world is changing around us. Now more than ever, supply chain leaders are realizing that in order to keep pace with an ever-competitive industry, they will need to adapt or risk being left behind. While supply chain leaders are acutely aware of the need to adapt, they’re also painfully aware of the risks that go along with change. After all, change management is notoriously challenging to accomplish. Harvard Business Review says that 70% of change management efforts eventually fail.1 Moreover, because supply chain resources tend to be spread precariously thin to begin with, supply chain leaders are even more likely to balk at the mere thought of devoting time and energy to adopting a new path forward, especially during a time of heightened volatility. Fortunately, it is possible to update your supply chain without enduring the trials of common change management mistakes and disappointments. This guide will walk you through change management best practices for supply chain, including an in-depth overview of how Starbucks effectively wielded change management best practices at a critical juncture in its company’s history. Why Does Supply Chain Need a Change Management Strategy? It’s no secret among supply chain professionals that the need for change has arrived. A survey of supply chains found that 73% of companies are experiencing pressure to improve and expand their delivery capabilities. Meanwhile, 42% of companies2 answered a resounding “yes” when asked if their experience with the coronavirus pandemic had caused them to change their supply chain strategy, while 28.9% answered “maybe.”3 Those supply chain leaders firmly on board with enacting change are likely inundated with the plethora of options available to them—supply chain is a unique industry, change management is hard, and while many strategies exist for the best way to approach it, there are few tailored specifically towards the needs of supply chain. Those leaders that are on the fence could be so for the simple fact that change management, although ultimately valuable, has a reputation as being both very challenging and often unsuccessful. That oft-quoted statistic of 70% of change programs failing to achieve their goals is well known for a reason. While many things can go wrong within a change managementstrategy, the main reason for failure is usually chalked up to employee resistance: a problem that 72% of leaders4 say they don’t know how to fix, either because they are too disconnected from the work, or out of sync with the cadence for effectively implementing change. That being said, it is possible to align leaders and their employees by implementing a clear-cut change management strategy (which this guide will go on to explain). The next hurdle after aligning an organization is actually implementing the change: a notoriously tedious process that can cause even the most stalwart leaders to balk. 51% of leaders report navigating change fatigue as a main frustration in business transformation, with the ability to generate and sustain momentum being a concern for another 35% of leaders.5 Navigating the challenges associated with change management is well worth it, however: research shows that among projects that effectively apply change management: • 94% meet or exceed project objectives • 81% were at or under budget • 71% were on or ahead of schedule6 These results clearly underscore the efficacy of change management when properly implemented. The question supply chain professionals should be asking themselves isn’t if they should implement change—it’s how to pull it off. 1 “Cracking the Code of Change.” Harvard Business Review, July 15 2021. https://hbr.org/2000/05/cracking-the-code-of-change 2 “Impact of Covid-19 on Shipping and Supply Chain Strategies”Statista, July 15 2021. https://www.statista.com/statis- tics/1129213/covid-19-impact-shipping-supply-chain-strategies/ 3 “Aligning the Supply Chain in the Age of Delivery Economy.” Project 44, July 15 2021, https://www.project44.com/resources/aligning-the-supply-chain-in-the-age-of-the-delivery-economy 4 “3 Change Management Statistics You Need to Know.” Capacity for Health, July 16 2021. https://capacity4health.org/change-management-statistics/ 5 “Nine Business Transformations You Can’t Afford to Ignore in 2019.’ Institute for Public Relations, July 2 16 2021. https://instituteforpr.org/nine-business-transformation-stats-you-cant-afford-to-ignore-in-2019/ 6 “Changing Change Management: an Open-Source Approach.” Gartner, July 16 2021. https://emtemp.gcom.cloud/ngw/globalassets/en/human-re- sources/documents/trends/changing-change-management.pdf Change Management Best Practices for Supply Chain The most fundamental cornerstone in successfully implementing change management is to have a clear-cut strategy that organizations can systematically follow through on. Research shows that companies following a structured change management strategy are 33% more likely to achieve success.7 That being said, here is a two- part change management strategy built out specifically for supply chain and answering its unique challenges. The first step for implementinga supply chain change management strategy involves building out a roadmap that determines the most important processes to update, with clear steps to follow through. The second component of a change management strategy addresses how to implement those changes on a managerial level. First, supply chain leaders will want to: • Pick a high-priority supply chain issue and focus on it: A supply chain manager should start by determining the supply chain’s most pressing pain points, and then selecting a single use case to focus on. That use case can be either a process in supply chain that needs improvement (such as the amount of time it takes for employees to resolve an incident), or an operation that requires correction (such as chronic part shortages). Leaders should be clear on the value of making that improvement by naming the benefits it will bring to their supply chain. Once that understanding has been reached, they can move forward by making contact with the business unit and team responsible for that process or operation. If a supply chain manager is unsure where to start, know that any team that has been asking for help or is known to be receptive to new technologies will make great candidates. After making contact, supply chain managers will want to document a to-from of the new process with new standard operating procedures (SOPs). This will be the team’s change-management bible. (Note: while most supply chain processes cut across multiple teams and functions, it’s usually still possible to determine an owner of a process. For our purposes here, we’re assuming the process owner is within the selected business unit.) • Choose a technology partner: The next step for supply chain managers is to choose a technology that supports the implementation of their change management strategy. Keep in mind that the best solutions will be able to remedy not just the initial challenge that the team is working to address, but various other pain points to work on over time. In many situations, supply chain operators will likely partner with IT to support the technology roll-out. It’s essential that IT is aligned with the chosen roadmap from step one. While IT can be a great partner that will most likely be called upon if the chosen initiative involves data, keep in mind that IT supports many “important” projects. Supply chain leaders will need to make sure that their operation’s needs are being fully fulfilled. In the most successful projects, Business takes the role of decision maker and owner while IT takes the role of enabler and coach. • Configure the chosen solution to meet your supply chain needs: Take time to learn the technology and align it to answer to the selected process. For example, a platform designed to improve incident resolution rates will need to be customized to include incident types, resolution codes, users, and so on to meet a business’ specific needs. A few extra hours upfront to properly map out the new process and personalize the technology, will go a long way to ensuring effective training and successful adoption. • Train the users: Training includes a general overview of the chosen technology and how to use it, as well as a detailed walk-through of the new SOPs. Every user should be clear on how to use the technology to run the chosen process, as well as receive instruction to personalize the system to see the things they care about. This step is a common pain point, but specificity helps: research shows that change programs clearly identifying roles and responsibilities are 6.4 times more likely to succeed.8 • Cutover: Select a date that the new process goes live. It is critical that the team fully cuts over to the new process in order to avoid errors, delays, and team push-back (no one enjoys redundant work, and having to repeat steps can build up resistance to the entire approach). The first week is a crucial one for reinforcement: management should do daily check-ins to answer questions and encourage adoption. 7 “Best Practices in Change Management.” Prosci, July 16 2021. https://www.prosci.com/resources/articles/change-management-best-practices 8 “How Do We Manage the Change Management Journey?” McKinsey & Company, July 16 2021.
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