Supply chain disruption pre-dates the COVID-19 pandemic
The varied nature of operations and supply chains means that there isn’t a one-size-fits-all approach.
Disruptions in supply chains around the world have been well-documented and broadly discussed. It’s an issue that started well before pandemic and the war in Ukraine, with Brexit, trade tensions and tax reforms upending the just-in-time model upon which companies had come to rely. At the same time, the economic order is changing. We are migrating from a unipolar world — a relatively stable model led by the US and upon which companies built their global supply chain models — to a multipolar economic world order that brings with it greater uncertainty. There are also external pressures to move to more sustainable business practices. And now, economic headwinds are intensifying against a backdrop of rising interest rates and inflationary pressure.
These issues have been compounded by an aging workforce, particularly in Western geographies. This has led to a talent shortage that is particularly acute in supply chain and operations functions. The global driver shortage (pdf) is one of many examples. Tighter labor markets and new opportunities, meanwhile, are empowering employees. Nearly half (43%) of respondents in the EY 2022 Work Reimagined Survey say that they’re likely to leave their employer in the next year.
of respondents say they’re likely to leave their employer in the next year.
The multitude of factors driving the supply chain makes the solution complicated.
Putting humans at the center of transformation is a concept that seems simple enough yet remains elusive for many COOs and CSCOs, because it requires understanding and acknowledging nebulous human emotions. Their job is made even harder because various functions along the supply chain are in different stages of evolution.
Supply chain planners, for example, display the exceptional collaboration skills that are their core competency. They are also adept at adopting innovative technologies to bring the transformation vision to life. However, on the manufacturing side, many companies continue to use a top-down style of management that neither empowers nor inspires workers to go the extra mile.
COOs and CSCOs will be challenged to get everyone on one side. Too much continues to occur in silos. There are six methods operations leaders can employ to achieve end-to-end transformation.
Six ways COOs and CSCOs can improve the odds of a transformation win
Operations executives need to enact leading practices in all six areas, not just one.
The transformation journey is neither linear nor easy. There will be twists and turns along the way. The key is to embrace emotions rather than ignore them. However, to maximize transformation success, COOs and CSCOs will need to excel at all six of the following drivers:
1. Lead: Practice courage, demonstrate curiosity and adopt a ‘we, not me’ mindset
Whether you’re a new operations leader or you’ve been in the job awhile, there is always an opportunity to improve your leadership skills by opening yourself to new perspectives and ways of working.
of operations leaders said they understood the needs and views of the workforce versus 32% of operations workers who felt the same.
While acknowledging that strategy, organizational alignment and decision-making are key attributes in senior leadership roles, it is equally important to recognize that value creation occurs at all levels of the organization where thousands or tens of thousands of performance-impacting decisions are made daily. A servant leadership model creates time for every leader to engage the organization every day to build capability, eliminate barriers, align priorities and reinforce culture. The focus on employee enablement instead of “managing” empowers the workforce to contribute at their full potential while simultaneously activating strategy through leadership engagement.
- Recognize the limitations of your current mindset and capabilities. Be honest about the fear, anxiety and self-doubt you may feel about what you can and can’t do; what you do and don’t know; and therefore what you need to learn.
- Demonstrate the courage to challenge the status quo and the curiosity to look at things from multiple perspectives.
- Adopt servant leadership behaviors that focus on putting people first and engaging with staff at all levels in an authentic and transparent manner.
2. Vision: Challenge the status quo and collaborate on a compelling ‘why’ that inspires
Within supply chain circles, there’s a lot of talk about artificial intelligence, the autonomous supply chain and “lights out” planning. Many COOs and CSCOs think it’s still years out. As an operations leader, it would be wise to challenge that assumption. You don’t need to wait for the “burning platform” to move ahead on the autonomous supply chain. You can be the fire.
of operations leaders said that the transformation vision addressed an issue that they felt passionate about versus 42% of all other leaders surveyed.
Of course, shifting to an autonomous supply chain will be a massively complicated initiative that many workers may not have the skills for, and where many of today’s jobs will become redundant. Alternatively, at a time of economic uncertainty and financial belt tightening, as an operations leader, you may be inclined to pursue a transformation that only considers reducing supply chain costs. Both scenarios for transformation will create anxiety for workers if you don’t craft a vision that inspires them to believe in the transformation and go the extra mile during the darkest days of the transformation journey. Yet, according to our research, operations leaders are 11 percentage points less likely than other functional leaders to say that their transformation vision addressed an issue they were passionate about.
Employees know that it’s a competitive world. When they understand the cost dynamics and how they can contribute to making a difference, the vision becomes more than a corporate slogan. It becomes a driving force that everyone can get behind. Nearly three-quarters (73%) of operations workers surveyed said that transformations offered opportunities for the organization to make a positive impact on the world. During one transformation, a well-known consumer goods company explained the compelling business reason for change at the factory, as well as the desired outcomes — improved safety, reduced waste and better customer service. These were issues that galvanized both leaders and workers to believe in the changes ahead. In this instance, improved ways of working and increased automation led to reducing staffing. However, all the losses were through planned retirement, natural attrition or moves to other roles.
- Be willing to self-disrupt, even if the organization is operating at peak performance.
- Focus on a compelling “why” that leaders and workers can believe in and support.
- Foster two-way communication that can reinforce the shared belief.
Consider collaborating with the CMO to help create a narrative that brings the vision to life. As experts on branding and consummate storytellers, CMOs are best positioned to help COOs and CSCOs craft the right messaging.
3. Care: Be transparent and engage in deep listening
During a transformation, both leaders and workers can show a surprising naïveté about what the journey entails and what it’s going to take to get to the next level. As a COO or CSCO, you need to be completely transparent about the ups and downs of the journey ahead so that there are no surprises.
of the operations workforce agreed that their function offered high levels of emotional support versus 45% of operations leaders who felt the same.
You also need to demonstrate more empathy and psychological safety than you may be accustomed to. Supply chain operates in a high-intensity environment that often rewards “fire-fighting.” In these circumstances, operations leaders need to make a more concerted effort to engage in deep listening and emotional support. In our research, 61% of operations workers experienced negative emotions during a transformation versus 50% of all other workers surveyed.
- Be honest about the journey ahead and clearly articulate both the opportunities and the challenges the transformation may bring.
- Create psychological safety by establishing a culture that not only encourages everyone to speak up but also directly solicits their opinions. Be open to new ideas and concerns from all levels within the team, and actively respond to them. Paying lip service to listening without actually following up won’t cut it.
4. Empower: Foster an environment of disciplined freedom
The idea of being given full responsibility for their role can be daunting for an employee. It’s a step-change process from simply operating the machine or performing a series of tasks, to understanding every aspect of the equipment and taking the lead on problem solving. During the transformation journey, there may be some workers who aren’t willing to assume that level of responsibility – at least initially. For those who are, the experience is empowering.
of operations leaders said the process encouraged innovative experimentation and new ideas versus 32% of operations workers.
Of course, along with the freedom to make autonomous decisions there needs to be discipline about reaching macro targets. A machine operator may have complete authority to shut down their equipment in the middle of a shift to service it, but they will also need to understand the bigger picture in terms of the KPIs their line may need to meet in a given day, week or month. They will need to make sure any decisions they make regarding their equipment at a micro level align with the desired objectives or outcomes at a macro level.
- Delegate authority and shift incentives to encourage ownership, but also establish clear boundaries that delineate the scope of responsibility within the bigger picture.
- Create a culture that encourages experimentation within defined boundaries, shifting away from “don’t fail” to fail fast and learn as you go.
5. Build: Address the human dimensions of technology
Today’s supply chains are entirely reliant on technology, end-to-end. However, it’s important that COOs and CSCOs don’t chase the latest technology simply for the sake of it. Stay focused on the business problem you are trying to solve.
of operations workers said they had the digital skills and mindset needed for transformation versus 44% of all other workers surveyed.
At the same time, you need to understand the impact technology has on the workforce. There is the issue of reskilling and upskilling talent to use new technology, and giving them the time and space to learn and experiment with it. There is also the impact on workers when there is a lack of technological sophistication. Workers are used to the cloud and apps and mobile phones in their personal lives. However, when they come to work, they often have to put their devices away and work in ways that feel outdated, particularly for younger workers. This can have a demoralizing effect. If you are going to provide workers with autonomy and ownership over their equipment or role, they would be better served to have current technology that enables them to excel.
Along other parts of the supply chain, you need to help workers prepare for new technologies that may make day-to-day activities obsolete but will free them up for more strategic activities and decision-making. One of the ways to foster engagement and buy-in is to use technology to drive visible action. Technology isn’t the vision, but the right technology can help to bring the transformation vision to life.
- Recognize the emotional impact of technology. Acknowledge and address the human dimensions of technology change, such as fear of losing one’s job or not knowing the technology or of losing control.
- Provide the right learning environment. Identify skills gaps and make training programs available for both leaders and workers to reskill or upskill for their new roles.
- Develop a growth mindset to help build the skills, agility, disciplined freedom and empathy to accelerate transformation.
6. Collaborate: Create a culture of collaboration and co-creation
Much can get lost in the seams of a supply chain, particularly when various parts of the supply chain continue to cling to siloed ways of working. In our research, 45% of operations leaders said they collaborated well across units, functions and geographies whereas only 34% of operations workers agreed with this assessment.
of operations leaders said they collaborated well across units, functions and geographies; only 34% of operations workers agreed with this assessment.
Creating a culture of collaboration is critical if COOs and CSCOs are going to unlock the true value of supply chain transformation. The KPIs by which performance is measured will have to shift to include behavioral metrics as well as capability metrics.
The traditional approach to transformation is often one of separation and independence. Leaders do the thinking and workers do the doing; strategists do the strategizing and managers do the implementing. For new ways of working to be successful, leaders and workers need to work together to reimagine the concepts around process, delegation, ownership and empowerment.
- Consciously build interdependency among teams to help break down the siloes. Set boundaries for alignment across the organization and teams to manage all aspects of change.
- Be deliberate in shifting to new ways of working. Create safe spaces for new ways of working to emerge from co-creation efforts between leaders and workers.
- Give workers opportunities to redesign their own work. Leaders and employees will want to collaborate on identifying the work and behaviors that need to shift.
Harness the power of your operations workforce to achieve transformation success
As a contemporary operations leader, you are at the forefront of a rapidly changing and uncertain world. The nature and impact of disruptions to the supply chain are accelerating. You know your function needs to transform. It’s something you have been doing continuously for some time now. But you may be at a loss as to why so many transformations you have witnessed over the last several years underperform.
By adopting best practices in the above six key areas, you will be able to harness the power of your people to drive transformation success.
Operations leaders are rebuilding their supply chains for resilience against any disruption. To do so, they need to move past the results of transformations past and improve their odds of unlocking the value that they set out to create. By paying more attention to the human factors that are often the root cause of transformation failure, and implementing best practices around six key drivers, operations leaders can increase their chances of transformation success by 2.6 times.