The Supply Chain Detective™ and the Case of the Broken Global Processes!

Broken Global Processes

I had just arrived on the scene. On the surface the operational leaders I met from the Americas, Europe and Asia were very smart people. But I soon learned that each region had their own disparate ways of doing things locally. From a broader perspective however there were only broken global processes.

To say that there were broken global processes is a little misleading. The fact was that there were no truly “global” processes. Every site had their own way of doing things even within a region, so there weren’t even actual regional processes.

Clearly there must be a better way of doing things. This was another case for The Supply Chain Detective™!

Setting the Scene

The company had two dozen facilities around the world. Each facility performed roughly the same tasks.

They received goods into their warehouses/distribution centres. They stored those goods. They performed some light manufacturing activities to transform those materials into products that were ready for sale in retail, through a variety of channels. And then they shipped those goods in accordance with customer orders received into those facilities.

Some of the facilities conducted business for the same customers. Some of the facilities had customers which were unique to that site alone. Some of the shared customers ran their businesses with us in the same manner for all facilities, whereas other shared customers did business differently with each of our facilities they had business in.

Some of the materials were sourced and managed by the customers. Still the sourcing and supplier management of other materials was delegated to our facilities.

Each facility leader reported into a Regional Vice President of Operations, one for each of Asia, Europe and North America.

On the surface it sounded like a typical manufacturing, logistics, or distribution operation.

But the overall operational performance of the organization was very inconsistent. Delivery performance, quality, operating costs, profitability, inventory turnover, cash flow, and return on investment all varied widely from facility to facility, within regions and across regions.

Customer satisfaction was hit and miss and employee morale up and down regardless of culture or geography. And a cursory look at benchmark comparisons to competitors showed the company lagging behind in virtually every metric.

At a company wide management meeting that was taking place on the day I started I got the opportunity to very quickly meet and talk to much of the on the ground company leadership. I got an earful, or two.

Complaints about inconsistent performance, disparate ways of doing things, mixed results and customer issues were abundant. No one was happy about how things had been done. Apparently my predecessor did not know much about operations at all, and was not able to provide any guidance or leadership during his tenure, leaving the organization rudderless.

Managers from across all parts of the organization were begging for my help, and probably skeptical about whether anything would really get done given their past experiences.

Something was very wrong.

It was time to start an investigation!

The Investigation

The only way to figure out what was going on was to visit every single facility to see for myself. It would not be good enough to sit behind a desk at company headquarters, looking at charts and talking to people on the phone or through email. Seeing first hand was the only way to get a handle on things.

And a visit to each facility had to be in-depth and very detailed. I needed to physically see and review every part of every operation. I needed to talk to the employees on the warehouse floor directly. I needed to investigate!

Far too many Executives visit facilities and do the “Royalty” tour, or the “Tourist” tour. Facility management prepare for those types of visits by adding fresh coats of paint, tidying things up, and keeping their visitors away from areas that they want unseen. These visits are cursory and superficial. Any operations executive worth their salt can quickly see past these attempts and circumvent these measures.

I told each of the Regional VPs to arrange a visit to each facility. I would spend approximately 2 weeks in every region visiting every single operation. The difficulties of this kind of intense, action packed travel were secondary to my primary mission. The VPs were also informed that on these visits we needed to drop all formalities. We were going in depth in reviewing every aspect of every facility.

I started the investigation visiting our facilities across the United States and Mexico.

In Florida I met a team that was very high functioning. They had a couple of customers who were actually competitors so their operations had to be physically separate and secured. The team gave me a great insight into their operation, what was working and what wasn’t. They were open to some of my initial suggestions. I left being impressed with the team.

The next facility in the Mid West left a quite different impression. The management team was somewhat dismissive and patronizing. Their insincerity shone through. They attempted to give me the “Royalty” tour but I quickly derailed that plan and crawled through every aspect of the operation. Clearly this operation needed a top to bottom overhaul.

As me travel throughout the Americas continued I met more operations like the one in Florida and only one other which was like the one in the Mid West. Overall the results were mixed but I had developed a good feel for the current state of things, which I would never have got sitting behind a desk at Corporate.

Next I proceeded to travel to Asia, visiting sites in 6 different countries. There was only one operation that seemed rather substandard. The Asian teams were highly accommodating, listened well, and overall left me with the impression that things were solidly in control, notwithstanding any opportunities for future improvements.

Finally I headed to Europe. Another 5 countries were on the itinerary. The operations were all finely tuned, with the exception of only one obviously weak operation. They were implementing some very innovative initiatives on their own. Their advanced mentality and visioning all stemmed from the mind of their very intelligent regional VP.

As I headed back home I had a lot to think about. I had completed my investigation. So now I had to look back on all the information and observations I had accumulated, assimilate it all, internalize it, and determine what if any actions we needed to take.

Solving the Case

The worldwide travel served not only to educate me on what was really going on in our operations, but it allowed me to very quickly meet and develop relationships with the entire operations team around the globe, at all levels from the warehouse floor to the offices and management.

I developed a sense of the level of openness to change and innovation, and the level of resistance and pushback. I now knew who was strong, who had great potential, who needed help in development, and who was going to struggle to stay on the journey.

As I contemplated all of the information that I had gathered, an overriding thought occurred to me.

Regardless of how well an operation was running, what customers a facility was serving, where a facility was located, or how effective the management team was, the core operations governing how every facility was run were exactly the same.

Every facility had to receive goods, store them, receive customer orders, process those orders, pick and pack those goods, and ship them as their customers directed. No matter what the goods were or who the customers were, every one of those processes had to be performed.

Every facility operated as an island, even within each region. There was no formal or even informal information sharing or best practice sharing between facilities. They were stand alone and stayed that way, and there had never been any encouragement to look beyond their own four walls.

What I realized was that although those processes were the same, the way in which each of those processes was performed was different from one facility to the next, even within the same region. Every facility had customized those processes over time to suit whatever their specific needs were.

The result was that none of those processes were optimized across the entire company. For as many facilities that we had there were that many different ways of performing those common processes. Even for theoretically well run operations there was no guarantee that they way they performed any one process was the best possible way. It was merely the way they chose to run that process.

And that was the fundamental problem of broken global processes. While all of those processes worked, they were not optimized. In effect these processes were broken from the perspective of global optimization.

I would never have had this epiphany sitting behind a desk. Only by visiting each and every location did I accumulate enough experience to arrive at that insight.

Defining the Future

I realized that for any single process there should be one best way of doing that process. If I had 24 facilities doing receiving, there should be an optimal way of conducting the receiving process. Further if I could identify that one best way of receiving then we could deploy that to every single operation. This would make everyone more efficient and effective. It made a lot of sense.

I discussed my vision for this initiative, or rather imperative, with my regional VPs. We needed to launch a “Global Process Excellence” initiative.

There would be one team for each process (a total of 12 different processes were identified. Each team would have representation from each region, allowing team members to get involved in a global innovation experience.

Each process team would have a mandate to identify the best in class process, perform benchmarking, and develop an action plan to deploy the best in class process across the entire global operation. They would act with my direct authority and were widely empowered to implement the necessary changes.

I added a level of governance to ensure that there was always forward progress for each and every team. I would meet with every team once every two weeks. This showed the team that this was important to me and to the organization. It was not “just another program”. Real results were expected.

These governance meetings also allowed me to ensure that the teams stayed on track. I could remove any blocks or sacred cows that they encountered through Change Leadership. I could provide them some mentorship and guidance if they needed it. And it enabled me to impart the cultural norms and beliefs that we needed to turn our culture into a high performance organization.

And so our efforts began to fix these broken global processes.

Results

Within 6 months we were seeing and realizing significant productivity improvements across most processes. Like anything progress moved faster in some areas and slower than others. But everyone was moving forward at some pace.

One particular team that created some industry leading, world class results was our pick and pack order fulfillment team. They created and implemented an ECommerce order fulfillment process that allowed them to pick and pack a customer order within 4 minutes of receipt of that order. At the time that was better than any other company in the world, INCLUDING Amazon.

Another team focussed on Inventory turnover performance also had extraordinary results. Within 9 months we had DOUBLED our inventory turnover. This took the company from an industry lagging position to an industry leading position.

Conclusion

Our investigation not only revealed an underlying problem with broken global processes that would not have been visible otherwise, but it also demonstrated that an exploratory investigation in search of a problem can lead to extraordinary results.

The investigative approach and capacity of The Supply Chain Detective™ resulted in the creation of best in class global processes that benefitted not only the company, but the effort motivated and developed employees, and delivered substantial increases in customer satisfaction.

Originally published on September 6, 2022.