Supply Chain Management: From Vision to Implementation

Chapter 14: People Management: Bridge or Barrier to SCM

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Chapter 14: Learning Objectives

1. Describe the characteristics of a SC manager.

2. Describe the vital role people play as a bridge or barrier to SC collaboration.

3. Explain how to cultivate a culture of empowerment. Discuss the ABCs of empowerment.

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Chapter 14: Learning Objectives

4. Explain the importance of investing in employee capabilities through training, especially in the areas of cross training and teaming.

5. Discuss why developing and integrating human and technological resources is critical to developing world-class processes.

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People Management

We know how to invest in technology and machinery, but we’re at a loss when it comes to investing in people.

–Peter Senge

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The Supply Chain ManagerWhat are the characteristics of the person in the middle?

What skills and mind-set does a true supply chain manager need?

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The Supply Chain Manager

True supply chain managers are defined by mindset and skill set. Strong functional skills Holistic thinker Analyzes trade-offs rigorously Builds collaborative relationships Executes with discipline Exemplifies leadership Embraces change

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The Most Valuable Asset?

If you leave us our money, our buildings, and our brands, but take away our people, the Company will fail. But if you take away our money, our buildings, and our brands, but leave us our people, we will rebuild the whole thing in a decade.

- Richard R. Deupree, CEO Procter & Gamble, 1947

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Great Management Lies1. Employees are our most valuable asset2. I have an open-door policy3. You could earn more money under the new plan4. We're reorganizing to better serve our customers5. The future is bright6. We reward risk takers7. Performance will be rewarded8. We don't shoot the messenger9. Training is a high priority10. I haven't heard any rumors11. We'll review your performance in six months12. Our people are the best13. Your input is important to us

- Scott Adams

Employees are our most valuable asset

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Investing in Employee Capabilities

Education…must reach everyone and it will have to go all through life. If you stop, you become obsolete, you cease to be competitive.

The obsolescence curve has compressed, Bud Lalonde estimates the amount of investment that must be made in acquiring new skills to avoid obsolescence.

10 % to avoid obsolescence in five years – 1990 20% to avoid obsolescence in three years – 2000

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P&G Leadership Development Attributes

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John Deere and SC Education

Deere offers over 50 courses to Deere employees and employees at first and second tier suppliers.

In addition to upgrading skill sets, these professional development classes bring managers together in a learning environment where they can build relationships.

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Deere & Company Training CoursesAdvanced EDI Finance for the Non-Financial Manager

Advanced Product Quality Planning Group Problem Solving

Apples and Oranges Interviewing Techniques

Application of ABC Data Introduction to ISO/QS 9000

Benchmarking Inventory Management

Business Report Writing ISO/QS-9000 Internal Auditor/Team Training

Cash Flow Analysis ISO/QS-9000 Quality System Documentation

Cell Manufacturing Job Instruction Workshop

Compensation Strategies and Incentives for CI Leadership Skills

Conflict Resolution: Team Operating Skills Mistake Proofing

Continuous Process Improvement Presentation Skills

Continuous Process Improvement (Advanced) Preventive Maintenance for Cycle Time Reduction

Continuous Quality Improvement Preventing Discrimination and Sexual Harassment

Cost/Price Analysis Process Mapping

Creative Focus Project Management

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Deere & Company Training CoursesCustomer Service—A Strategy for the Future Root Cause Analysis

Customer Service II Setup Reduction

Cycle Time Reduction Teaching Techniques

Decision Focus Team Effectiveness

Design of Experiments Team Effectiveness II

Developing Communication for Increased Collaboration Team Focus

Developing Employees Team Problem Solving

Developing High Performance Teams Time Management

Effective Facilitation Win-Win Negotiations

Effective Job Skills Working in a Changing Environment

Facilitator Skills World Class Manufacturing

Failure Mode & Effects Analysis Writing Skills

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Management Training

In addition to problem solving and role specific training, managers should receive training in the following:

Overview of the organization focusing on its history, culture, and objectives.

Review of customers, their needs, wants, and success factors.

Analysis of key suppliers, including their competencies and capacities.

Exercises in communication, teamwork, and paradigm shifts.

Specific instruction regarding the firm’s performance measurement and reward system.

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Training Program Problems

Management training is a large investment by a company. Managers often change employment after only 3

to 5 years.

Job rotation and manager trainee programs delay time between hire and permanent job placement.

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Cross-Training

Cross functional workers emerged with Lean manufacturing principles.

Toyota, the inventor of Lean, seeks to develop world-class process capabilities based on development and integration of people and technology.

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Cross-Training - Lessons from Toyota

1. Requires heavy investment in problem solving skills.

2. Requires broad job descriptions. At NUMMI, the number of job descriptions was reduced

from 200 to 3.

3. Requires management to empower employees with the authority and responsibility necessary to make real decisions that make an impact. Jidoka – man and machine system; the authority to stop the

production system when problems are identified.

4. Requires management to develop collegial relations with the workforce.

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Cross-Experienced Management Team

Goal is to provide managers an understanding of roles and challenges inherent in diverse value added activities throughout the company.

Many companies have developed multi-year manager trainee programs that include job rotation, providing trainees with extended experience within various functional areas. Helps to build relationships, reducing barriers to

cross-functional cooperation.

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Job Rotation Programs Develops an appreciation for the needs and wants of

customers Become familiar with products and value-added process Gain perspective of different functional areas and how

the functional areas work or don't work together Learn the "language" spoken in each area Establish relationships, improving future decision

making, reducing barriers to collaborative initiatives Develop appreciation for workers that make the product

or interface with customers Gain understanding of the role outside suppliers play in

product development, production, and distribution

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Job Rotation Programs

Job rotation can continue after initial hiring. Communicates that the company is serious about

systems thinking and teamwork. Improves cross-functional communication.

Can be accomplished with assignment to cross-functional task forces and project teams.

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Types of TeamsType of Team Team Objectives

Advisory Councils Senior-level steering committees, customer advisory boards, and supplier councils - provide feedback, expedite communication, and garner commitment for key initiatives.

Capital Equipment Design and acquire needed equipment. Several tasks must be performed to meet key objectives: 1) determine specifications, 2) select a supplier, 3) conduct negotiations, and 4) install and maintain equipment.

Commodity Develop the expertise and relationships needed to establish a strategy for managing the acquisition of important commodities over time. They also investigate and select one or more sources for a given material or service.

Cost Reduction Take many forms and consist of many different players. Sourced inputs represent 50-80 percent of the cost of good sold suggesting that considerable effort be targeted at improving both supplier relations and supplier processes.

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Types of TeamsType of Team Team Objectives

Customer Relationship

Work to build relationships and understand specific customer needs as well as to respond to customer inquiries and resolve customer problems. These teams increasingly work to design tailored services for the most important customers.

Cycle-time Reduction

Responsible for reducing time at key processes. The increased use of collaborative planning, forecasting, and replenishment and vendor-managed replenishment has made inclusion of outside representatives valuable.

Information Systems Determine information needs of the firm and design the information systems to provide this information. Information system specialists run the team but they need the input from the areas where information is either collected or used.

Inventory Control Seek to reduce inventory levels while providing an uninterrupted flow of materials. Sourcing, Operations, and Marketing work to develop dock-to-stock, lean-materials, and coordinated promotions/replenishment systems

Problem Solving Numerous ad hoc teams or task forces are used to solve specific problems, drive the adoption of new technologies, or implement a strategic initiative. These teams are almost always dissolved upon completion of the specific task.

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Types of TeamsType of Team Team Objectives

Product Development

Reduce time needed to bring a product from concept to market. Consist of representatives from Marketing, Production, Purchasing, Engineering, and Quality as well as representatives form both customers and suppliers.

Quality Improvement

Work to improve the quality of products and processes. Members come from Production, Purchasing, Quality Assurance, and Engineering as well as supplier and customer representatives to assure accurate quality definition.

Supplier Development

Help suppliers upgrade process engineering, manufacturing, and quality capabilities. These teams consist of representatives from selected suppliers as well as from Production, sourcing, Quality Assurance, and Engineering.

Value Analysis Study a product or process and all of its components to determine how to lower cost or improve quality. These teams often include representatives from Engineering, Marketing, Operations, and Purchasing.

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Advantages and Disadvantages of Teams

Advantages of Teams Decision Ownership Leveraged Diversity Faster Task

Completion Better Organizational

Understanding

Disadvantages of Teams The Never-ending

Debate Groupthink Social Loafing Peer Pressure

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Factors Impacting Team Dynamics Availability of Resources Clarity of Team Objectives Commitment of Members to the

Team Complexity of Team

Assignment/Task Executive Management Support Functional/Technical Skills of

Team Members Open and Honest Team

Communication Organizational Experience with

Teams Overall Organizational Support

for Team Success Performance Feedback and

Information Support

Measures Used for Team and Team Members

Supplier Involvement Team Autonomy/Mandate Team Cohesiveness Team Leadership Team Longevity Team Member Personalities Team Process Skills of Team

Members Team Reward Structure Team Size

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Team Design Process Identify a well-defined goal that can be clearly

articulated and communicated. Identify the variety of expertise and experience

required to accomplish teams goals. Define time commitment required. Identify people with the right knowledge, experience,

and complementary working styles. Determine whether individuals can be freed from

current tasks and whether their participation will add more value to the firm than those tasks.

Identify a skilled leader.

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Working Styles

The Quick Starter - highly energetic, sees an opportunity and quickly mobilizes energy.

The Fact Finder - very meticulous and oriented toward detail and analysis.

The Follow Through - determined and focused on carrying out a task to its completion.

The Implementer - very task oriented, with a particular penchant for hands on work.

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Requirements for Team Building Common Goal - Successful teams possess a

common goal Leadership – Successful teams are led by well-

respected managers who understand team dynamics

Communication - Open, constructive communication is fundamental to team success

Cooperation - Effective teams sometimes require compromise

Specific Roles - Team members understand their role and responsibilities

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Requirements for Team Building Measurement - Clear and precise performance

measures facilitate success Individual Responsibility - Each member

accountable for individual and team performance Resources - Adequate resources/information is

available Time - Chemistry emerges as team members

spend quality time working together

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Team Development Process

1. Forming - determines team membership.

2. Storming - establishes direction, purpose, roles, responsibilities, and rewards for both the overall team and each team member.

3. Norming - establishes team rules and procedures, helping teams to synchronize their activities.

4. Performing – identification of problems and opportunities, establishing a plan of attack, and then implementing the plan. A well-designed, well-trained team often finds that performing is the easiest part of the team process.

5. Adjourning - up-front definition of key milestones and a specific ending point in terms of outputs and a target completion date. Once a team completes its designated task, it should disband.

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Team Measurement

Measurement drives behavior

Teams require the correct balance between team based measures and individual measures. Emphasizing team outcomes can lead to social

loafing and a loss of individual motivation. Emphasizing individual outcomes can undermine

team performance.

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Establishing an Empowerment Culture

An empowerment culture precedes the creation of knowledge workers and the learning organization.

Knowledge workers recognize opportunities, analyze problems, and proactively move to find creative solutions.

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Pathway to Empowerment

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Leadership - The 7 Rights

1. Get the right people2. Communicate the right expectations3. Provide the right training4. Measure the right things5. Reward the right behavior6. Support with the right resources7. Give them the right opportunity (i.e., get out

of the way).

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Goal Setting

Aggressive and systematic goal setting drives out complacency, helping to sustain momentum of an empowered workforce.

Failure cannot be punished, it must be used as a learning experience.

Managers must work with employees to facilitate goal attainment.

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Communication and Teamwork

Managers must communicate expectations, corrections, and praise.

Managers must recognize team members for their contributions toward overall success.

Recognition and empowerment increased motivation and commitment.

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ABCs of Empowerment

Affirmation – positive reinforcement to the workforce making them feel truly valued.

Belonging – employees must feel a sense of community and commitment.

Competence – the company must invest in employee capabilities throughout the organization.

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Employee-Oriented Companies Services for employees—e.g., a gym & health-related

programs Benefits & salaries suggest company cares about employees Company asks for employees opinions & input for decisions Treat each person as an individual Employees understand their position & are knowledgeable Company continuously trains & updates skills of employees Employees are happy doing their job Allowing employees to advance & grow in the organization Open communications between employees & immediate boss

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Employee-Oriented Companies Meetings are more like town hall discussions Management is openly willing to receive feedback Trains employees beyond job requirements Company is generous with benefits Fair level of pay—competitive level Provides services to employees that are not job related Work space is clean, user friendly Employees use updated equipment Well run human resource department—easy access to

services

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Employee Satisfaction Factors

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Employee Satisfaction FactorsCharacteristic Employee Perceptions of Characteristic

Compensation Hallmark of a great company to work for. Workers want to be treated fairly and they regard a company’s financial package as the acid test of fairness. Great companies have learned to combine salary, bonuses, stock options, insurance programs, and the company retirement plan into a comprehensive package that communicates a concern for their employees’ well being.

Family Friendly Need to make work fit within a holistic lifestyle. The goal is to balance work with personal and family needs. Companies are responding with an assortment of services and benefits including family counseling, savings bonds for children, college tuition grants, parental leaves, time off to attend parent-teacher conferences, and lactation rooms for new mothers.

Facilities Well-designed work place that is safe and aesthetically pleasing. Convenience of on-site child care, on-site medical care, or on-site concierge services. Some companies offer massages, dry cleaning, travel services, and pet care. Employees also value access to exercise programs and fitness facilities.

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Employee Satisfaction FactorsCharacteristic Employee Perceptions of Characteristic

Accommodating Workplace

Flexibility is an important perk. Opportunity to schedule their own hours, shorter workweeks, telecommuting, and flexible-time programs all allow workers to balance work and family obligations. Paid vacations and opportunities to take time off without pay also provide for personal renewal. Great companies recognize the need to avoid burn out and provide workers opportunities for revitalization.

Enabling Culture Desire to work for an ethical company. Employees feel it is important to work for a company that promotes diversity, is environmentally sensitive, and is involved in the community. Paid time for charity or volunteer work is particularly attractive.

Manager- Employee Relations

Managers who know their employees and acknowledge their accomplishments and concerns are a key source of corporate enthusiasm. Promotes open communication and facilitates a sense of collegiality. Employees want to know that their ideas are valued, seek empowerment, and want to be trusted.

Invest in Employee Skills

Employees recognize a need to stay current with the latest developments in their fields of expertise. Company-sponsored education programs, skills-based training, and tuition reimbursement programs are beneficial.

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Integrating People and Technology

Organization’s needs must be matched with technology. As a general rule, the simplest technology that will meet product and process needs should be given priority.

Organization’s technology strategy should support long-term approach to building world-class value-added processes.

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Integrating People and Technology

Adequate support must be in place to implement and support new technologies.

The following technology pitfalls should be avoided: The “follow-the-leader” mentality The “shiny-hardware” syndrome The “island of automation”

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Integrating People and Technology Workforce must be viewed as a critical resource and the

necessary capital for training programs must be committed. Once a firm invests in workers, it must give them the responsibility and opportunity to use their increasing skills.

Managers must develop familiarity with value-added processes and key technologies. Appreciation and understanding of the abilities of line workers and managers in other disciplines is needed to coordinate and integrate competitive efforts.

Appropriate performance measures that do not penalize workers and that promote “revolutionary” enhancement should be adopted.

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A Return to the Opening Story

Based on what you have now read and discussed:

1. How did Doug and his team get so caught up in SCM that they forgot to get everyone involved? What are the dangers of having the task force do it all? Can SCM thrive if it doesn’t become part of the culture?

2. What should a supply-chain training program look like? Who should be involved? How much training is needed and for how long?

3. What is a culture of empowerment? What does it look like? How should Doug go about cultivating it?