MRO Today - More, better, faster, smarter

More, better, faster, smarter!

by Dr. Robert A. Kemp

Supply management has always been an important business function, but as fundamental changes have occurred and revolutionized our supply management processes, that importance has become ever more profound. We have become a more strategic process.

Supply management is about managing the supply chain -- with an eye on today and an eye on the future -- and ensuring continuity of supply. That supply must come with better service and more involvement with suppliers and others. This allows us to meet, or exceed, our customers' expectations.

I like to tell people that successful firms of the future will have supply management systems that:
1) do more strategic work;
2) do that work faster; and,
3) do it better, and, most importantly, with fewer resources.

We can accomplish all these by succeeding in three significant change processes - human behavior, organizational structure and technology. These are basic controlling concepts for all organizations. I'll briefly examine each to get you started on a change process.

Human behavior drives everything. A grizzled farmer watching a high-tech farm productivity demonstration was asked by a newsman, "Are you going to go home and change your farming practices?" The man responded, "Naw, I already know how to farm better than I do."

Many of us are like that farmer. We, as managers, know how to do our work better, but we hang on to antiquated processes, wasteful practices and operate at high costs because we resist change. Training, empowerment and dynamic leadership can change such behavior.

Our people know how to use the new processes. However, they must be empowered to make the required changes.

Leadership is most important. It sets the whole change process in motion. Leaders create action by setting dynamic cost objectives, establishing new supply relationships that foster efficiencies and effectiveness, and empower people. Shake your organization to its roots with dynamic objectives that force people to behave differently.

Organizational structure follows processes and formalizes the relationships we've established. Structure is a blessing and a curse. Obsolete structure -- with extra levels of "assistants to" and "managers of" that hold lots of meetings that delay any kind of action -- is costly and detrimental to the organization's long-term health.

Flatten your structure with wider spans of control in the hands of people that make things happen. Results come through leadership and delegation that empowers and rewards people for achieving dynamic objectives. Everybody should have something at risk and the ability to share in the successes.

And if you resist change? Well, years ago, I worked with a company to build a better pay system for its sales force. Senior managers were convinced the sales force played too much golf. They had a pay system based on a fixed salary and a small bonus based on a monthly goal. It was easy to see the sales force easily reached its maximum salary for the month and then relaxed. I proposed a simple system that let the individual salesperson earn unlimited income based on increasing sales. Senior management called it too revolutionary. Here, antiquated processes kept an organization from maximizing its performance. The company no longer exists.

Technology is a force driving rapid change in supply management. New technology helps determine the type of organizations needed in the future. Utilization of technology is key to freeing human effort from non-value-adding activities.

We have the power to use information better, communicate with blinding speed and accuracy, and accomplish work with great efficiency. But, many of us are reluctant to make the investments in hardware, software and training necessary to employ technology to its full advantage.

Can we do more strategic work, and do that work faster, better and with fewer resources? You bet. But many of us are like the old farmer. To succeed, we must train our people and empower them with delegation and the needed new technology while motivating them with objectives that force change.

Robert Kemp is a consultant, speaker and the former president of the National Association of Purchasing Management. He can be reached at kempr@mchsi.com.

This article appeared in the October/November 2000 issue of MRO Today magazine. Copyright 2000.