MOST Analysis

Mission Statement

The execution of an organization’s supply chain strategy is best managed as part of the Sales & Operations Planning (S&OP) process and meetings. In case an organization should not have an S&OP process, this may be a good time to develop and implement one as part of their integrated supply chain strategy.

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Objectives

01. Responsibility Awareness: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
02. Team Alignment: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
03. Assess Capabilities: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
04. KPI’s: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
05. Decision Acceptance: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
06. Strategy Flow: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
07. Employee Engagement: departmental SWOT analysis; strategy research & development. 1 Month
08. Transformation Program: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
09. Leadership Roles: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
10. Scorecards: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
11. Inclusive Planning: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
12. Middle Management: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month

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Strategies

01. Responsibility Awareness: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
02. Team Alignment: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
03. Assess Capabilities: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
04. KPI’s: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
05. Decision Acceptance: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
06. Strategy Flow: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
07. Employee Engagement: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
08. Transformation Program: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
09. Leadership Roles: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
10. Scorecards: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
11. Inclusive Planning: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
12. Middle Management: Each individual department head to undertake departmental SWOT analysis; strategy research & development.

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Tasks

01. Create a task on your calendar, to be completed within the next month, to analyze Responsibility Awareness.
02. Create a task on your calendar, to be completed within the next month, to analyze Team Alignment.
03. Create a task on your calendar, to be completed within the next month, to analyze Assess Capabilities.
04. Create a task on your calendar, to be completed within the next month, to analyze KPI’s.
05. Create a task on your calendar, to be completed within the next month, to analyze Decision Acceptance.
06. Create a task on your calendar, to be completed within the next month, to analyze Strategy Flow.
07. Create a task on your calendar, to be completed within the next month, to analyze Employee Engagement.
08. Create a task on your calendar, to be completed within the next month, to analyze Transformation Program.
09. Create a task on your calendar, to be completed within the next month, to analyze Leadership Roles.
10. Create a task on your calendar, to be completed within the next month, to analyze Scorecards.
11. Create a task on your calendar, to be completed within the next month, to analyze Inclusive Planning.
12. Create a task on your calendar, to be completed within the next month, to analyze Middle Management.

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Introduction

The Keys to Executing a Successful Strategy

In the Global Supply Chain, only solid execution can keep you on the competitive map after a brilliant strategy, blockbuster product, or breakthrough technology has put you there. You must be able to follow through on your promises. Unfortunately, the majority of businesses, by their own admission, aren’t particularly good at it.

Execution is the product of thousands of decisions made every day by personnel acting in their own self-interest and based on the knowledge they have. We’ve identified four essential building blocks executives may use to impact those behaviors : clarifying decision rights, creating information flows, aligning motivators, and implementing structural adjustments. (We’ll refer to them as choice rights, information, motivators, and structure for the purpose of simplicity.)

Most supply chains’ first turn to structural measures to improve performance since changing lines across the org chart appears to be the most obvious option because the changes are visible and tangible. These actions usually produce some short-term efficiency fast, but they simply address the symptoms of dysfunction rather than the core reasons. Companies frequently finish up back where they started after several years. Structural change can and should be a component of the path to better execution, but it’s better to think of it as the apex of any organizational transformation rather than the cornerstone. In fact, our research reveals that activities related to decision rights and information are significantly more important than improvements to the other two building blocks, and are roughly twice as effective. (See the exhibit “Strategy Execution’s Most Important Factors.”)

What Is Most Important in Supply Chain Strategy Execution?

When a corporation fails to carry out its strategy, the first thought that comes to mind is to reorganize.

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Case Study

Consider the situation of a multinational consumer packaged products corporation that went through a major reorganization in the early 1990s. (In this and subsequent situations, we have changed identifying details.) Senior management, dissatisfied with the company’s performance, did what most firms did at the time: They reorganized. They reduced the number of layers of management and expanded the scope of control. The cost of management personnel dropped by 18% in a short period of time. However, eight years later, it was deja vu all over again. The layers had crept back in, and control swaths had shrunk once more. Management had addressed the outward symptoms of bad performance but not the underlying cause—how people made decisions and were held accountable—by focusing solely on structure.

This time, management focused on the mechanics of how work was completed rather than lines and boxes. Rather than looking for methods to decrease expenses, they concentrated on improving execution—and in the process, they found the actual causes of the performance gap. Managers lacked a clear understanding of their duties and responsibilities. They didn’t know which decisions were theirs to make naturally. Furthermore, there was a shaky link between performance and pay. This was a firm that valued micromanagement and second-guessing over accountability. Middle managers spent 40% of their time justifying and reporting upward, or challenging their direct reports’ tactical decisions.

With this knowledge, the organization created a new management model that defined who was responsible for what and established a link between performance and compensation. For example, it was common practice at this organization, and not uncommon in the sector, to promote employees fast, within 18 months to two years, before they had a chance to see their ideas through. As a result, even after being promoted, managers at all levels continued to do their old tasks, gazing over the shoulders of their direct reports who were now in control of their projects and, all too frequently, taking over. People are staying in their jobs longer these days so they may follow through on their own ideas, and they’re still around when the benefits of their labors begin to show. Furthermore, the outcomes of such projects continue to factor into their performance appraisals for some time after they’ve been promoted, compelling managers to live up to the standards they set in earlier employment. As a result, forecasting has improved in accuracy and consistency. The improvements did result in a structure with fewer layers and broader control spans, however this was a side effect rather than the primary goal of the alterations.

The Components of Effective Execution

Our judgments are the result of decades of hands-on experience and extensive investigation. What are the most effective techniques of reorganizing, motivating, improving information flows, and clarifying decision rights? We began by creating a list of 17 traits, each of which corresponded to one or more of the four building blocks we knew were necessary for effective execution—traits such as the free flow of information across Global Supply Chain organizational boundaries or the degree to which senior leaders refrain from intervening in operational decisions.

Organizational Effectiveness: The Fundamental Characteristics

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The importance of decision rights and knowledge to good plan implementation is shown by ranking the attributes. The first eight characteristics correspond to decision-making authority and information. Only three of the 17 qualities have anything to do with structure, and none of them are ranked higher than thirteenth. Here, we’ll go over the top five characteristics.

Everyone Is Aware Of The Decisions And Acts For Which They Are Accountable

In companies that excel at execution, 71 percent of employees agree with this statement; in companies that struggle with execution, only 32 percent agree. As a corporation grows older, decision powers begin to blur. Young companies are often too focused on getting things done to take the time to properly define roles and duties from the outset. Why should they, after all? It’s not difficult to find out what other people are up to in a small organization. So things go well enough for a while. Executives come and go as the company grows, bringing with them and taking away various expectations, and the approval process becomes more confusing and muddy with time. It’s becoming increasingly difficult to tell where one person’s responsibility ends and another’s begins.

This was discovered the hard way by one major consumer-durables corporation. It was difficult to identify anyone below the CEO who felt truly accountable for profitability since there were so many people making competing and contradicting judgments. The corporation was divided into 16 product divisions, which were then divided into three geographic groups: North America, Europe, and the rest of the world. Each division was responsible for meeting specific performance goals, although functional employees at corporate headquarters were in charge of spending goals, such as how R&D dollars were allocated. Divisional and geographic leaders’ decisions were frequently overruled by functional leaders. As the divisions hired more people to help them build airtight arguments to challenge corporate decisions, overhead expenses began to rise.

While divisions argued with functions, each layer weighed in with queries, decisions stagnated. Because functional leaders were responsible for awards and promotions, functional staffers in the divisions (for example, financial analysts) generally deferred to their higher-ups in corporate rather than their division vice president. The CEO and his executive staff were the only ones who have the authority to settle disagreements. All of these symptoms compounded and delayed execution—until a new CEO was brought in.

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What is the Definition of Global Supply Chain Strategy?

For one thing, it’s not operational efficiency.

By reorganizing the divisions to focus on customers, the new CEO elected to focus less on cost control and more on profitable growth. As part of the new organizational architecture, the CEO clearly delegated profit responsibility to the divisions, as well as the power to rely on functional operations to achieve their objectives (as well as more control of the budget). Corporate functional responsibilities and decision rights were recast to better serve the divisions’ demands as well as to construct the cross-divisional connections needed to improve the business’s overall global capabilities. The functional leaders, for the most part, were aware of market realities, which necessitated some changes to the business’s operating model. It helped that the CEO included them in the organizational redesign process, so the new model wasn’t something they were forced to adopt, but rather something they collaborated on.

Critical Information Regarding The Competitive Landscape Is Rapidly Communicated To Headquarters

In strong-execution firms, 77 percent of employees agree with this statement, whereas just 45 percent of employees in weak-execution businesses do.

Headquarters can play a critical role in spotting patterns and disseminating best practices across company sectors and geographical regions. However, it can only play this coordinating role if it has current and accurate market intelligence. Otherwise, rather than deferring to operations that are much closer to the client, it will tend to push its own agenda and policies.

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Case Study

Consider The Case Of Caterpillar, A Heavy-Equipment Company

Caterpillar’s organization was so terribly mismatched a generation ago that its very existence was threatened. Today, it is a highly successful $45 billion worldwide firm, but it was so horribly misaligned a generation ago that its very survival was threatened. Decision rights were hoarded at the top by functional general offices in Peoria, Illinois, despite the fact that much of the information needed to make such decisions was in the hands of sales managers in the field. “It just took a long time to get decisions going up and down the functional silos, and they really weren’t good business decisions; they were more functional decisions,” One field executive remarked. The information that did make it to the top had been “whitewashed and varnished numerous times over along the way,” according to current CEO Jim Owens, who was then a managing director in Indonesia. Because they were cut off from knowledge about the external market, senior executives concentrated on the organization’s internal operations, overanalyzing issues and second-guessing lower-level judgments, costing the company opportunities in fast-moving markets.

Concerning The Information

Organizational efficiency was tested by asking respondents to complete a 19-question online diagnostic.

Pricing, for example, was based on cost and established by the pricing general office in Peoria rather than market realities. Salespeople all across the world were losing sale after sale to Komatsu, whose competitive pricing routinely outperformed Caterpillar’s. The company suffered its first yearly loss in its nearly 60-year history in 1982. It lost $1 million each day, seven days a week, in 1983 and 1984. Caterpillar had lost a billion dollars by the end of 1984. By 1988, then-CEO George Schaefer was in charge of a bureaucracy that was “giving me what I wanted to hear, not what I needed to know,” as he put it. As a result, he formed a task force of “renegade” middle managers to design Caterpillar’s destiny.

Ironically, the best method to ensure that the correct information reached headquarters was to ensure that the correct decisions were made far further down the chain of command. Top executives were freed to focus on more global strategic challenges by delegating operational responsibilities to those closer to the action. As a result, the corporation was divided into business divisions, each with its own P&L statement. Overnight, the all-powerful general offices that had previously existed ceased to exist. Their engineering, pricing, and manufacturing expertise was divided among the new business units, which could now design their own products, devise their own manufacturing procedures and schedules, and determine their own prices. The shift radically decentralized decision-making authority, handing market decisions to the units. Return on assets became the universal metric of success, and business unit P&Ls were now monitored similarly across the firm. Instead of using obsolete sales data to make inefficient, tactical marketing judgments, senior decision makers at headquarters may make wise strategic choices and trade-offs with this accurate, up-to-date, and directly comparable information. The new model was implemented in the company within 18 months. “It was a fantastic metamorphosis of a kind of slow firm into one that genuinely has entrepreneurial zeal,” Owens says. And that change happened quickly because it was decisive and comprehensive; it was thorough; it was universal, global, and all at once.”

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Decisions Are Rarely Questioned After They Have Been Made

Whether or whether someone is second-guessing you is a matter of perspective. Managers further up the supply chain may not be delivering incremental value; instead, they may be slowing progress by redoing their subordinates’ work while effectively shirking their own. In this study, 71 percent of respondents in poor-execution firms believed their judgments were being second-guessed, compared to only 45 percent of respondents in strong-execution companies.

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Case Study

Consider the case of a global humanitarian organization dedicated to poverty alleviation. It had a situation that others may envy: it was under stress as a result of increased donations and a corresponding increase in the depth and breadth of its program offerings. As you might anticipate, this nonprofit was filled with mission-driven individuals who took a strong personal interest in their work. Delegation of even the most routine administrative responsibilities was not rewarded. Copier repairs, for example, would be individually overseen by country-level supervisors. As the company grew, managers’ failure to delegate resulted in decision paralysis and a lack of accountability. It was an art form to second-guess someone. When there was a question about who had the authority to make a decision, the standard procedure was to hold a series of sessions in which no conclusion was made. When judgments were made, they were usually scrutinized by so many people that no single individual could be held responsible. An attempt to speed up decision-making through restructuring—by combining important leaders with subject-matter experts in newly established central and regional centers of excellence—became yet another stumbling block. Key management were still unsure of their legal right to use these centers, so they didn’t.

Second-Guessing Was An Art Form: By The Time Choices Were Made, They Had Been Scrutinized By So Many People That No Single Person Could Be Held Responsible

The nonprofit’s board of directors and administration went back to the drawing board. They created a decision-making map, a tool to assist identify where different sorts of decisions should be made, and as a result, decision rights were defined and reinforced at all levels of management. Following that, all managers were urged to delegate standard operational responsibilities. Holding people accountable for their judgments felt fair after they had a clear understanding of what decisions they should and should not be making. Furthermore, they could now concentrate their efforts on the organization’s objective. Clarifying decision rights and responsibilities also improved the organization’s capacity to track individual accomplishment, allowing it to map new and exciting career routes.

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Information Is Freely Exchanged Across Supply Chain Organizational Lines

Units function like silos when information does not flow horizontally across different parts of the firm, preventing economies of scale and the transfer of best practices. Furthermore, the company as a whole misses out on the chance to cultivate a cadre of up-and-coming managers who are well-versed in all sectors of the business. According to our findings, only 21% of respondents from poor-execution organizations believed information flowed smoothly across organizational boundaries, whereas 55% of respondents from strong-execution companies did. However, since even the strongest organizations have low scores, this is an issue that most businesses can address.

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A cautionary tale comes from a B2B company whose customer and product teams failed to work together to serve a critical segment: large, cross-product clients. The corporation had built a customer-focused marketing organization to handle connections with significant clients, which devised customer outreach initiatives, novel pricing models, and targeted promotions and discounts. However, this group could not provide clear and consistent reporting to the product units on its initiatives and success, and it had trouble gaining time with frequent cross-unit management to discuss major performance issues. Each product unit communicated and planned in its own way, and it needed a lot of effort on the part of the customer group to comprehend the diverse priorities of the units and customize communications to each of them. As a result, the units were unaware of, and had little faith in, this new division’s efforts to penetrate a vital consumer category. The customer team, on the other hand (and appropriately), believed the units paid only cursory attention to its plans and couldn’t elicit their cooperation on topics important to multiproduct clients, such as potential trade-offs and volume discounts.

This lack of collaboration had previously not been an issue because the company was the leading player in a high-margin area. Customers began to perceive the firm as unreliable and, in general, a tough supplier as the market became more competitive, and they became increasingly hesitant to enter into beneficial partnerships.

However, once the flaws were identified, the remedy was rather simple, requiring just that the groups communicate with one another. The customer division was tasked with providing regular reports to the product units that detailed performance versus targets by product and geographic location, as well as a root-cause investigation. Every quarter, a standing performance-management meeting was added to the calendar, providing a space for face-to-face information exchange and discussion of unresolved concerns. These actions fostered the larger organizational trust that collaboration requires.

Field And Line Employees Typically Have Access To The Data They Need To Understand The Financial Impact Of Their Daily Decisions

Employees’ ability to make rational decisions is inevitably limited by the information available to them. Global Supply Chain managers will always pursue incremental revenue if they don’t know how much it will cost to grab an additional dollar in revenue. They can hardly be blamed, even if their judgment is incorrect in the light of all available evidence. According to our research, 61% of people in high-execution firms believe field and line employees have the information they need to comprehend the financial effect of their decisions. In firms with poor implementation, this figure drops to 28%.

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We witnessed this unfavorable dynamic at a large, diversified financial-services customer that had grown through a series of successful acquisitions of small regional banks. Managers preferred to split front-office bankers who marketed loans from back-office support groups who performed risk assessments when combining operations, putting each in a different reporting relationship and, in many cases, in different locations. Regrettably, they did not establish the required information and motivational ties to ensure that operations ran well. As a result, they pursued separate, and frequently conflicting, objectives.

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Executive Summary

Chapter 1: Responsibility Awareness

Clearly Define Roles And Responsibilities

The single most significant quality indicated for effective plan implementation was ensuring that “everyone has a good knowledge of the decisions and actions he or she is responsible for.” Why?

Individual decisions make up a firm, and individual decisions make up successful strategy implementation. Responsibilities are usually apparent in a small business. However, as the firm grows, so does the number of people, and the number of jobs and duties expands and spreads. Meanwhile, bosses are becoming increasingly disconnected from their employees’ day-to-day tasks.

Individual decisions make up a firm, and individual decisions make up successful strategy implementation.

Who is to blame for what is no longer obvious?

Things can get extremely muddled in global corporations with similar teams in different parts of the world. Who, for example, makes the decisions when designing a product for a specific market? Is it better to work with a global team or a local team? Conflict and ambiguity become rampant, impeding any forward movement.

What are some ways to make the roles of individuals and teams more clear?

Create a clear structure that identifies who has the authority to make choices (for both departments and individuals) and communicates this to the entire organisation. Allow individuals to complete projects before promoting them to new positions; this reduces crossover – the perplexing period when a new manager arrives but the old management can’t let go of the project they were working on.

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Chapter 2: Team Alignment

What Are The Benefits Of Strategic Alignment For Strategy Execution?

A few handpicked executives would create a strategy initiatives cabal and scale the mountain to meeting room C back in the strategy dark ages. They would emerge weeks later with a stone tablet engraved with the new strategic objectives. They may have also thrown a pizza party (but we can’t be sure because no employees were invited).

The task has been completed, and the approach has been implemented. So they reasoned. This top-down, prehistoric approach to strategy, however, does not function in the actual world. Thankfully, in recent years, there has been a shift in strategy.

If your firm sets rigid strategy goals without taking into account the strategic alignment process, you’re setting yourself up for a hot new recipe for failure at every turn. Let’s take a look at the drawbacks of bad strategic alignment.

What Are The Ramifications Of A Strategy That Isn’t Aligned?

When company leaders keep strategy planning to themselves, the result is a tone-deaf shambles. It becomes unrecognisable after being distilled so far from its source.

Then, like some strange totem pole, this complicated “plan” is thrust at staff. The businessmen wrap their neckties over their heads and shout ‘this is the future…’ in a rhythmic manner. A wide-eyed CEO thumps an ominous beat on the bongo under the flickering light of a 417-slide PowerPoint presentation on the antiquated projector, as puzzled (and terrified) staff place matchsticks in their eyes to keep awake.

Okay, we may be prone to exaggeration (sometimes), but it’s reasonable to say that staff buy-in is low. With such a strategy in place, business units strive to ‘Exceed Success’ or ‘Awesomize the Day,’ but because there is no coordination or communication across departments, everyone goes their own way, and the organization’s goals are left to project conflicts and isolated teams.

Employees are frustrated and disengaged from the leadership’s vision in this climate. Isolated skill becomes stagnant, and demotivation is rampant. Some people quit, staplers go missing, and Netflix viewing time in the office skyrockets.

Employee engagement plummets, and performance suffers as a result. People are unsure of what they should do and are less willing to put forth an effort.

What was the end result? Countless hours, dollars, and talents have been squandered.

A lack of strategic alignment has rendered strategy execution difficult to attain and pointless to pursue in this scenario. Every attempt by management to gain support is a costly endeavour that results in more animosity than return on investment.

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Chapter 3: Assess Capabilities

Capacity Of Organisations

Organizations that successfully unlock capacity to execute new growth initiatives see a 77 percent boost in profitability. To achieve plan implementation success, strategists must focus on unlocking capacity.

Many businesses fail to commit sufficient resources (assets, time, people, etc.) to the implementation of new growth initiatives. They place an excessive amount of emphasis on strategy development, planning, performance measures, and communication.

Strategists must identify places where the organization’s capacity to execute is compromised owing to a lack of coordination. The net outcome of poor coordination is a decrease in the enterprise’s entire capability.

• Deploy diagnostics to measure organisational capacity before starting growth efforts to unlock organisational capacity.
• Use new technologies to better understand mid-manager trade-offs when it comes to resourcing growth bets.
• Create new frameworks for releasing resources that have been trapped.
• Establish support systems to aid in the integration of expansion initiatives into existing enterprises.

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