How to
Transform an Organization into a Supply Chain Centric Model. It Starts and Ends
with People. Why not use Pay-For-Skill?
Most supply
chain professionals are familiar with the best practices of a supply chain
organization and how to transform purchasing into a lead strategic partner in a
company. These usually include a thorough spend analysis to focus on the major
areas of materials and services. Another
aspect includes the rationalization of suppliers and the formation of a few key
partnerships with important suppliers. The institutionalization of a
comprehensive sourcing methodology is also crucial. The area that is often overlooked
or neglected is the investment in people!
Many
purchasing professionals have been rewarded for bureaucratic and tactical
behaviors for many years. The culture of risk aversion is prevalent and roles
are particularly well-defined and limited. They focus on a particular material
or service and become “experts” on these items. Often they work in silos and
have no real connection with operations. It is usually not their choice but the
expectations of the culture or of their organization.
The retraining
of supply chain professionals begins with developing the capability to lead
cross-functional teams not only in sourcing, but in process improvement
activities such as Lean and Lean Six Sigma. Most need to reach the level of at
least a green belt in a process improvement approach, and to reinvent
themselves to be total product experts not just a particular material expert. You have to be a product expert to understand
the Voice of the Customer (VOC) or what is really important to them. This
requires striving to become an expert in an entire industry not just a narrow material.
It also requires a dedication to understanding and working with operations. Performance
reviews need to be tied into how well they do in predicting the market trends
of their particular industry and meeting or exceeding the VOC.
All too
often this training is piecemeal, unorganized and uncoordinated. Fortunately
there is a comprehensive approach that has been around for forty years that
works in many industries particularly ones where employee knowledge is highly
valued like the chemical, oil and process industries. The approach has been
called pay-for-skill or pay-for-knowledge. Employees are paid
more for each skill or knowledge area that they develop, and demonstrate their
proficiency in by job performance. It
does require a significant monetary investment by the organization in training
employees and the organization evolves to a continuous learning campus.
The word campus is critical
because many organizations partner with local technical schools or universities
to jointly provide the comprehensive training and courses.
Unfortunately many
organizations have disinvested in training employees and would rather outsource
for many skills or functions. This is deadly to the supply chain concept and
process improvement, which must strive to constantly improve the entire supply
chain from start to finish without breaks which may or may not be performed
better by an outsourced entity.
The major
objection to the pay-for-skill approach is the cost and the length of time for
payback from the employees improved knowledge. Once in place, however; the
power of this employee intellectual capital, and the momentum of continuous
improvement, establishes a supply chain centric organization that is nearly
impossible to beat competitively.
People
transform supply chains and organizations not technology or best practices.
Tom
DePaoli
Dr. Tom DePaoli is the Principal
(CEO) of Apollo Solutions (www.apollosolutions.us) which does general business consulting in the supply
chain, Lean Six Sigma and human resources areas. He retired from the Navy
Reserve after over 30 years of service. In other civilian careers, he was a supply chain and human resources executive with
corporate purchasing turnaround experience and Lean Six Sigma deployments. He is currently consulting on leadership by
storytelling. He is the author of 11 books on Amazon. drtombooks.com
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