Integration Leads To Excellence

Integration leads to excellence

BARRY ELLIOTT

We've been mulling over the notion of ''integration' '. One of our friends, who is a well accomplished management consultant working in the field of IT strategy, asked us about our particular field, namely business excellence focused somewhat more on supply chain management than on the other building blocks. He said something like: ''Hasn't all of that manufacturing resource planning and integration stuff been done already?''

Well, sadly, the answer is, of course, ''No!'' And, just as sadly, we are still talking about essentially the same stuff now as we learned early in our careers, thirty years ago. How is it that industry isn't really progressing as much as we would have expected back then?

There is no question that thinking and so-called ''best practice'', has progressed. Thirty years ago, the principles of supply chain management hadn't been developed nearly as well as they now have been.

For example, the Oliver Wight Class A Checklist for Business Excellence, the key reference for our work, has progressed over that time from a list of 20 or so questions to the current sixth edition comprising nine chapters, roughly 90 subjects, 180 definitions of excellence, and almost a thousand detailed topics. Other examples of this progress that we have presented in this space over the years are the Supply Chain Council's Supply Chain Operations Reference (SCOR) model and the concepts of Efficient Consumer Response (ECR).

We are very clear about what it takes to achieve business excellence.

So, what is missing? Why don't very many businesses, let alone entire supply chains, achieve excellence? Why aren't they truly integrated? Indeed, what do we mean by excellence and integration?

In trying to progress the discussion, we must first get clear on what we would mean by integration, as such. At the highest level, an organisation that is truly integrated would work together and be very cohesive.

Different people in different functions wouldn't have different views of either the current and future situation; when things change, as they inevitably do, they would react in a consistent, collaborative way.

In business, a ''view'' is typically documented as a set of numbers and one would expect to see only a single set of numbers in a truly integrated business, not having the situation where Marketing has a different view than, say, Production.

In our experience, it is quite typical to find certain parts of almost every organisation that operate in an excellent fashion. Sometimes people refer to these as ''islands of excellence in a sea of mediocrity''. How is it that one or some parts of the same organisation perform so much better than others?

The answer, of course, is that at one time or another, certain people have led the way. The easy part of getting to excellence is to figure out the ''right'' answers with respect to the business processes to execute and what tools that you need to enable and support them. The hard part is having the right kind of leadership and getting people to understand what it is that you are trying to do and to behave in the way that is needed to achieve excellence.

This understanding that you need people to have includes the critical notion of being profitable. This ''excellence' ' to which we keep referring is not some academic or theoretical idea of how it would be nice to do business. It is defined or prescribed by what it takes to make money from your endeavours. However, profitability is an outcome; you have to do a whole lot of things right in order to, in the end, be profitable. And, it is very difficult to determine what is the maximum level of profitability in a particular business in a particular industry in a particular situation, time-wise and geography-wise.

And, so, that is why the answer to my friend's question is, ''No''. Yes, you can go and buy very good solutions in terms of software that come bundled with templates, configurable tools and processes based on best practices from around the world. One cannot argue that.

But, you have to put in the hard yards so that you and your people understand. You have to get past the point of ''you don't know what you don't know''. You have to do the hard work of evaluating all of those best practices and choosing from them, probably tailoring or modifying them, for your particular situation. It is only by doing that yourself, not contracting it someone else because they have done it many times for others and so they can do more quickly, that you will build the required internal commitment and expertise to achieve sustainable improvements.

This, in turn, will be the driver for the proverbial ''journey to excellence'' .

Integrated processes and tools are readily available. Our key message is that integrating the people aspects of an organisation, firstly, and an entire supply chain, secondly, require that hard thinking and hard work.

Weekly Link is co-ordinated by Barry Elliott and Chris Catto-Smith of the Institute of Management Consultants Thailand, as an interactive forum for industry professionals.