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A well-known U.S. manufacturer was installing new production-scheduling software. Everything seemed to be going according to plan. The system was rolled out to the factory without any glitches. Then, within a week, the company had to shut the whole project down.
What went wrong? Certain individuals had a problem with the system's conclusions. As longtime managers of the production line, their mantra was never to let resources stand idle. Yet the new scheduler was recommending just that, based on signals of actual demand.
Top management had to back up. It gathered with employees at the plant level and explained the theory of constraints, which promotes a supply chain based on demand, not the maximization of production capacity. When the scheduling system was rolled out a second time, it was a success.
The story is told by Dwight Klappich, vice president of Gartner Inc. He's illustrating a maxim of successful change management: don't forget the human element. Education is one way that companies can enact real change within their supply chains, without falling into the traps set by everyday organizational behavior.
No matter how effective the software, or how brilliant the management theory, it can be undermined by a handful of individuals at various levels of a company. "What we've found is that the success or failure of many IT implementations within supply chain programs can be directly related to poor change management," says Klappich. Employees who aren't brought into the process from the very start, or inadequately prepared for change, are time bombs waiting to explode.
Sometimes its simply a matter of demonstrating the benefits of change. Klappich cites another example, of a production scheduler who was convinced that her use of spreadsheets was superior to any newfangled piece of planning software. Working around her to get a small pilot up and running, management was finally able to prove that the new system would actually make her job easier.
Companies need to take the time to explain the assumptions behind a change. "Sometimes people ask, 'Why are we doing it that way?'" says Klappich. "If I don't have a document, I can get defensive."
Other times the opposition can be more insidious. Certain types of human behavior, if not anticipated and dealt with from the start, can quickly sabotage a change effort. Bill Black, chief quality officer with the European Aeronautic Defence and Space Co. (EADS), speaks of the employee attitude typified by the acronym BOHICA-short for Bend Over, Here It Comes Again. Originating in the military, the term has begun to catch on in the business world. But it describes a behavior that is probably as old as human society.
"It's a natural response," says Black. He likens the people within a defined group to a living organism that will defend itself against external forces-in this case, any kind of supply chain change.
The trick is to manage change simultaneously at all levels of the organization. Black describes four distinct tiers, beginning with those who actually carry out the work of the company. They might be engineers, buyers, assembly-line workers, even the first level of management. Above them is the "superstructure," or middle management. Then come senior executives, and finally, top management. A successful program of change will address all of those levels, minimizing the communication gaps that naturally occur among them.
The problem becomes more acute as companies grow in size. EADS, with 2004 revenues of $43.3bn and a majority stake in Airbus, the world's largest commercial aircraft maker, faced a big challenge in breaking down corporate "silos," Black says. The effort had to be equally focused on people, process and tools. Too often, consultants are brought in to address just one of those elements, or only the top level of management. It might take several years for the message to trickle down to the "doing" level, assuming it ever gets there. In such cases, BOHICA becomes an understandable reaction.
Where It Begins
A successful program starts with a clear message from senior executives about what they want to achieve, along with the means to carry it out. But the actual details of execution must come from the bottom up, where employees are closest to the reality of day-to-day operations. Such individuals must be equipped with additional skills, including the fundamentals of Six Sigma, Lean manufacturing, Total Quality Management and business-process reengineering, says Black. At EADS, that translates into a four-week program which "demonstrates to the operational level that we as a company are prepared to trust them to make improvements happen."
Those given the task of enacting change are then put through a multi-step process which ranges from defining the problem to reinforcing the eventual change. Each industry has its own unique challenges, Black says, but in aerospace and defense the watchwords are time, cost and quality. Again, all must be attacked at once in order to ensure real transformation.
|"The success or failure of many IT implementations can be directly related to poor change management."|
- Dwight Klappich of Gartner Inc.
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