For you, it’s clear: it’s time to overhaul your supply chain practices—teams are under stress, performance is unsatisfactory, we’re not agile enough, and our systems are outdated. The need for supply chain transformation has never been more evident.
Yes, it’s clear to you, but how do you convince the executive committee, and obtain the budgets to finance this transformation? Winning executive committee buy-in is crucial for any strategic supply chain management initiative.
Do I Need to Compile an ROI File?
No doubt you’ll be tempted to start by putting together an investment case: assessing the costs, evaluating the benefits, and the risks if we don’t go ahead with the project—in short, putting together a case demonstrating the ROI in supply chain initiatives. We are often asked to provide evidence to support this type of study.
It’s a mistake; don’t start there.
Many years ago, I was the supply chain manager at a multinational company, and I was involved in a strategic project we wanted to launch, for which I had put together a factual argument. The industrial director took me aside and told me: “You know, this type of strategic decision isn’t made based on a document. In reality, decisions are made at the coffee machine, in the canteen, at dinner parties, in informal conversations—because several people are pulling in the same direction, because there is gradually a bundle of information and influences that make the project convincing and obvious.”
I was still a bit naive and not political enough—executive teams don’t make decisions based solely on ROI. You decide, and only then justify it with a ROI case…
I’d had a hint of this at the start of my career: in my first job, I was in charge of putting together the business case for investing in a new production line. I quickly realized that the project was not at all profitable—it was an increase in capacity, whereas we had already excess capacity. At the time, I was told, “Yes, okay… but in any case, the investment is committed, and the line is being manufactured!”—the motivations were different…
Building Alliances
To convince people to launch a supply chain transformation, your priority must therefore be to find allies within the company, and in particular within the management committee. Building business alliances is key.
Natural allies are not necessarily those closest to the supply chain function: purchasing and production. Quite often, the performance of these functions is measured on criteria that run counter to your intentions—the mere mention of reducing manufacturing or purchasing batch sizes can alienate their support…
The Finance function is certainly your ally. Learn to speak the same language, develop joint reporting, steer the S&OP process together, and simulate the effects of a change in practices together—if you have the CFO in your pocket, you’ll find it easier to take the decision! Supply chain finance collaboration is essential to securing the needed resources.
Sales, marketing, and business functions as a whole are also your potential allies. The benefits of supply chain transformation must be there: increasing service, facilitating growth, accelerating time to market, responding rapidly to real demand, and reducing inertia—these are at the heart of your common interests.
In many companies, however, these functions and the supply chain are at odds. One side blames the other for late trains, while the other retorts that they should provide better forecasts… So you need to build trust so that the supply chain strategy roadmap becomes a shared one.
A good way to weave these alliances is to distill information on established or emerging supply chain best practices, popularize them, encourage meetings with other companies, gradually dig your furrow—and be opportunistic when windows of opportunity open up. Organizing a serious game lasting a few hours during a management seminar can be an excellent way of doing this.
External Allies
Do you need to bring in external consultants?
It can help you get across messages that are sometimes inaudible internally. An external consultant, reputed to be an expert, expensive, and experienced in delivering impactful messages, may seem more legitimate—use this lever wisely if it’s relevant to your corporate culture.
If you can show benchmarks and encourage meetings with other companies, that’s even better—there’s nothing like the candid testimony of other manufacturers to understand the relevance of your supply chain management projects.
Validate the Investment
Once you’ve won the decision in principle, and only then, build the supply chain investment case—the question asked will no longer be “Is this transformation project right for us?” It will just be “Can we afford this supply chain transformation which is essential for our future?”. The good news is that with Intuiflow, you don’t have to put millions on the table to do so. For more on how Intuiflow can transform your supply chain, visit our website.
