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Accelerate your End-to-End Performance and Growth

Companies with Synchronized value chains will dynamically adapt and respond faster to the “new normality”. The competitive gap between those companies leading the Sync race, and those yet to get started is only set to grow wider. It’s time for busi­ness leaders to embrace Sync and capitalize on the opportunities that synchronized end to end operations can bring.

Heading into the new decade, business leaders were already unsettled by trade uncertainty, political instability and more intensive competition resulting from disruptive technologies. Then, a new turn! The shocks of the pandemic began to reverberate, with far-reaching consequences for the way the world works and does business.

While Lean and Just-in-Time systems are core to the optimization of production in many complex and highly integrated industries such as Electronics, Automotive and Pharmaceuticals; the potential shortcomings have been exposed, as supply networks on all continents have been disrupted. Businesses are being forced to challenge and rethink their global value chains. Where chains were once shaped to maximize efficiency and low cost, the needs for resilience, speed and agility are now front of mind.

Firms are seeing the urgency to be fleet-of-foot and dynamic in their decision making; the ways they plan, evaluate scenarios and orchestrate/ deploy their resources. This calls for stronger coalitions, collaboration and levels of connectivity not only internally, but also outside with Suppliers, Customers and eco-system generally, bringing greater transpar­ency and visibility throughout the entire network.

We’ve conducted a global survey to investigate the maturity of the Synchronization journey in their businesses, as well as exploring the barriers that companies face and the solutions they have adopted. Hundreds of sen­ior supply chain executives and practitioners across multiple Industry sectors, around the world, have participated. We’ve also run several one-to-one interviews with survey participants and sub­ject matter experts to further deepen the research and validate the meaning behind some responses.

The consolidated findings have been summarized below:

The survey identified priority solutions. Using practitioner experience and insights gained from the companies which are most advanced in the Sync journey, we have been able to set out the ten Accelerators for Sync breakthrough. These are explored in the pages to follow.

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Value creation, customer centricity and sustainable business define the WHY for SYNC

The Value Chain concept was developed around 1985 by Michael Porter, the Harvard Business School professor. According to Porter, when managing the value chain system, the idea is to optimise the end to end chain so as to maximise value creation while minimising cost and waste.

Whilst the majority of survey participants (89%) believe that the benefits of a Sync’d value chain are tangible and measurable – especially around Service, Agility and Speed – many struggle to convert these improvements into financial impacts, in particular, tangible business wins on Revenue, Profit and Cashflow.

This is a concern, since unless business leadership can evaluate Sync initiatives, strategies and actions against Top Line, Bottom Line and Cash Flow impacts, there is unlikely to be excellent traction and appetite to do more.

Survey participants also cite a lack of clarity around business and customer needs. Value propositions are often ill-defined, or too generic to be translated into specific operating strategies, which are able to meet the segmented needs of Customers and end Consumers.

The answer requires an appreciation of the competitive weapons and value drivers for their own industry, business unit and product/ service types, ensuring a perfect match to customer needs and thereby providing a competitive advantage over peer competitors.

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Customer centricity and understanding is, therefore, fundamental to achieving Sync outcomes. Optimised and sustainable end to end value chains are realised when all nodes are driven by the pace of customer demand - delivering differentiated products and services when needed, at the right quality and value, with zero waste and obsolescence. Most come up short today against this vision.

Secure business leader sponsorship by being able to translate Sync benefits into tangible value

85% of the survey population recognise that Business Leader sponsorship is essential to successfully achieve a Sync breakthrough. Yet 1 in 4 think their Leadership lack a clear understanding of the benefits of being Sync’d as an organisation and having a fully integrated end to end value chain.

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The critical need here is how to ensure that Sync benefits are measured and results visible in order to capture the C-Level and Executive teams’ attention to support, drive and sustain breakthrough initiatives.

Almost all companies reporting progress on their Sync journey have put essential measurement systems in place – at least for a few key metrics. Comprehensive measurement systems are less widespread, with just 1 in 6 companies having such a capability. Data showed that those companies quite advanced in their Sync journey are the ones for which their C-Level and Executive teams were fully aware and convinced about the opportunities.

Companies like P&G, Unilever, Amazon, just to mention a few, understood at an early stage that integration and synchronisation were value generative and concurrent progression offered a competitive advantage that is pursued with a sense of urgency.

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Build coalitions for Sync through effective internal and external focused collaborations

85% of survey participants recognise that Sync is not possible without effective internal and external collaborations. Fully Sync’d value chains can only be built through cross-functional and cross-enterprise coalitions. However, many participants see this as a considerable challenge, as current organisation metrics, silo structures and ways of working inhibit collaboration. Discouraging, or misalignment of metrics was cited as a significant barrier by all companies, irrespective of their stage in the Sync journey.

Cross-functional engagement is vital for the success of any Sync initiative. Earlier research by EFESO with Cranfield University found Collaboration, both internal and external to the enterprise, to be an essential requirement for successful next-generation supply chains, although a capability gap for many organisations today. Success elements include building commitment and trust between individuals, teams and functions – extended to external entities, supported by power distribution and gain/risk share mechanisms that permit effective end to end collaboration.

Lack of trust makes it difficult to cooperate or even feel motivated to do so. Many companies also remain wary of external partners accessing or sharing their information. Shared output metrics need to be in place, and considerable tenacity is required to secure the alignment of Operating Strategies, Planning Systems (e.g. Joint Business Planning, S&OP, etc.), Metrics and Rewards.

Address the structural, cultural and change management elements necessary to achieve a Sync breakthrough

The structural design of an organisation sets out the way in which activities are arranged and coordinated, so that its mission can be fulfilled and goals achieved. The design may or may not be the result of conscious choices coherent with the business needs; either way, it will have a strong influence on the resulting culture and behaviours prevailing across the organisation.

Survey respondents cited struggles to adjust and influence their existing cultures to embrace and adopt new mindsets and behaviours more coherent to Sync progression. Examples include:

  • Prioritising business and customer needs over functional and silo outcomes
  • Reorientation from a “PUSH” culture to a “PULL” culture with predictive capabilities
  • Global and holistic thinking to optimise decisions across the breadth of the chain
  • Multi-functional collaboration and teamwork to embrace work processes that span across functions
  • Shifting from a “fire-fighting” to a Continuous Improvement/Zero Loss Culture
  • Sustaining process performance and improvement via the adoption of standard work practices and short-interval performance management systems (e.g. Plan-Do-Check-Act, Daily Direction Setting etc.)

Earlier, we raised the importance of establishing trust, group values and mutual commitment between actors in the chain. Moving to higher levels of Sync capability requires yet more work on the change management elements. Thus, as the walls go down, teams and individuals can be adequately equipped and skilled to connect, contribute and collaborate effectively. As a consequence, more agile, proactive and empowered problem solving and decision making becomes evident in the organisation and visible in behaviours with the added benefits to performance.

Educate people for Sync skills and promote knowledge about Sync benefits across the organisation

It has often been said by business leaders that “people are our biggest asset”. And yet, the real investment to develop capable and competent practitioners that think and work with an end to end mindset, whilst also having adequate technical (or functional) “mastery”, has been very low.

Not surprisingly, leadership development and workforce education are viewed as essential or highly relevant for Sync breakthrough by over half of survey participants, although someway down the list of priorities. The takeaway here is that to make a meaningful transformation, requires a critical mass of individuals with the so-called “T-Shape” profile, blending end to end know-how of value delivery and optimisation with deep functional competencies. When assembled as coalitions, these groups of educated individuals can provide a potent force for change.

One example cited is that of a sizeable Pharmaceutical organisation, where VPs, Leaders, Site Directors and immediate reports undertook a programme of value chain education that facilitated the implementation of integrated planning hubs. This was a focused element of a global transformation that resulted in a better Sync’d planning approach and a huge reduction in inventory across the business.

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Re-orientate leadership and accountability towards an end to end performance and optimisation, not just functional or activity focus

As a consequence, individuals may seek to maximise the performance of their own domain, possibly at the expense of overall performance and value creation.

To make Sync happen, Leadership accountability needs to span the full chain in order to maximise total value creation. Looking at the most advanced companies in our survey, more than half cited that “dual reporting lines” had been relevant to improve levels of Sync.

Improved performance then occurs, not only by eliminating losses in an individual function (or node), but also primarily by addressing the disconnects or losses that occur between functions in the trade-offs.

Some businesses have created “Single Point” accountability for the chain to Business Leadership and other functions. In this way, better Sync has been achieved by having a coherent and consistent strategy deployment from top-level business goals/customer needs into end to end value chain operations with complementary functional execution strategies, aligned KPIs and priorities set across the full chain.

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Establish the solid foundational capabilities that are necessary as a precursor to any successful Sync progression

Solid foundations are critical to paving the way to a successful Sync journey. This is a point often overlooked as Business Leaders get distracted by the “shiny stuff” and other “silver bullet” solutions, rather than recognising that the hard graft must be done first to put in place the fundamentals. Examples are standard work definition, good process control, performance management systems and a continuous improvement culture. If you can’t find these practices in your own organisation, then don’t expect to make fast progress towards Sync.

Gartner data shows that 63% of organisations have the aspiration to be at Sync’d Level 4 within 2 years. Yet the reality check indicates that most are struggling with capability building at more basic levels.

In our survey, it is in the Foundations area that we see some of the biggest differences between “LEADERS” and “LAGGARDS” in the Sync journey. Leading companies have already worked to put in place foundational elements that will accelerate high levels of capability and integration of end to end operations. Four specific areas stand out for LEADERS:

  • In-control of stable, functional processes
  • Robust planning capabilities
  • Culture of short-cycle management/direction setting
  • Education, skills and development

This foundation work is proven to deliver short-term benefits, helping to eliminate defects, reduce buffers, planning time horizons and eliminate efficiency losses from more reliable processes and greater agility. This creates the platform and business traction to continue moving forwards.

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A progressive approach towards Sync ensures efforts are targeted towards the most essential value creation opportunities and that benefits are locked in at each stage

As easy as it may sound, it requires significant insight to navigate through the synchronisation journey. This journey is illustrated in Figure 11 above, with the five levels of progression highlighted on the vertical axis.

This progression must be made in a “concurrent” way, meaning that all functional domains (as shown on the horizontal axis) should advance in concert, prioritising capability development and performance improvement in the areas that maximise overall value creation.

In practice, some domains or functions may lead others, but the key takeaway is that no function should run ahead with “silo optimisations” that can be to the detriment of others and potentially erode end to end performance.

The progression to a Level 4 (and beyond) customer-centric, integrated and synchronised chain, is outlined as follows:

Level 1 RESTORED – all processes, standard work and metrics are defined by function. Operations and process losses become evident, dissatisfaction with the status quo will increase.

Level 2 IN CONTROL – functional operations are stable and follow strict adherence and performance to agreed standards. Reliability and customer satisfaction will improve.

Level 3 RESPONSIVE – performance will be predictable; complexity will be managed to eliminate areas of non-value added. Suppliers and Customers are engaged and progressively connected. The focus will move to increase flexibility, speed and agility. Customer value delivery will improve.

Level 4 SYNCHRONISED – end to end integration and sync is based on customer demand-pull. Performance is transparent and driven by ONE Number concept, ONE source of Truth. Flow, inventory and assets will be optimised. Volatility and risk will reduce.

Level 5 REAL-TIME VALUE NETWORK – the utopian vision state in which everything is perfect? Setting out the details and enablers for this vision state is beyond the scope of this research report. However, there is no doubt it is a future augmented fully by digital technologies, permitting real-time response and adaptability.

Demand is visible throughout the value stream in real-time. Decision support platforms are AI-ed and allow consumption and fulfilment data to be interrogated, classified and segmented in real-time, to influence and adapt operations in a predictive and prescriptive way.

Partners are able to exploit profitable opportunities in a dynamic marketplace. Missions and objectives are fully aligned to the value stream core purpose. Relationships are mature and multi-dimensional. Capabilities are known and complimentary. Innovation, creative destruction and change is the new norm.

The progression outlined above can be viewed in much the same way as the Team and “Pit Crew” in an F1 Race; constantly managing strategy and execution performance; everyone with clear roles and responsibilities; working with split-second precision and technical mastery; supported with advanced digital tools and technologies to drive out every drop of performance from the “System” with the aim of winning the race.

Experience shows that a progressive approach towards Sync ensures that efforts are targeted towards relevant business priorities and that benefits can be capitalised and locked in at each stage.

Prioritise real-time information flow with predictive and prescriptive decision-making support

We found that the companies already more advanced in the Sync journey (17%) had a willingness to start with less than perfect data. They also chose a “fail-fast and learn” culture to enable early adoption and response. This has led to their ability to not only use predictive insights to both drive the chain, but also to orchestrate the Sync breakthrough itself. Insights gained using this approach brought increased acceleration and capabilities to move ahead of the competition.

The increased volume of “big data” also requires a more sophisticated data science infrastructure and an advanced analytics capability to facilitate decisions both internally and with partners. Of our survey population, less than 1 in 7 have confidence in their organisation’s data hierarchies and the future capability of their data ecosystems.

There is a recognition that to manage end to end data volume requires scale and an automated capability. This will enable dynamic exception management to drive the end to end chain. In other words, a situation where the majority of business flows are handled hands-free or “self-driving”.

Ultimately this can enable “in the moment” decision making from the data lake, facilitated by machine to machine capabilities, which will empower and inform decisions for expert authorisation, thereby minimising risk and maximising service outcomes. This is an exciting reality as Sync’d value chains are becoming more prevalent.

Smart Organisations will look to Sync as a vehicle to regenerate performance, value creation and growth recovery post-crisis

In all corners of the globe, the Covid-19 crisis during 2020 highlighted the dependencies we have on reliable and responsive supply chains to keep things moving and maintain the availability and distribution of vital food, medical supplies and other essentials.

There has never been a better time, nor a stronger case, to drive a Sync breakthrough than today. Whilst our Sync survey was conducted in a pre-crisis context, the grim reality facing many business and Industry value chains is literally “Sync or Sink”.

In the post-crisis economy, companies with Sync’d value chains will dynamically adapt and respond faster to the “new normality”. Demand sensing insights and response mechanisms will allow Sync’d organisations to intelligently reposition their assets, resources and capabilities throughout the market and across channels, to enable them to take competitive initiative.

Leaders that can hone their organisation’s Sync ability in the months ahead will be able to better shape and respond to the uncertain and stormy conditions. Through Sync, value levers can be pulled and quickly optimised to accelerate the return to growth, or in the worst case, manage supply constraints to better maximise performance and profitability.

About the authors:

Clive Geldard Clive Geldard, VP EFESO Consulting, specialist in customer centric supply chain transformation.
Eitel Monaco Eitel Monaco, Executive Vice President, Head of Practices.