Managing Start-ups and Transitions
Typical "S.W.A.T. TEAM" Approach Does Not Work
By Chuck
Arfsten, Vice President, Shared Warehousing - East
Close to 70% of Fortune
500® manufacturers are outsourcing all
or part of their logistics functions – up from 58% one year
earlier (Lieb/Randall, 1997). And nearly half of senior executives
surveyed state that their outsourcing efforts are becoming more
strategic in the context of the company’s business and financial
objectives (1998 Outsourcing World Summit).
Yet
despite the growing strategic importance of outsourcing, 15% of
these same senior executives reported results from outsourcing agreements
to be "below expectations" (1998 Outsourcing World Summit).
One of the main reasons, according to outsourcing consultant Michael
Corbett, is a failure to put the resources in place to effectively
manage the transition.
"At
the onset of an outsourcing effort, there must be strong senior
management commitment within the outsourcing organization and a
plan to link both parties at the strategic and functional levels,"
says Corbett.
While
outsourcing is growing at 25%-30% per year, it is not a surprise
that a segment of companies are dissatisfied with the results of
their outsourcing efforts. Large-scale change management is a complex
business involving detailed planning, human resource management,
systems expertise and communications done often and done well. Companies
should not assume that they can develop this expertise overnight.
The
good news is that many third-party logistics providers have significant
experience managing start-ups and can help orchestrate a successful
transition. However, not all have a model to assure long-term success
and seamless integration with the manufacturer’s operation.
That is why many outsourcing partnerships are short-lived.
The
traditional approach involves a "S.W.A.T." team that comes
in for a brief transition management phase but quickly moves on
to another assignment. This S.W.A.T. team approach does not work.
While a short-term transition team may keep all the balls in the
air during the critical period 60 days before and 90 days after
the start of operations for the customer, a new team cannot be expected
to sustain this juggling act.
A better
model involves a dedicated team from the third party that works
with the customer during and beyond the initial transition
to assure successful long-term integration and sustained operational
excellence. Rather than a transition team, it’s an integration
team.
No
matter how many times the word "partnership" is uttered
during the transition phase, it’s not uncommon for the purchaser
of supply chain services to view the initial transition in terms
of "us" and "them." After all, they are now
newly dependent on an outside provider to deliver one of their most
important customer service functions. Third parties must be sensitive
to this tendency and team members must become advocates for the
customer within their own organizations, helping to build a climate
of high trust and open communication.
Tips on Successful Transitions
For
companies planning a major transition, the process can be like navigating
your way through a complex maze. But there is a logical process
you can follow that will increase the likelihood of a successful
transition and ultimately help you leverage your supply chain to
achieve a competitive advantage in your market.
Below
is a diagram of this process, followed by a more detailed summary
of select steps in the process. Every transition will be different.
But these tips provide a solid foundation for understanding transition
management for the logistics function.
We
view transition management as a three-stage process that includes:
1)
understanding of the business reasons for outsourcing and establishing
commitment within the manufacturer’s organization
2)
managing the transition
3)
integrating the manufacturer and supplier organizations to assure
long-term success.
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