Gartner identifies four imperatives for value chain transformation

Organizations seeking to make the transition from supply chain to a demand-driven value network (DDVN) must look beyond traditional projects and the adoption of functional best practices, according to Gartner, Inc. Gartner analysts have identified four imperatives that supply chain leaders must address to make the change successfully.

“The case for value chain transformation has never been greater,” says Steve Steutermann, research vice president at Gartner. “Competing in today’s global markets requires companies to abandon internally focused supply chains and reorganize resources, processes and systems to support networks aligned for joint value creation.”

The four imperatives that organizations address before attempting to design and execute a transformation road map are:

1. Identify a burning platform. Organizations must realize that supply chain change is required and identify pain points that stakeholders can relate to. The burning platform can include a picture, slogan, list of problems or quantification of business impact and should send a concise and direct message about the primary nature of the problem, allowing details to be itemized within the business case.

2. Have a compelling vision. A vision must paint a clear and inspiring picture of the intended future outcomes as its primary purpose is to inspire and align the organization to move forward in a common direction. The vision must be durable and specific enough to serve as a guideline for decisions, trade-offs and courses of action during the journey. However, the vision does not attempt to define features of the solution (people, processes and tools), but rather it focuses on describing the experiences and benefits from a stakeholder’s point of view.

3. Document a business case. The business case should contain detailed assumptions and analysis that quantify and pressure-test the benefits to make sure the view is worth the climb. It must be presented separately to protect the emotional appeal of the burning platform and vision, and is also a valuable repository that captures the link to strategy, key assumptions and anticipated business risks and impacts. The key elements of a business case framework for supply chain transformation include an executive summary, scope, rationale, financial impact, timing, risks, key leadership roles and a request for resources.

4. Establish capability to change.?This step assesses and equips the organizational capability to change. It looks at whether other change initiatives are underway, the skills required to organize and lead the change and how ready the organization is to adapt.

Leaders for transformation should be carefully selected by the executive champions and given the necessary training and time for team formation. Clear and distinct roles for process architects, technology architects and program managers should be established. This period can also be an opportunity to perform more detailed as-is process analysis of the current state to understand in greater detail the gaps, constraints and opportunities. Mapping the complex overlap of processes will also help identify future points of integration, which need to be added, removed or redesigned.

“The difference between leading organizations and the rest of the pack is the ability not only to formulate elegant strategies for supply chain excellence, but to execute well-designed transformation plans,” Steutermann says. “Before attempting to design a road map for value chain transformation, supply chain leaders should put in place the four imperatives for success to increase the probability that best-laid plans are converted to reality and shareholder value.”