As end users become more sophisticated in
their operations they understand through experience the real advantages of
optimizing product delivery processes.
It is natural that they should want to extend those advantages to key
services, both provided and received.
Supply Chain Management (SCM) is often thought of as a manufacturing
discipline, which it indeed is. Today,
however, SCM principles are being adapted to the services side of business as
well, with rewards and dividends to both sides of the provider / end user
relationship.
For many this is a fundamental change
requiring acquisition of new skills, knowledge, and mind sets. These folks must learn to walk first, but
getting up to “business speed” cannot take too long. Others have the requisite skills and knowledge
but need to extend them to new areas of their business. In both cases, overcoming ingrained cultures
running counter to the initiative is paramount and something that should be
thoughtfully done.
Across industries and market sectors companies
are looking for service providers who want to partner with them at new
levels. Whether the end product is
machinery, financial services, a new building, or operational in nature;
optimizing the delivery process is now a holistic agenda that encompasses all
required resources.
What Is
Driving Business Integration?
For starters, better educated and more
demanding customers. As organizations
improve internal management systems and mechanisms they develop new
intelligence about themselves, their competition, customers and yes, service
providers. Business intelligence is a
greater differentiator now than ever before.
Process improvement, Six Sigma, metrics programs and other initiatives
of their ilk are changing the way we understand and organize our work. As that intelligence matures it begins to ask
new questions, test new ideas, and probe for new advantages. Extending that intelligence beyond the
boundaries of your own organization by challenging business partners to match
it in their domains and align their processes with yours is a natural next step.
Competitive intensity has increased in recent
years, partially the result of economic stress. Focused by the need to survive some
companies have pared away non-core businesses, reduced or expanded offerings,
or taken advantage of opportunities to expand and grow. Behind all of these strategies is a single
imperative – succeed when others do not.
The oft-quoted exhortation to “Never let a good crisis go to waste” has
been taken to heart. These activities amount to a reshaping of business, each
incidence an opportunity to streamline processes. Many companies have gone after these
opportunities with zeal and more often than not they challenge their business
partners to match them stride for stride.
Customers seek to minimize the number of
business relationships they must manage.
Their goal is to lower the amount of management friction that is applied
to the business of doing business. As a
result, strategic business alliances often form in which multiple businesses
collaborate in competition against other alliances. It’s not just your company competing for
business anymore, it is your alliance competing against other alliances. That means each alliance partner has a vested
interest in each partner’s business performance; and it motivates alliance partners
to plan, act, measure, and communicate in similar fashion. You cannot do that when your processes,
standards, and tools are different.
Fulfillment of customer requirements has
always been the primary business purpose - it has not always been the primary
business activity. Although SCM began as a manufacturing discipline, business
in general is moving from a production-based model to a fulfillment-based
model, improving business speed and alignment.
The foundational principle at work here is that of connectivity,
creating networks of entities that share business intelligence and act together
in synchronized fashion. As this model
moves further down the chain efficiencies and advantages are increased to the
advantage of all in the network.
Inherent in this model is the recognition that individual firms depend
upon resources controlled by others in the network.
Integration
Tools
Deployment of secure and integrated
information technologies across the customer – provider alliance enterprise
enables process synchronization and speeds the flow of information. In classic terms, such seamless operating
protocols make pulling resources vs. pushing them possible, thereby avoiding
stranded investments for inventory, space, and management systems at each level
of the alliance.
Common measurements and language are critical
elements. Each partner in the alliance
may elect to retain measurements they feel are uniquely important to them but
which are not relevant to other partners; all partners, however, should adopt
common measurements and language for tracking and reporting enterprise
activity. If, for example, the
customer’s five most important Key Performance Indicators (KPI’s) are expressed
as cost per end unit or cost per revenue unit, then the alliance partners
providing support services to the customer should provide measures of their
business that feed into the customer’s metrics in similar fashion and language.
The human part of the equation requires
specific attention. The degree of
transparency required can be a challenge.
Sharing business intelligence and allowing visibility and integration of
key processes may be a new dynamic for some.
Employing managers who have a collaboration orientation, are comfortable
working with a range of technology systems, and who understand process design
should be a priority for any firm engaged in an alliance business model. Linking compensation to alliance performance
strengthens the leverage towards implementation of cross-enterprise best
practices.
Information
is the Currency of Integration
Integrating and managing the supply chain
seeks to assure that the right part shows up at the right place, at the right
time. The goal of services integration
is to speed information to the point of need exactly when needed, thereby
enabling the deployment of services in the most efficient manner. The opportunity to integrate services to the
level discussed here is enabled primarily by technology and information
systems. Information becomes knowledge,
and knowledge becomes wisdom. Wisdom,
when acted upon correctly and speedily, becomes advantage.
Condition-based service management systems
proliferate today. I get an email from
the car dealership with an appointment date and time when it is time for an oil
change in my vehicle; not based on distance driven or elapsed time but on the
actual condition of the oil and operating conditions of the engine, and on the day
of the week and time of day I prefer based on the history of previous visits. Sensors communicate automatically when set
parameters are reached, triggering a process that results in my pulling into a
service bay. In building management an
exact parallel occurs when an outsourced HVAC maintenance provider is
dispatched to service a unit by automated sensors linked to intelligent
building systems. This model can be
applied at multiple levels, even to stocking paper for copiers. The fact that cloud computing largely
eliminates the cost of deploying these technologies is speeding their adoption. Service vendors lower inventories, redeploy
capacity, and reduce costs. Customers
have greater visibility, can forecast more accurately, and have more control
over cash flow.
The philosophies behind service chain
integration are not new: Deep integration of business processes by alliance
members who are invested in each other’s success, who are intensely
customer-centric, who trust each other and accept accountability, who are
driven by a desire to achieve process excellence, and who share business
intelligence willingly. When merged into
a cohesive operating system each becomes a force multiplier for the others,
improving service quality, cost and efficiency.
