CREDIT

A multi-faceted approach to management

BRIEF  Leveraging networks, methods, and people to drive results

In today’s era of limited resources and fierce competition, companies are under intense pressure to satisfy customers and increase productivity. Meeting these challenges requires a combined effort that utilizes several approaches. This short discussion highlights value chain integration, design and build methodologies, and stakeholder management.

Value Networks

As the business environment becomes increasingly complex, value chains are becoming value networks—collections of interdependent organizations utilizing products, processes, and people to achieve a wide variety of outcomes. Companies must understand interconnections within the value delivery system, and then leverage key external relationships to achieve results. In addition, new product and service opportunities can be identified by understanding product-in-use applications from customers’ perspectives (customer experience).

The value network approach was successfully utilized by a manufacturer of consumer/industrial goods. The company teamed up with a key distributor to improve their shared order fulfillment process and to create joint marketing campaigns. As a result of the collaborative effort sales to the distributor rose 14% during a period when industry sales were down by over 9%. At the same time total company standard margin increased by 3.7 points.

Design and Build Methodologies

Product development activities often focus on applications and technologies. Therefore many productivity considerations are not addressed during the development process. However, the majority of product cost is determined by design. Initiatives to improve cost, quality, and cycle time must extend beyond the production floor to include cooperative efforts among engineering, manufacturing, procurement, and supplier personnel.

A large equipment manufacturer implemented an integrated program comprised of the following elements:

• Material cost reduction through design to cost, continuous improvement, and supplier contract negotiations

• Design for Assembly to reduce labor content and cycle time

• Lean manufacturing to improve resource utilization and delivery performance

• Design and manufacturing process improvements to improve quality

• Contract manufacturing to minimize the impact of industry business cycles

Stakeholder Management

Companies wanting to sustain long term performance must consistently do more for customers, investors, employees, and the community. Incorporating stakeholder requirements into overall business objectives helps ensure organizations address a diverse set of needs.

Employee development is a specific example of stakeholder management. Managers and employees have a shared responsibility to ensure organizational goals are achieved while individuals are developed to realize their full potential. First, employee performance objectives should include a mix of company, department, and individual goals. Second, managers assess each employee’s skills, create development plans that build capabilities, and provide ongoing opportunities for personal and professional growth. Third, procedures are implemented to ensure constructive feedback is provided on a timely basis.