Globalization and rapid technological innovations are combining to make the daily issues faced by industrial distributors more complex than ever before. As an indispensable partner with manufacturers worldwide, even relatively small distributors now find themselves doing business in multiple countries, operating in multiple regulatory environments, adapting to new technologies and having little choice but to customize the customer experience they deliver.
Stocking, managing, servicing, and distributing the various products and services manufacturers need to keep their businesses running efficiently can be a challenge for distributors, particularly when it comes to managing and standardizing business processes. This challenge becomes even more complicated as a result of the process variations that are inevitably required along the supply chain.
I remember my first experience dealing with “standard” processes and the challenge of multiple process variations. Without going into all of the details, we thought we had developed new, standardized processes that represented a true, best-in-class breakthrough. Then came the implementation phase and, in short order, we realized that everywhere we looked, slight differences to the standard process were required. Each region in which a facility was located had specific demands for process customization in order to meet local needs and regulations.
In short, it felt like our concept of standard processes was a fiction — something that worked incredibly well in theory and on a flowchart, but completely fell apart when it was exposed to the legitimate localization and customization demands we experienced in the real world. We were forced to create separate processes for each region in which we worked, which translated into major headaches, major investments in time and energy, and major project overruns, not to mention process inconsistencies and increasing complexity with the introduction of each new process variation.
Today, managing process variations is still a huge problem for industrial distributors, particularly those which have numerous locations or deal with customers in multiple countries. It is unnecessarily complex, costly, and inconsistent. And in all too many instances, it simply doesn’t work. To quote industry expert Steve Stanton, an analyst with FCB Partners: “Ninety percent of the organizations I know have failed at standardization.”
It’s kind of like the dirty little secret of process management. Process owners know they have so-called “standard” processes that do not actually meet the requirements of the teams who are expected to apply them, which means the processes may as well not exist.
Distributors have tended to respond to the challenge of process standardization in one of three ways –
- They create standardized processes at a high-level only, which means they are not really useful to anyone for day-to-day process guidance or as a platform from which to navigate future change.
- They attempt to tame all of this complexity by developing mega-processes that apply approved process notation standards to every conceivable variation. Inevitably, this approach fails to engage employees, who find it extremely difficult to comprehend, let alone implement. Even worse, it can stall agility or future improvements because the process owners aren’t confident enough to make changes to the documentation.
- They allow process variations to be owned, managed, and changed independently, which inevitably leads to the kinds of administrative headaches and process management chaos you might anticipate from such a random approach.
Despite the past track record, it is actually possible for distributors to achieve the benefits of standardized processes across their entire organization, while simultaneously providing individual operations with the ability to control process variations where needed.
To be successful, a distributor must begin by agreeing on the standard processes owned by global process owners, which in turn will form a platform against which to consider local variations. Local process variations should be established only off of this standard process base, with any changes highlighted and visible against the core processes.
The distributor must have the ability to compare and report on all variations that exist for each standard process. Doing so will allow visibility into the activities that have been added, removed, or changed, in comparison to the standard process.
To improve process relevancy and adherence when navigating to processes, business teams should be able to select the variation they seek from a list, or even better, be routed automatically to their variant if they have a “default” location, product team, or business unit.
Industrial distributors must also establish a global reporting capability so that process champions can see the list of processes that exist for each variation. Local variant owners should be notified of any changes applied to the standard processes by the global process owners, enabling them to merge those changes into each variant process or amend as necessary.
Finally, process variant costing and timeframe tracking should be in place so that distributors can calculate the difference in cost and time between variations and the standard processes. This will enable them to make informed decisions about whether to keep or eliminate certain process variations.
These capabilities will empower distributors to understand the extent of the process variations they are managing, and to challenge, control and report on them. Just as important, this approach will empower business teams to be more agile, more flexible, and to customize (or eliminate) activities as they see fit because the process variations will exist in an environment over which they will actually have clarity and control.
Ivan Seselj is the CEO of Promapp.