␡
- The Idea Behind DSI
- How DSI Is Different from S&OP
- Signals that Demand and Supply Are Not Effectively Integrated
- The Ideal Picture of Demand Supply Integration
- DSI Across the Supply Chain
- Typical DSI Aberrations
- DSI Principles
- Critical Components of DSI
- Characteristics of Successful DSI Implementations
- DSI Summary
This chapter is from the book
This chapter is from the book
This chapter is from the book
This chapter is from the book
Characteristics of Successful DSI Implementations
An old quote, attributed to a variety of people from Sophie Tucker to Mae West to Gertrude Stein, says, “I’ve been rich and I’ve been poor, and rich is better.” In a similar vein, I’ve seen good DSI implementations, and I’ve seen bad ones, and good is better! Based on the good, and bad, that I’ve seen, here are some characteristics of successful DSI implementations:
- Implementation is led by the business unit executive. In other words, DSI cannot be a supply chain–led initiative if it is to be successful. The most common reason for the failure of DSI is lack of engagement from the sales and marketing sides of an enterprise. Often, the impetus for DSI implementation comes from supply chain organizations, because they are often the “victims” of poor integration. Many of the 40+ forecasting and DSI audits that have been conducted by our research team have been initiated by supply chain executives, usually because their inventory levels have risen to unsatisfactory levels. The preliminary culprit is often poor forecasting, which is usually just the tip of the iceberg. Poor Demand/Supply Integration is usually to blame, and it is often due to lack of engagement from the sales and marketing sides of an organization. So DSI implementations absolutely need commitment of time, energy, and resources from sales and marketing, but the front-line personnel who need to do the work are often unconvinced that it should be part of their responsibility. This problem can be most directly overcome by having the DSI implementation be the responsibility of the overall business unit executive, who has responsibility for P&L, and to whom sales and marketing report.
- Leadership, both top and middle management, is fully educated on DSI, and they believe in the benefits and commit to the process. DSI is not just a process consisting of numerous steps and meetings. Rather, it is an organizational culture that values transparency, consensus, and a cross- functional orientation. This organizational culture is shaped and reinforced through the firm’s leadership, and for DSI to be successful, all who are engaged in the process must believe that both middle and top management believe in this integrated approach. Such engagement from leadership is best achieved through education on the benefits of a DSI orientation.
- Accountability for each of the process steps rests with top management. Coordinators are identified and accountable for each step. Obviously, business unit and senior management have other things to do than manage DSI process implementation, so coordinators must be identified who have operational control and accountability for each step. DSI champions must be in place in each business unit, and this should not be a part-time responsibility. Our research has clearly shown that continuous process improvement, as well as operational excellence, requires the presence of a DSI leader who has sufficient organizational “clout” to acquire the human, technical, and cultural resources needed to make DSI work.
- DSI is acknowledged as the process used to run the business, not just run the supply chain. The best strategy for driving this thought process is to win over the finance organization, as well as the CEO, to the benefits of DSI. Without CEO and CFO engagement, DSI can easily be perceived throughout the organization as “supply chain planning.” A huge benefit from establishing DSI as the way the business is run is that it engages sales and marketing. I have observed corporate cultures where DSI is marginalized by sales and marketing as “just supply chain planning, and I don’t need to get involved in supply chain planning. That’s supply chain’s job.” However, if DSI is positioned as “the way we run the business,” then sales and marketing are much more likely to get fully engaged.
- Recognition exists that organizational culture change must be addressed for a DSI implementation to be successful. Several “levers” of culture change must be pulled for DSI to work:
- Values. Everyone involved in the process must embrace the values of transparency, consensus, and cross-functional integration.
- Information and systems. Although IT tools are never the “silver bullet” that can fix cross-functional integration problems, having clean data and common IT platforms can serve as facilitators of culture change.
- Business processes. Having a standardized set of steps that underlie the DSI process is a key to culture change. Without clearly defined business processes, important elements of DSI can be neglected, leading to confusion and lack of integration.
- Organizational structure. Having the right people working in the right organizational structure, with appropriate reporting relationships and accountabilities, is a key facilitator to culture change.
- Metrics. People do that for which they are rewarded. What gets measured gets rewarded, and what gets rewarded gets done. These are clearly principles of human behavior that are relevant to driving organizational culture.
- Competencies. Having the right people in place to do the work, and providing the training needed for them to work effectively, are critical elements to successful DSI implementations.