by In a monthly meeting with the Board of Directors, a supply chain manager I know brought up their excess inventory levels. Conditions at that time, the company had sufficient inventory levels to meet the needs of more than 6 months ahead, far above the ideal level.
Because of that he felt he had to convey this condition so that the Board of Directors was aware of this condition and also other functions within the organization.
The supply chain manager presents some ideas that can be taken to reduce inventory levels to healthier levels. That way, the company can free up quite a bit of money that’s currently stuck in stock. It may still be like that for the next few months, but at least the company can take steps to reduce inventory from now on so this condition doesn’t last forever.
He hopes that the Board of Directors will provide the support needed to form a cross-functional team project related to inventory reduction activities.
Unfortunately, the response he got from the BOD after he finished submitting his report was not what he expected.
What concerned the BOD at the time was why the Truck Filling Rates to either destination were low. Indeed, that was one of the reports he submitted as well. However, when viewed from the consequences that can be received by the company, the low Truck Fill Rate only has a small impact.
Even if there is an increase in the Truck Filling Rate even higher than what was achieved at that time, it will not provide a big advantage for the company. And besides that, that number had increased a lot compared to when he first joined the company. So that the remaining improvements that can be made no longer have a significant impact on the company.
Unlike the case with inventory reduction activities that he proposed. The impact is very large in a positive way for the company.
Seeing the case above, what actually happened?
Why is BOD more focused on small things than other things that have a bigger impact?
What is wrong?
That’s what we will discuss this time.
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Table of Contents
What causes Top Management not to see things that are more strategic
There are several things that can make the BOD in the above case pay more attention to things that have little impact.
Do not understand the benefits that can be obtained
Not knowing what benefits can be obtained from supply chain improvement activities, will make you feel that these activities are just a waste of time and effort.
If you don’t know what the benefits of having an effective supply chain operation are, you will have no desire to move in that direction.
If you are in a situation like this, then you have to convince decision makers about the benefits that can be obtained slowly. From time to time, give them such understanding. Little by little.
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Do not understand what to do
You may know the advantages you can get by operating an effective supply chain, but you don’t know how to make them. What would you do?
Of course you’re not going to do anything because you don’t know how to do it right?
You can ask, of course. But some people find it too high to ask others so they end up shifting the conversation to less important things that they are good at.
In this condition, you must be able to explain step by step in detail how the company can make supply chain operations more effective without seeming patronizing.
Narrow mindset and short term thinking
Some people only focus on what is in front of their eyes. And usually, when they get involved in too many details, they can no longer see the big picture of a situation.
In supply chain management, you need people who can see the entire operation. Which can quickly identify where the problem occurs.
Do not have a clear direction and goals to achieve
No matter how well you present data-backed facts, it means nothing to people who have different goals than what you offer.
Especially if that goal doesn’t even exist. Whatever you say means nothing. Because they can’t see what your explanation has to do with the goal they’re trying to achieve (which doesn’t really exist).
They are content with their current situation and don’t try to get better over time.
Why do people have narrow mindsets?
It will really depend on what kind of environment they are in.
Being in a challenging environment, which has targets that always increase from time to time, will certainly be different from those who are in the opposite situation.
People with a growth mindset are always challenging themselves to be better.
And a company with a strong, long-standing culture will greatly influence the people who have been with it for a long time. If the company culture is good, then the people there will have a good growth mindset. And vice versa.
People who have been working in one place for a long time will usually lose their fresh ideas. Because they have never been anywhere and seen how far the development of the world out there is.
But sometimes this narrow mindset is also caused by the management within the company itself. When workers’ creative ideas are minimized, let alone counteracted, they eventually become habits and make workers often back away from expressing their ideas.
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- How Wrong Supply Chain Decisions Can Bring a Business Down
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What can you do when stuck in that situation
You have an idea, that’s great. But you can’t force the recommendations you give.
In fact, everyone has a different understanding of what supply chain management is.
And in many situations, you don’t have the privilege of being able to choose who you work with.
Everyone has their own priorities. So, you have to be smart to find the right approach to be able to grow the right understanding of supply chain management.
Do it from small things. Start case by case. Or, from one function to another.
Sometimes, it is good to let things go as they are until organizations feel the negative effects of their ineffective and efficient supply chain operations. Until finally they wonder what the way out.
And most importantly, enjoy the process. Because the process of change takes time and effort. How deeply you enjoy the process will determine how far you can survive until the expected changes come.
Hope it is useful!
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