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How Competent is Your Design? Increasing the Speed to Benefit with the DECODE Methodology

By Carlos Valderrama and Toby Brzoznowski  July 25, 2018

It’s well established that the supply chain industry is evolving and changing at an unprecedented pace. It’s challenging enough to keep up and maintain a business-as-usual approach in light of changing customer expectations, disruptive technologies and economic and geopolitical implications that seem constantly in-flux. But some businesses are exceeding expectations and making major gains despite them. How? With the increased agility and responsiveness provided by establishing an internal supply chain design competency.

LLamasoft has invested millions of dollars and collaborated with hundreds of global companies to help uncover why some organizations thrive and adapt while others underperform and are slow to change.

Through this process, we have used a systematic approach to define and measure competence in supply chain design through a multi-layered maturity model. We have benchmarked excellence and calculated the value of supply chain design maturity, uncovering conclusive data to prove that companies achieve accelerating levels of value with each new step in maturity — this value equates to lower cost, improved service, reduced risk and greater sustainability.

Over the last three years, we have developed a detailed program to help companies progress to greater levels of maturity through a program we call DECODE (DEsign COmptency DEvelopment Plan).

Assess Your Current Design Maturity

How are you managing your design practice to-date? Do you take an ad-hoc approach via occasional project work, or are you continuously designing and analyzing your network? In order to progress, you first need to have a realistic understanding of where you are today to make strides toward where you aim to be and can actually be given your organizational constraints. Assess the four areas of any strong design strategy: people, process, technology, and strategy. Do you have the right team in-place to address you challenges? Do you have repeatable and scalable processes established? Do you have the right technology to achieve your goals? And is your strategy affined and aligned with your supply chain strategic view? Upon taking stock of your current operations you can more accurately assess what projects you can tackle today versus what you will work toward in the future.

Within the CPG industry one organization decided to embark in the journey of setting up a globally coordinated supply chain design competency, and took the first step towards such goal, running through a baseline supply chain design maturity assessment leveraging LLamasoft’s DECODE methodology.  These series of assessments allowed them to understand the current state of each regional team’s people, process, technology, and strategy, and to be able to make adjustments as needed.  Later they ran a future outlook set of assessments, to gauge where they could be at within 3 years, given their organizational constraints in every region, as well as their current needs.  The overall plan set them at level 2 on average and set them up on the track to level 4 within three years.  On average an organization would go through levels 2, 3, and 4 within a timeframe of 4-5 years of disciplined and focused work, which means we would need to leverage a couple of accelerators to get results here within the three years desired.  By working together with the company, and setting up best practices, community development within their regional teams, and path to create the value desired within the timeframe, the company was able to achieve savings north of $20M Euros for the first year of the program alone, while progressing to level 3 for 80 percent of their global operations teams.

Identify a Possible Future State

Now with a realistic view of where you stand today, you can build a plan for the future. What are long term initiatives you’d like to tackle? What are organizational objectives where you can make a major impact? With a better understanding of the people, processes technology, and strategy needed to achieve a more mature supply chain design competency for your team, you’ll have the pieces of the puzzle needed to formulate your plan of attack.

An organization in the high-tech industry with a high growth and highly volatile environment decided to ensure that their design competency development was highly accelerated to be able to reach their goals, their desired future state.  Given the requirements on inventory rationalization and deployment, as well as overall network design assessment and review of their current product flow prerogatives, the company was able to put together an ambitious design competency development plan.  The plan aims to move them from their current design maturity state to a future high enough so that they would have advantages around response times, visibility for the business, structure of the team, and value tracking.  The definition of that future state from a skills development, process setting, technology understanding, and strategy creation and nourishment is the driver for change and improvement, which creates value for all.

DECODE and Make a Plan

What is going on in the industry? How have others garnered success? How are others managing governance of projects? How are they building their teams? Leverage industry benchmarks to build a path to not only meet, but beat, the competition. Then, based on where you are today, what is the plan for projects you can accomplish now? First you can tackle some quick-wins to garner buy-in, but then you can think bigger and broader. How can I leverage my design competency to affect a major organization change? How can I apply this practice toward cross-functional initiatives? Define your KPIs and how you’ll measure progress and program success.

One high-tech company applied LLamasoft’s DECODE methodology to their design competency development plans, and after a couple of reviews of their progress through their journey, we have identified three different classifications of value for the company.  First being value perceived from the customer, which relates to the likes of an Net Promoter score assessment.  The second is recommended value, which comes from the results of the overall models that were run.  Lastly implemented value, which is the culmination of any designer or model builder work into a reality. For this tech company, the recommended value resulting in the accelerated maturity process, resulted in 50 percent of their initiatives covered producing 13 percent of the implemented value at around $17.5M, aside from improvements in service levels, risk mitigation, waster reduction, etc.

There is a significant correlation between progressing through the supply chain design maturity curve and the benefits you’ll net from your design practice. Click here to learn more about how to apply the DECODE methodology to your supply chain design practice.