This is a contributed op-ed written by Adam Runsdorf, president of WDSrx.
I am confident the proliferation of motivational quotes about embracing change can be attributed to people who were not referring to business and who were not aware that 66% of organizational change initiatives fall short of success.
Here is my attempt: "Managing change in a business is like making a souffle. Even with the finest ingredients, one misstep results in disaster."
The logistics industry is in a state of constant disruption. As the president of a pharmaceutical logistics services provider, our company’s commitment to clients is to reduce their cost and increase their productivity. Adopting practices to achieve similar goals within our own organization, however, was a difficult challenge.
The company I founded in 2010 grew from a single 48,000 square foot facility with three employees into an operation of over 450,000 square feet in seven warehouses with approximately 200 employees. The upward trajectory of our business strategy did not fully consider the growing pains we experienced with our people and processes.
One important factor impacting our operations was our ability to maintain quality control over people and processes in the midst of geographic and business expansion. Monitoring our daily operations was much easier when we occupied a single facility compared to supervising multiple warehouses with the same attention to detail.
Limits to our technology backbone were also exposed as our network expanded that created obstacles until we could install upgrades in our warehouse management and communications systems.
Facing the issues
Before we embarked on a transformation process, I was wary of the many cautionary tales about businesses that tried and failed to implement institutional change.
We established a working group with representatives from our client services, fulfillment and information technology departments and included the director of marketing as a facilitator. Within two months, the working group’s evaluation provided a fresh perspective and new ideas that challenged 'the way things were always done.'
Some of our legacy procedures implemented many years ago were still effective but not efficient.
For example, our technicians were accustomed to receiving paper orders from certain clients and converting them into digital instructions. This practice was eliminated by working with this small client subset and providing them with the tools they needed to enter orders electronically, saving time and increasing accuracy on their end and ours.
Scheduling a performance tune-up
In the warehouse environment, our technicians perform vital tasks that enable our company to perform core business functions. They are highly trained professionals to whom the old expression "If it ain't broke, don't fix it," certainly applied.
Fortunately, the working group members understood our culture and were hesitant to advocate wholesale changes when incremental movement could achieve better results.
Prior to the report, warehouse performance was monitored using different metrics that suited the requirements of a particular manager or they varied across locations. After consultation, we made the decision to use six new standard Key Performance Indicators (KPIs) for daily operations that address group activities including picking, packing, dock-to-stock and on-time shipping as well as individual statistics including units picked per hour.
By focusing on fewer KPIs that better reflect the majority of inquiries received by manufacturers, we are able to concentrate on continuous improvement for the metrics that are most important to our prospective clients.
Vendor and client buy-in
A multitude of research from consulting companies warns against a top-down approach to organizational change. Human behavior is not easily modified by sending a memo.
According to a study from a major consulting firm, senior leadership makes decisions exclusively in 80% of change management initiatives, resulting in poor firm-wide adoption of new procedures. Common wisdom on the subject stresses a bottom-up process with deep involvement from all employees is key to achieving lasting organizational change.
Our experience taught us that involving our clients and service providers was also a vital component of our successful transition. New procedures involved changes in our communication channels that altered how we previously conducted business. We explained to external partners how improving our efficiency would also save them time by accelerating our ability to respond to their needs and resolve any issues.
Any doubts I had about changing our operations were dispelled early on in the process when I realized a universal truth. The potential for change to harm a company can be neutralized by the constant presence of talented and loyal colleagues. Now, change is an ongoing strategic consideration to be included in every internal meeting agenda. There are certainly differences of opinion within our group. But, working together to embrace change, we are securing the future for our company, our employees and our clients.