Recipe for a Merger

I recently finished reading Jared Diamond’s book Guns, Germs, and Steel: The Fates of Human Societies, a quick walk through the history of the last 13,000 years of human society, and I was intrigued by the parallels between his section on the development of written language, and how Supply Chain seems to be progressing with frameworks. The section of his book that deals with language stresses the importance of having written language to administer large human organizations –empires, kingdoms, nations, etc.

It is difficult to create financial administrations without numbering systems and records, and, likewise, it is hard to administer entities like a legal system without the ability to create and transmit rules and information. Without going out of my depth on my initial reading, what was intriguing to me was how Supply Chain has progressed from primitive gestures – the see – do kind of education – to languages which convey rules – in fact, recipes for process management.

What do I mean by a Supply Chain of gestures or “hand waving”? Case Studies – the tool of choice for Supply Chain instruction. All case studies end up resembling some sort of parable or folk tale, illustrating some fundamental business truth that is understood almost by faith. “We were having problems,” – the case study usually starts – “with customers being dissatisfied with…” – they usually go on. In other words, “Once upon a time, there was a kingdom….” Sometimes the case study moves on to discuss cycle times; at other times, it is may be cost/price, or perhaps choice. With a compendium of case studies, an astute business person should be able to infer a pattern that parallels a situation in their own business, and then they will see how the story goes: The “team is brought together” to re-engineer the processes, and, voila, the fairy tale may have a happy ending. (See Stephen Jay Gould’s Essay, “Cordelia’s Dilemma,” if you want to know about case studies with unhappy endings.) If you are clever enough, you can pick up the case study elements and repeat them in your own business, and have similar success. Much Supply Chain knowledge, I find, is conveyed through this language of gestures, which lacks precision, repeatability, or basic things like grammar and syntax. Can you imagine trying to manage accounting through example-based bookkeeping? Or perhaps telling someone how to perform a complex task by telling a story that you hope will bear an allusion to the job? What has been attractive to me about SCOR and framework-based Supply Chain is that it is so specific, so repeatable, and so, well, like a recipe. Supply Chain does not start out with “Once upon a time,” but rather a specific business description, using SCOR (and related framework) syntax and grammar – levels, process elements, metrics, benchmarks, and the like. From a specific high-level description, detailed identification of measurable problems are set out, and then analysis commences to identify a change to the business process description which will result in the appropriate performance. That process architecture is implemented then, and monitored for variance to the intended performance. What is interesting to me is that the sequence of steps you go through, as well as the framework language “business descriptions” themselves are specific “recipes.” The gesture versus the recipe for change The gesture: You are a manager in a company going through a merger, and you read a case study on a merger – clean room, analysis teams, lots of hard work, a design, and launch – a narrative story with beginning, middle, and a (happy) end; actors and events; dramatic staging and points of humor. So, is this useful in your own merger? You might pick up on some best practices (the merger team was separated from daily work), some observations (it took six months), or perhaps some good things to use in communication (“This can be done!”), but, ultimately, it is more motivational than instructional. It is a dramatic gesture, instead of a recipe.

Recipe for a Merger:

  1. Identify merger strategic criteria (from a set of metrics).
  2. Segment the two company’s supply chains and match up the overlaps.
  3. Describe level – 1, 2, 3 processes between the two companies, according to a framework language.
  4. Analyze the two company operations frameworks against the merger goals, using framework metrics.
  5. Design the target structure that fulfils those goals.
  6. Translate the differences between the original and the target process structure into programs, and implement them.

The recipe lacks a certain, dramatic je ne sais quois, but it is much more executable, and more valuable, perhaps.

You can train a team – You may not be able to take it to Broadway.

The gesture versus the recipe for an operation The gesture: Consider a case study about company “X” whose management is sweating about losing ground to a competitor because their manufacturing costs in their own company are higher. The competitor is using OEM manufacturers in a Far East country (i.e., they are outsourcing), and, while their own company has tried outsourcing in the past, they have not successfully lowered their costs.

They buckle down, and, after hard trial and error, they get their own OEM manufacturing to work, and they survive, with only a little downsizing. “The farm is saved, Ma!” And the curtain descends.

The recipe: You grab an existing SCOR process model for OEM manufacturing (there are many on the SCC website); it has details on links between order management process steps, procurement process steps, perhaps specific sequences of EDI transactions, how planning is performed, whether you use 3PL or your own logistics (two different recipe variants), and even whether it is a build-to-order OEM or just pure stock. Implementation is about lifting the recipe and making it work in your organization, not about method acting. Sorry to be cynical.

What’s the takeaway? Case studies in Supply Chain are wonderful motivational instruments, but they are lacking as a true educational medium. We rely far too much on case studies when we might better rely on specific recipes in a framework language. Use framework-based Supply Chain examples to look at models for operations, and train your teams on a stepwise, repeatable methodology, rather than encouraging them to hope for success through imitating gestures.