Why Do Long-Term Business Plans Conflict With Short-Term Results?

In a recent survey we sent to business leaders, 74% of respondents said they follow a long-term business vision but are tied to short term results. This is often due to the complexity of functional silos that can create internal inconsistencies and ultimately pass mistakes onto customers if left unmanaged.

In a recent webinar, we explored the business methodology that drives improvements in all parts of a business by focusing on supply chain-centric decision making, performance, and maturity. This includes the management systems that enable functional areas to align and collaborate to deliver measurable business results.

Here are three reasons why long-term business plans conflict with short-term results, and how to avoid this from happening with supply chain-centric thinking. The goal is to ensure your organization, or team, is working together towards success!

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Three typical causes we see in organizations:

  1. Misaligned goals
  2. Non-commitment to operating principles
  3. Ineffective management systems

Misaligned goals

Business plans should incorporate the short and long-term goals AND how they will be attained.  At times we find that they become difficult to navigate for various reasons:

  • Long-term plans are often absent or communicated ineffectively.
  • Goals stay at board level vs. cascading down to tactical level for day-to-day execution
  • Business silos are not incentivized to collaborate.

Example of a business goal:

“Our goal is to sell a particular product to a particular customer in a particular sales channel with a forecasted expectation of sales, revenues, costs and margins.”

...This is only a sales target, or financial target. To effectively have goals we must root them in supply-chain performance. In order to sell in certain channels, we need goals around distribution competency. To drive cost reduction goals, we’ll need operational and inbound supply-chain goals.  Organizations will often have misaligned goals because the long-term plans are absent or not fully communicated, the plans are not comprehensive or realistic, and the functional areas of a business clash with each other to achieve conflicting goals

Non-commitment to operating principles

An operating principle is a fundamental truth or mental paradigm that serves as the foundation for  a system of belief or behavior. They are techniques the organization believes are the right strategies or tactics for goals and results to be realized. Operating principles

  • Guide leadership and employee behavior, measurement systems, business process design, decision making protocols. “It’s just the right thing to do!” 
  • Reflect leadership priorities
  • Are critical for setting direction and deciding what work to perform
  • Can result in frequent changes of strategy and tactics when absent
  • Should not be confused with values

Example of an operating principle: "lead time reduction"

Supporting operations for thie principle would include supplier location selection, material lot size management, manufacturing batch sizing and customer delivery frequency planning

Ineffective management systems

Management systems are the aggregate, or sum, of all the processes designed to enable leaders to make correct decisions, recognize deviations to plans, and initiate counter measures quickly in order to achieve operational and strategic goals.

All organizations have management systems - some are formal and others are informal - all with varying degrees of rigor. Management systems are in place to:

  • Gain alignment around goals
  • Implement operating principles for all key processes to guide decisions and determine KPIs
  • Develop structure (ex: standard update meetings)
  • Facilitate reflection for future organizational development

The success of any organizational initiative rests in embedding the elements of a structured improvement process into the management system.

Example: "quarterly business reviews"

Putting it all together

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It’s time to address these challenges. As business leaders we need to move toward our long-term visions while producing short-term results. We need our organizational structures and management systems to drive collaboration and cross-functional decision making. We need process improvements to become institutionalized into our management systems, and we need a simple way to benchmark and assess performance.

To improve collaboration and drive systems thinking, you don’t need to restructure your organization. You need a simple roadmap that everyone in the organization can align around to move forward. This is what adopting a systems (extended value stream) based, supply chain-centric view of your organization provides. This is what we call, supply chain advancement.

Supply Chain Advancement (SCA) is a business improvement methodology that drives measurable results across the entire business by leveraging Advanced Supply Chain Performance to identify significant improvement opportunities within core business processes. SCA helps achieve business goals and objectives through the implementation of supply chain-centric operating principles and a robust management system that focuses on extended value stream thinking to maximize customer value at the lowest possible total cost to the business.

When making decisions, you need everyone to ask themselves, “How will this add value to the customer or create unwanted complexity and waste in the supply chain?” Asking this question on a habitual basis introduces a supply chain-centric view of the organization, which is the first step toward solving many of the big problems that we face today.  

Will SCA be easy to accomplish? Perhaps not, as it requires people to look at the business from a new perspective (extended value stream based) and it requires leaders and managers to work collaboratively towards a common set of objectives. This means we need to view the organization horizontally and connect and relate the core business processes of business strategy, product life cycle management, sales and marketing and supply chain operations (order fulfillment). 

This connection of these four core business processes is the most important problem organizations need to solve. This is the last frontier for significant business improvement and the management of all the disruption around us.


 

For more information about supply chain advancement, download the webinar slides:

 

Download e-Book

 

Posted by LeanCor Consulting

LeanCor Consulting is a division of LeanCor Supply Chain Group. Today’s complex supply chains require vision, strategies, and innovative techniques to create competitive performance. LeanCor Consulting is a trusted partner for advancing end to end supply chain performance through diagnostics, assessments, and full implementation. Global organizations leverage LeanCor Consulting to develop vision and strategy deployment plans for improvement in all supply chain functions. We focus on elements of speed, cost, quality, and delivery, and are able to develop innovative solutions from operational experience as a third party logistics partner.

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