A Simple Strategic Analysis Tool

Table of Strategic Constraints – A simple tool that exposes significant constraints in enterprise processes and value chains

Large organizations often find that the internal and external functions of supply chains and value chains are at odds with each other. They battle over lead times, quality of documentation, requirements, specifications, delivery schedules, pricing, engineering plans, etc.  A common example is the eternal battle between sales and delivery in numerous industries such as telecommunications, medical devices, and construction.  I will pick on telecommunications since I know that industry well.  Sales personnel sell circuits and value added services in various configurations across the globe.  Inevitably, what was sold is reviewed by a sales engineer under tremendous pressure to get reviews done.  Working with limited information and disconnected from the reality of field engineering, he does his best to approve the sale.  Once the sale is done, it ends up in the hands of some provisioning center and assigned to field installation and configuration personnel that immediately reach out to the customer to find out what they actually want and often to tell them they can’t get everything they were promised when it was promised or maybe not at all.  The same scenario plays out over and over in Government, DoD, and numerous industries.  While we all know this exists, it is often difficult to document and communicate.  This week, I am posting about a tool any manager or leader can use to document organizational misalignment and conflicts that cause these inefficiencies.

The tool is what I call the table of strategic constraints.  It is essentially a system analysis and optimization tool that anyone can use to quickly document certain important attributes of each major function in a supply chain or value stream to easily identify where functions, departments, or entire organizations are out of alignment and possibly even working against each other.  In a process, the optimization of a step or sub process places constraints upon related steps.  Sub system optimization creates whole system sub optimization. Yet, in many value streams each phase struggles to optimize itself at the expense of others.  The result is a never ending series of myopic initiatives to reduce costs and improve performance.  To solve this, the entire process must be optimized on the whole at a strategic or enterprise level.  This will ultimately lead to sub optimal performance of the steps within.  This model analyzes the root causes or drivers of sub process optimization and myopia by qualitatively assessing the objectives and incentives of each phase of the process.  An example of a completed table is shown below.

The concept and the process are simple.  Call a meeting of managers from each of the organizations in your supply chain or value stream.  You can make this as broad or narrow as you wish.  Use some common sense.  Explain to everyone that the exercise is to help everyone in the chain, not to point fingers at any one organization.  If they are honest, they will all learn things that can help everyone to better serve the end customer and streamline their relationships.  Starting at the top, list the phases as shown.  You can also list the organizations if desired.  Now continue to work your way down one row at a time with the team.  Identify the Primary Objectives, then the cost, cycle time, and performance objectives.

The motives and incentives is where cold hard honesty is required.  Ask “what are the people in this phase really incentivized to do.”  You should see things like “avoid getting called into the boss”, “earn commissions”, “execute the budget”, “sell the inventory”.  This is an area where you can truly expose a lack of alignment with the needs of the customer.  You can also expose root causes of lingering problems.  There are no hard and fast rules for completing the table, just enter honest and meaningful information that can be compared across the columns.   Use consistent terminology across the columns of each row.  In other words, for cycle time, don’t enter “yes”, “100%”, “per metrics”.  These entries are almost impossible to compare.  Rather, enter useful and comparable information, such as “top priority”, “no concern”, “based on artificial metrics”.  In this example, one can deduce that the first phase makes cycle time a priority with the customer and the rest of the value chain either does not care or has established internal metrics they probably fudge to make themselves look good.

Completing the table will take several iterations.  Once it is complete, simply scan each row, across the columns and identify the areas in which the phases/organizations are out of alignment.  Document these problems and discuss them with the team and brief them to leadership.  The findings can also become valuable inputs for your strategic planning process.