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Change Management is the Key to Fully Realizing ROI for Supply Chain Projects

 

warehouse labor war

Supply chain projects often demand significant resources to complete, so managing them effectively is imperative.

 

At the onset of a supply chain execution project, an organization must decide how dependent the project’s benefits are on adoption and usage by employees. The more dependent they are, the more crucial the contribution of change management. To reveal dependencies, ask senior project leaders two simple questions:

  1. What is the benefit of the project?
  2. What if no employees adapt to the change and properly utilize the new system, process or technology?

 

If non-adoption will have a negative impact on the ROI of the project, it’s time to consider change management.

Investing in Your Projects with Confidence

 

Your supply chain is preparing for a software upgrade, implementing new processes to improve labor efficiency, or perhaps installing new equipment to optimize throughput in your warehouse. The investment in software, equipment or consulting fees is going to be significant, along with the time spent planning, preparing, installing and testing. Given your investment in the project, how confident are you that your workforce is going to adopt change and make it successful?

 

On average, 75% of supply chain execution project benefits and ROI are dependent on employees fully adopting change. If your workforce is moving from a paper-based picking system to one that involves RF guns and system interaction, are your employees going to immediately welcome the use of new technology? What will prevent them from reverting to the existing, comfortable process? Is your new equipment fully automated or is there human interaction that will require an employee to understand how to use it to complete a task or entire process?

 

Take a minute to think of all processes your employees will need to adopt a change to realize the return on your investment. If your list includes more than a handful of employee touchpoints, consider the benefits of incorporating change management into your project. Simply training employees before go-live and expecting them to “get it” can impact project success and ROI.

Instead, you can maximize your ROI in the shortest amount of time—knowing your employees are on board and fully ready for the upcoming changes—with a change management program.

 

What Change Management Means for the Supply Chain Industry

 

So, what exactly is change management? It’s a set of processes, tools and practices that are used to manage the “people side” of change. This takes place from two different but equally important perspectives:

  • Individual Perspective: How do people experience change?
  • Organizational Perspective: How should organizations manage groups throughout a change?

Keeping in mind these two perspectives, the goal of change management is to help associates transition from the current state to the desired future state. This transition can only occur when the associates are involved and participating in the change.

 

“It is not the size of the project that determines the need for change management. It is the people-dependent contribution to project outcomes that determines how much you invest in getting people to adopt and embrace the new solution.” 
– Mike Davis, Director of Operations, Global Affiliate Network, Prosci

 

The Disconnect Between Executives and Employees on Handling Change

 

Many supply chain leaders have a very different perspective than their individual contributor associates on how well their organizations handle change. Making senior leadership aware of this challenge is important. In most cases, the jobs of individual contributors are substantially impacted by the change, so they will know better than their executives if the company is managing the change well.

 

Connecting People to Project Benefits

 

Every project has a target ROI, usually coming from an increase in efficiency or sales or a decrease in labor or expenditure; something that makes a positive financial or organizational impact. Especially pertaining to supply chain execution, projects have a high degree of change management ROI. A large portion of the change individual associates must adopt is related to people changing the way they do their job from a technical, process or organizational perspective.

 

The people side of change represents an ultimate connection to the overall project results. In one Prosci study, 67% of respondents said that at least two-thirds of project benefits are tied to employee adoption and usage. In enVista’s experience, on average the implementation aspects of a project account for only 22% of the project’s ROI, whereas the remaining 78% depends on the adoption of the change by employees—which is what is affected by change management.

ProsciROI

Data taken from past enVista projects, using Prosci CM ROI calculator. Copyright Prosci, Inc. Used under license.

 

Non-adoption greatly reduces ROI, sometimes to the point that the project becomes a failure. In a warehouse software implementation, for example, non-adoption can slow down or halt ROI entirely at all levels of the project.

 

Positioning Your Projects for Success

 

Change management is not just about communication and training. Rather, it encompasses every touchpoint between the people implementing the change and the people who are asked to change.

 

A properly designed and executed change management program, with the help of trained professionals, will help increase the likelihood of a successful supply chain project. This will help you ensure all associates are on board and avoid unnecessary work after go-live, so you can realize the expected benefits and ROI for your project.

 

To read more about how enVista can help with Change Management, download our white paper here.

 

 

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