Reuters Events | Supply Chain & Logistics Business Intelligence

To fully leverage the benefits of outsourcing transportation management, build a good change management framework, minimize implementation challenges, and plan for the future.

Throughout my career, I have helped customers with change management and process transformation. Initially, that meant implementing large scale systems, such as SAP. As my career progressed, I focused on working with customers who chose to outsource their logistics. I have found that (1) outsourced relationships have a similar impact on a company’s culture and processes as migrating to a new Enterprise Resource Planning (ERP) system, and (2) those who most successfully leverage the benefits of a transportation management outsource have embraced and implemented organizational change management concepts such as these:

1. Build the best possible framework for change before you choose an outsourcing provider.

It’s quite common for companies to underestimate the effort required to convince employees to accept changes that will affect their daily work, across all parts of the business. In fact, I would argue that the number one way to sabotage the speed at which you’ll reach your goals is to surprise people with changes that will affect their jobs and lives—changes they had no part in developing.

The goals you plan to achieve with outsourcing—greater efficiency, enhanced savings, supply chain transparency, improved customer service—will only be realized with the support of the entire organization. That support requires messaging that explains the benefits of making the changes, communicated by key people who can motivate employees to accept change and adapt quickly to it. Fostering the necessary support requires:

• A burning platform for change. There must be clear reasons why outsourcing is beneficial for the entire organization. Everyone must see the big picture, even if their own area of responsibility does not directly benefit. For example, one division may achieve savings, while another only benefits from increased visibility.
• Executive sponsors. The reasons for the change must be supported from the very top, including the necessary resources to execute business realignment, support for program initiatives, and the enforcement of compliance.
• A change agent. Filling this role is critical to achieving your goals. This person must be a company insider with authority, credibility to enforce change, and the ability to influence groups throughout the organization.
• A cross-functional team. Your transportation management outsource impacts multiple areas of the company, from accounting and IT to sales and customer service, not to mention warehousing, procurement, and transportation. Depending on your organization’s structure, it may impact these areas for multiple divisions or business units, not just one corporate entity. All of these functional areas, and all of the facilities impacted, must work together to shape a clear scope of services and proper evaluation criteria for success.

2. Leverage the framework during implementation. 

The implementation should start with your outsource provider asking the cross-functional participants how all impacted procedures work. As a neutral third party, your provider can sort through the discrepancies, document the actual processes, and draw upon experience to present opportunities for improvement. The resulting best practices must be approved and prioritized by the cross-functional team, change agent, and ultimately the executive sponsors.

3. Plan for “the valley of despair.”

Unfortunately, no matter how detailed your implementation planning is, all organizational changes go through “the valley of despair.”  This is the period after “go live,” when things start going wrong.  Circumstances will arise that no one planned for or thought about. This makes forward momentum difficult to achieve, so the management of these obstacles is imperative. The collaboration of your cross-functional team, assigned change agent, and your outsourcing provider is key to coming out of the valley successfully. Quick wins need to be communicated across the organization, benefits realized must be shared, and open issues must be tracked through to resolution.  Executive sponsors may also be called upon to enforce compliance and reaffirm the benefits.

4. Prepare for future transformation.

Change management does not stop with the initial go-live period. Even as you and the outsourcing provider move ahead with identified improvements, there will be changes in the market, acquisitions, and other unplanned events. Benchmarking, performance measurement against key performance indicators (KPIs), and business intelligence are all methods to identify opportunities and continuously transform the organization.