Incremental functionality strategy

While attending an event in September I ran into a former classmate from Nyenrode Business University, Eduard de Vries. Eduard is Senior IT Manager for IDEXX, market leader in diagnostics and IT solutions for animal health and water and milk quality. IDEXX operates its reference laboratories division from about sixty locations worldwide and discovered that the IT environment was inefficient. A series of takeovers had resulted in a patchwork of organisations and systems, and the company decided to start an ambitious project to implement a new integrated global system.

Based in Boston on of Eduard’s responsibilities is to lead this project. The implementation is successful; the global rollout is progressing from country to country. This project is not only considered a significant catalyst creating improved productivity, but a greater amount of information available as a result means that IDEXX can offer its clients much better service. Remarkably, the rollout of this project is even on the agendas of analysts who follow the company. It is often discussed during analysts’ meetings, with positive reference made to it. According to Eduard, part of its success is not so much the complete elimination of the differences between the departments involved, but more a simple acknowledgement of these differences. Success can only be achieved if all the system’s users accept and embrace changes.

Eduard and his team have applied an incremental functionality strategy. The aim here is not to identify and describe all the possible functionalities beforehand. The team focuses on the needs of the country in which implementation is taking place by applying an incremental functionality strategy. In this way, the existing organisation and processes are encompassed by the team, ensuring that original functionality is retained. Then, the team sets itself a target of two or three major wins. If one of more of these wins is new to the project, it is immediately implemented in the countries where the application is already running. Thus, as the system expands, standardization takes place naturally. This process also forms an excellent basis by which to constantly improve and update the strategy.

IDEXX’s operations are changing so quickly that long-term implementation plans can sometimes no longer be relevant. The chosen approach forms the basis for acceptance amongst shareholders, management and users while, at the same time, acting as a stepping-stone towards future integration and improvement. This is how Eduard keeps everyone on board during the course of this long-term project, while achieving repeated success.

Don’t forget your silos

Does using an incremental approach imply that Eduard has set a low ambition level? On the contrary! But he is determined to set realistic goals. In large and complex organisations, it is an enormous challenge to make a global project a success. Calls for ‘disruptive’ changes often result in unrealistically high expectations that a company simply cannot stay abreast of.

Greg Smith, Transportation and Logistics Industry Director at Oracle, has his own take on this matter: ‘Silos aren’t that bad, they’ve brought us to where we are now.’ In other words, remember how a company got to where it is today. It got there with the help of its silos, IT systems and employees. If you don’t acknowledge this then you actually disregard the present-day organisation. This is the wrong way by which to gain acceptance and will be fatal to ambitious plans as well as damaging to an organisation.

Eduard has recognised this fact and applies this knowledge without being less ambitious. If silos are completely demolished during the course of a project, an organisation might collapse. Start by installing some windows and doors and people might find their own way out.

Jeroen Bolt is interim manager and consultant at Bolt Consultancy

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In recent years, quite some emphasis has been put on the importance of strategies such as just-in-time, lean manufacturing, off-shoring and frequent deliveries to retail Bringing profess ionals and academics together outlets. However, with significant economic changes, rising labour costs in developing countries, huge volatility in oil and
other commodity prices, and new regulations such as carbon emissions caps, some of these strategies may put the supply chain in peril. At the same time, logistics and supply chain management have been the focus of executive meetings, business columns and research institutes as never before. The importance of integrated, globally optimised supply chains is well understood, and it seems that in many companies, executives have discovered the impact on business performance that can be achieved by effectively managing their supply chains.

SCM in the boardroom
The objective of this next SCM research by MIT is to answer the question of how important SCM is as a topic on the agenda of today’s business leaders, particularly CEOs and COOs. If it is on the agenda, what should it specifically include: risk management, cost cutting, cash reduction or new channels? If SCM is not directly on the CEO’s/COO’s agenda, what is on their agenda? Is there a link between SCM and these topics? More importantly, is there a framework that links the firm’s value proposition to its supply chain strategy? Such a framework can establish a strong connection between business strategy and SCM and help position it in the eyes of the firm’s decision-makers.

Become a member of the SCM Research Community
If you would like to participate in the study or need further information, please send an email to mhoogeveen@trueconomy.com.

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