Change management is an important aspect of consulting our clients here at Egon Zehnder International. Have you participated in a change management process during your career?

Anonymous Answer

I was hired to my current role as GM of _______ to be a change manager for our Devices business. Historically, our business operated on a model of having inventory in place at all costs - this drove the business to airship 58% of the 90M units we sold in 2021. This was certainly a unique year with many manufacturing and supply chain challenges, but it also served to highlight the costs that were being incurred and not properly managed. I was hired with the goal to cut our air shipments in half. To do this effectively, I determined we needed to do three things: 1. Change the culture of "cost acceptance" throughout our organization, 2. Create an air approval process that treated this decision as a "defect" vs default, and 3. We needed to create a new ordering system that weighed the costs of supply chain decisions against the costs of being out of stock. #1 was mostly the soft side of change management influencing senior stakeholders throughout the organization. I was able to do this effectively by constantly highlighting the cost of every decision that was being considered - something that was surprisingly not done previously. 2nd was a mechanism I put in place to ensure that I had awareness and control over what was happening in our global supply chain. I disabled air orders without a manual approval intervention - the business justification that I used to say "yes" was to weigh our lifetime economic value of having a specific unit in stock to sell - this incorporated current profitability, demand perishability, and downstream economic impact to our decision model. The 3rd key work stream was to build the new ordering system - this was something that I certainly was not able to do personally, but I used my approval methodology to start the framework for the engineers to build out what we called 'cost-aware' ordering. It built on my tradeoff model and added more scientific scenario testing into it (additional example info - country-level profitability analysis to optimize inventory placement when constrained).

In the first six months in role, I was able to reduce our air shipments to 18% saving 200M annually. As we've entered 2023, we have doubled down on these initiatives and launched our cost aware ordering system enabling us to further reduce air shipments to below 3%, saving an additional 75M.