2. C.H. Robinson | Create a Culture for Change 2
In brief
Companies turn to outsourcing transportation
management so they can optimize and dramatically
improve their supply chains. Outsourcing provides the
greatest value when organizations minimize obstacles
to change. By building a strong change management
framework, shippers can obtain more successful and
productive results.
Contents
Build a change management framework 3
Before and during implementation 5
Sustaining a culture of continuous change 8
To succeed in outsourcing, manage change 10
Creating a culture of change 10
3. C.H. Robinson | Create a Culture for Change 3
It takes a concentrated effort for a company to choose
the right third party logistics provider (3PL) for a
supply chain outsourcing engagement.
What stands between the current state and the value the company seeks—
greater efficiency, enhanced savings, better customer service, and other
improvements—is the speed at which the company’s workforce can adapt to
change.
Build a change management framework
The stages of accepting change are well documented (see Figure 1).
Outsourcing will usher in changes throughout the supply chain and affect job
responsibilities and daily work in many areas of the business. Companies see
the greatest value from outsourcing when they obtain internal buy-in before
the provider is chosen. The reason: people who help develop a supply chain
outsourcing solution are more likely to be motivated and enthusiastic about
pursuing change. Conversely, people who are surprised by changes to their jobs
and their lives are likely to resist.1
Without their support, the provider may miss
key information, slowing progress toward deliverables or stopping it entirely.
1 Litre, Patrick, and Kevin Murphy. “Results Delivery: Managing the Highs and Lows of Change.” Bain
Company, May 8, 2013.
FIGURE 1 THE CHANGE CURVE
PERFORMANCE
TIME
High expectations Effective Program
Typical Program
Despair
Light at the
end of the tunnel
Realization of effort
and complexity
+
-
As companies pursue
better outcomes, some
employees will have high
expectations for the
changes ahead. Over time,
they see how much effort
will be required. After a
time, they see the light at
the end of the tunnel.
4. C.H. Robinson | Create a Culture for Change 4
Executive sponsors
A senior executive must back business realignment and support program initiatives. To obtain their support, build the business
case, connecting challenges, goals, and desired outcomes with issues the senior manager cares about (e.g., inventory turns,
sales volumes, shortening the order-to-cash cycle, or lessening inventory). The leader must stay involved to champion the shift in
business strategy and enforce buy-in.
Change manager
From the start, choose a company insider who understands why the change is needed and can explain it to others. This person
should have the authority and credibility to enforce change, and should carry influence with customer service, sales, production,
information technology, and other functional groups.
To help prevent slowdowns in progress that can be traced to late or incomplete handoffs, the change manager should:
• Create a communications plan that speaks directly to each employee. The change manager should develop a very short elevator
speech, covering these points for every type of employee who will be part of the change:
• What are you working on?
• What’s important about it?
• Here’s what I need from you…
• Model a mindset of collaboration.
Employees will need clear guidance as to how they should behave. Emulate a “collaborate not collide” mindset—one where
participants and the provider work together for positive outcomes.
• Add new elements to the communications plan.
The change manager and executives should prepare a system of incentives for supporting change and penalties for failing to
comply (e.g., “Fifteen percent of your bonus this year will be based on compliance to the organizational change.”).
FIGURE 2 LEADERS OF CHANGE
The first step to involve the workforce is to assemble a cross-functional
team. It should include people from across the supply chain—shipping and
receiving, purchasing, production/manufacturing, warehouse, customer service,
information technology, finance, and sales and marketing. The make-up and
responsibilities of the executive sponsor, change manager, and cross-functional
team appear in Figure 2.
Enterprise-wide commitment will be required to develop a 360-degree view
of the supply chain, with input from each functional group. The same level
of commitment will be required to integrate the technology that will enable
outsourcing to work as expected. With extensive two-way communication,
the entire company can develop internal consensus toward a shared vision.
Employees can clarify strengths and weaknesses and better understand what
the organization needs. It will take all internal divisions working cooperatively to
move forward to achieve the desired objectives.
Cross-functional team
Everyone who touches the supply chain should be part of the process: people who order materials, build and manage stock, ship
product, answer customer questions, forecast, invoice, and handle financials. Include people who actually perform the work. The
cross-functional team should capture organizational objectives across the enterprise and ensure buy-in, a clear scope of services,
and proper evaluation criteria.
5. C.H. Robinson | Create a Culture for Change 5
Before and during implementation
Before implementation of the logistics solution, all parties must agree on how
process transformation will be approached, the order in which objectives should
be pursued, and how those objectives will be measured. The provider should
thoroughly evaluate the current state of systems and processes, create a
detailed plan for achieving the organization’s goals, and make sure that senior
managers remain engaged.
The provider should be especially diligent in asking questions about what
is being done. Managers and the employees who actually do the work may
disagree on how a process actually works, but the provider, as a neutral third
party, can help uncover discrepancies without preconceptions. They can reframe
negative commentary that “invites blame, causes fatigue, builds resistance,
and fails to draw on people’s passions and experience”2
into more productive
discussions.
The provider should work with the cross-functional team and other company
employees to document current processes and systematically identify and
prioritize opportunities for improvement. The provider and team can focus
on the “added value that process change will create for customers and the
greater employee engagement that will come from eliminating needless rework,
duplication, and complexity.”3
During implementation, the pendulum of change can swing from resistance
to optimism as projects begin and successes are earned. While optimism can
energize employees, it can also lead people to expect too much to be accom-
plished at once. The company will walk a fine line as they encourage optimism,
yet keep people’s expectations as realistic as possible.
2 Aiken, Carolyn, Dmitriy Galper, and Scott Keller. “Winning Hearts and Minds: The Secrets of Sustaining
Change.” McKinsey Company, 2011.
3 Ibid.
6. C.H. Robinson | Create a Culture for Change 6
FIGURE 3 THE CHANGE MANAGEMENT LIFECYCLE
COMMUNICATE
TRAIN
EVALUATEHA
B
ITUATE CORREC
T
1
2
34
5
BEGIN
NEW NORMAL
BEGIN
FUTURE
STATE
1. Communicate. Explain why change is necessary now.
What is the value to the company? What outcomes does
the company desire?
2. Train. Employees are more likely to retain what they learn if they use their new skills
soon after training occurs.
3. Correct. Although some errors will occur as the solution rolls out, expect employees to
follow the process.
4. Habituate. Correction by the company decreases as employees increasingly adapt to
change; the change becomes the “new normal.”
5. Evaluate. Another change can be selected to improve;
the company begins talking about the future state.
For instance, the company may choose an outsourcing provider that will
implement significant process changes throughout the supply chain. If the
processes are established well, they can support enterprise-wide transforma-
tion. If not, the company will have to backtrack to correct problems, slowing
change. Companies that follow the steps in the change management lifecycle
are more likely to keep moving forward (see Figure 3).
1
2
3
4
5
7. C.H. Robinson | Create a Culture for Change 7
Overcoming Resistance
to Change4
• The risk of change is seen as greater than the risk of standing still. Set
out in stark terms why you believe it’s riskier to stand still than to change. Use
numbers to engage the logical mind.
• People feel connected to people who are identified with the old way.
Combine change messages with statements that honor the work of those who
brought the company to success.
• There are no role models for the new activity. Have the people who believe
in your idea demonstrate how the new way will work.
• People fear they lack the competence to change. Conduct town-hall
events. Detail how people will learn what will be required of them, from whom,
and when.
• People feel overloaded and overwhelmed. Fatigue can slow change. Be
very generous with praise and listen to people’s complaints throughout the
change process.
• People have a healthy skepticism and want to be sure new ideas are
sound. Listen to skeptics. Some of what they say could prompt genuine
improvements to the idea.
• People fear hidden agendas. People may suspect reformers of wanting to
eliminate rivals. Be open; show good faith and a genuine interest in promoting
the greater good of the organization.
• People feel the proposed change threatens their values. Help people
see they can still realize their own sense of mission and may see new rewards
under a new work process.
• People anticipate a loss of status or quality of life. People may see the
change (correctly, in some cases) as contrary to their interests. Accept that
some will leave rather than change.
• People genuinely believe that the proposed change is a bad idea. People
may not be recalcitrant, afraid, muddle-headed, nasty, or foolish. They may
just see that the idea is wrong. Don’t ignore genuine, rational reservations or
objections.
Over time, the company and provider resolve open issues, and later, during
the implementation process, benchmarks and measurements come into play.
Companies often measure line haul costs first to see how well they buy trans-
portation. Benchmarking other key performance indicators (KPIs) offer a
mutually governing document to define success.
A scorecard of KPIs can show how the company performs against its targets
and the external market. The company chooses specific targets for quality,
service, savings, and cost avoidance. A 95 percent on time delivery rate could
be one target that the company and provider commit to hitting. Targets are
measured and reviewed monthly. Ahead of time, both parties should agree on
action to be taken if results fall short, and for whom.
4 Schuler, A.J., Psy.D. “Overcoming Resistance to Change: Top Ten Reasons for Change Resistance.”
www.schulersolutions.com, accessed October 9, 2013.
8. C.H. Robinson | Create a Culture for Change 8
Sustaining a culture of continuous change
Change management is not a one-time event. Even as the company moves
ahead with planned change, both expected and unexpected issues arise.
Market changes, changes in suppliers, acquisitions, and other unanticipated
events can temporarily or permanently redirect efforts for changes that are
already in process (see Figure 4).
FIGURE 4 STEPS FOR CONTINUOUS CHANGE
4
3
2
1
5 PROCESS IMPROVEMENT
Once the supply chain adapts to the
unplanned change, evaluation and
implementation of the next process
improvement occurs.
UNEXPECTED CHANGE
Market changes, changes in suppliers,
and other events can temporarily or
permanently redirect efforts for the
changes in process. Additional change
management is required.
PROCESS IMPROVEMENT
The next continuous improvement
event occurs.
PROCESS IMPROVEMENT
Communicate, train, correct, habituate,
and evaluate (see Figure 3 in part 2 of
this white paper series, page 7); new
process is stabilized.
ESTABLISH BASELINE
Process measurement begins from
this baseline.
9. C.H. Robinson | Create a Culture for Change 9
If the company has chosen a provider with business intelligence tools, better
processes, and risk mitigation, they can more easily adapt to both planned
and unplanned changes and continually improve. The outsourcing provider
can establish a baseline from which a change can be measured. The company
gains visibility to the supply chain in its entirety, often for the first time. Activities
surrounding their freight—from the arrival of raw materials to the delivery of
finished product to the customer—become clear. With routine processes and
data on service, cost, and quality, the company can track progress toward its
desired outcomes.
It is during the continuous improvement stage that the open issues log proves
its worth. The issues log shows the exceptions to automated routines and
identifies where problems and process inconsistencies occur. Some of these
issues are the proverbial “low-hanging fruit” that can be resolved for fast effi-
ciencies and savings.
As the organization resolves issues, they also stabilize processes that must
be in place before they can pursue more complex approaches like network
analysis. The log provides a ready source of improvement opportunities for
gains that can last beyond the first year of the outsourcing engagement.
While visibility shows where things aren’t working in the supply chain, it
also reveals the details of company performance. Before analytics and
business intelligence metrics were available, the organization may only have
had anecdotal evidence to judge how well it served customers, or how well
suppliers performed. The KPI scorecard measures on time carrier performance
and acceptance levels, line haul costs, fuel surcharges, savings year over year,
and cost avoidance so the company can see how close it came to the
desired targets.
In addition, the KPI scorecard contributes to the company’s evolving supply
chain strategy. An executive steering committee should meet regularly with the
provider to examine targets and performance and discuss additional strategic
improvements. The provider should offer recommendations on attainable goals
and targets; the organization drives which targets to pursue. In this way, the
business intelligence metrics, open issues log, and KPI scorecard, along with
the experts who interpret the data and analyze it, keep all parties aligned.
10. C.H. Robinson | Create a Culture for Change 10
To Succeed in Outsourcing, Manage Change
The company and the supply chain outsourcing provider should collaborate to
understand existing processes and create realistic expectations for what can be
done, and when. But performing the work to actually transform the supply chain
is “hands on” for both parties. Ultimately, the provider can empower change, but
only the company can rally internal support to enable improvements.
From the outset, organizational change can test people’s ability to adapt.
Managers who understand why people resist change, and who help employees
feel they have a stake in the organization’s success, can create and maintain
momentum for ongoing change initiatives. By creating a framework to support
change—engaging executives, communicating with and training employees,
benchmarking, and measuring—organizations can create a framework to
support change and achieve enterprise objectives.
Ideas for creating a culture of change
Build a change management framework
• Establish the expectation that everyone in the company will collaborate with
the provider to solve problems.
• Create the right infrastructure to support change before choosing a supply
chain outsource provider. Establish one executive sponsor, change manager,
and cross-functional team early on.
• Commit to continuous improvements beyond year one. The first year’s to focus
on understanding old process, integrating systems, and fixing what doesn’t
work.
• Plan to improve efficiencies beyond internal operations. Technology will
play a huge role in providing internal visibility. Some platforms also connect
companies with suppliers and customers to optimize processes and bring new
efficiencies to the supply chain.
• Prepare a compelling message for employees. Be ready to explain why the
change is necessary, why it must happen now, and how the impacted parties
will benefit.
11. C.H. Robinson | Create a Culture for Change 11
Before and during implementation
• Require mutual consent for the project launch date. If a step isn’t complete,
the process should stop. Or, both parties may agree to move forward after
discussing the risks.
• Set small, easy-to-achieve targets that can be completed in a short timeframe.
If one of eight facilities is smaller or more enthusiastic about a change, start
there. Highlight that win to create positive buzz and encourage others to adapt.
• Establish an open issues log. Nothing works perfectly as changes begin. But
all parties can pursue perfection and achieve excellence by keeping a log of
open issues and holding a weekly call to resolve them. Focus on how problems
surfaced and whether they are one-time glitches or the culmination of steps in
the process.
Sustaining a culture of change
• Adapt and evolve. The company must maintain a mindset of continuous
improvement. Without change, the company can experience the same or
worse results over time.
• Establish champions who will continue to drive change. The
provider and the company should assign one person to be accountable for
monthly continuous improvement ideas. These two champions of change
should be aligned in the ongoing search for new ways to improve.
