Drivers of change in an organization shows the supply chain industry is constantly evolving and becoming more complex. As supply chains stretch across the globe as discussed in this article, industry managers and executives must consider more factors than ever before. The five main drivers of supply chain adaptation and evolution are social change, technology, the environment, the economy, and politics. Kurt Lewin’s model for change management gives a good description of change management, its importance, and everything you would want to know about these five drivers of change can be simplified by the acronym STEEP.
Drivers of change in an organization
Social awareness has become part of American culture over the past decade, driving consumption in ways that have had a profound impact on how supply chains work. Today’s consumers want chemical-free food and products grown and shipped by fair workers. As outsourcing grows and the media often focuses on ethical behavior, companies also need to uphold corporate social responsibility (CSR). This is true not only at home but also abroad.
Further, Business leaders must consider cost-effective sourcing and cost-effectiveness. However, they must also consider the carbon footprint and human labor component of their manufacturing, transportation, distribution, and procurement activities. Social factors to consider include ethical trading and procurement, public health and safety, human rights, diversity, and corporate governance.
Whether using social media to increase transparency or automated freight to improve port efficiency, supply chain companies recognize that technology plays an important role in their operations. More often than not, supply chain companies embrace technology in the name of efficiency. Technology can also manage change and automate much of the traditional paperwork involved at each stop on the trip. Wireless technologies such as Remote Frequency Identification (RFID) tags can be used to scan goods and provide accurate daily updates on status and proof of delivery instantly to stakeholders.
Using new technology is not always an option, as current governments demand modernization. For example, the Department of Transportation’s 2015 electronic logging mandate requires the continued deployment of wireless technologies. These provide real-time shipment status updates and delivery confirmations. Companies are also encouraged to store information in an organized
database rather than relying on hardcopy.
A global supply chain means that the potential for environmental impacts increases at one or more stages of a product’s journey, from raw materials to the final product. Natural disasters can disrupt supply chains, delay deliveries, increase costs, and cause material loss.
In addition to this growing risk of environmental impact, companies are looking to green their supply chains by keeping them as short as possible and purchasing materials that are manufactured with the lowest carbon footprint.
Obstacles to the supply chain include poor transportation infrastructure and political regulations that hinder the rapid movement of goods are major obstacles to business performance and economic growth, including, For example, a new trade deal could eliminate tariffs, while a Federal Reserve vote could raise interest rates, impacting retailers and suppliers in many ways. Similarly, perspectives of change outline national economic conditions and the tactics of central banks and economic regulators limit the ability of multinationals to establish supply lines in each country and serve domestic markets.
Politics have a fundamental impact on supply chain effectiveness. Further, political violence, economic instability, and the rise of nationalist governments trying to protect domestic resources are forcing organizations to build resilient business models to protect their supply chains. Government regulations give domestic companies special advantages and can undermine trade agreements that export valuable materials. The administration can impose trade tariffs to prevent transactions with foreign multinationals. Drivers of change in an organization also work for some governments, like the United States and Cuba, are closing ports and barring all ships from entering or leaving. Conversely, others are easing trade restrictions with certain countries.
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