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Supply Chain Transformation: Practical Roadmap to Best Practice Results by Richard Sherman

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Chapter 4

Business Structures Are the Levers of Change

While the Beer Game teaches us that structure is a major lever of change, it's important to note that structure has multiple dimensions, or as I like to say, fulcrums...boundaries and rules, physical and informational, financial and material, cultural maturity, metrics, functional responsibilities, and other characteristics combine to define structure. How these dimensions or fulcrums are structured will determine how much power the lever has to move the rocks that are thrown on the path as we move along our transformational journey. What I have discovered over the years is that there are dimensions of structure that can be easily changed or, in the case of boundaries, in particular, that are very difficult or even impossible to change.

For example, in the Beer Game, it is not possible to change the physical boundaries of the game as it is structured. But, you say, what if we were to bypass the wholesaler and distributor and go retailer direct? What if we “open” communication among the participants? What if we break the rules? Bingo! Did the electricity light your bulb? Sure, you can change the structure, but when you do, you change the game. Structural changes can be powerful levers and can be game changers. P&G's transformation is a game changer. Wal-Mart's big box, everyday low price strategy is a game changer. Information and communications technology implementations, such as Colgate's, are game changers. Apple's iPhone ...

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