White Paper Effective Chage Maagemet A Idispesable Igrediet of Successful Busiess Trasformatio Effective Chage Maagemet is...a practice where art, sciece, ad craft meet. This is what drives the chage maagemet ideology ad methodology at TCS. We believe that it takes a amalgamatio of the art of trade, the sciece of techology ad the craft of itegratio to make a chage maagemet effort effective. It is o secret that maagig chage is a importat elemet of a busiess trasformatio iitiative, yet there are umerous iitiatives that fail because of the lack of effective chage maagemet. We believe we have the right formula to help our cliets chage successfully ad effectively, ad make their biggest of Busiess trasformatio iitiatives successful. Whether it is adoptig the Bottom-up approach to create a visio for chage for the operatios team (that works at the groud level ad is most affected by the chage) OR followig a cliet-cetered, collaborative approach to strategy formulatio (to esure full cooperatio ad trasparecy from the cliet) OR employig our ideology to ivolve all levels of maagemet i the decisio makig process (to esure complete buy-i), we believe we kow how to maage chage ad maage it well.
This paper details our cocept of Chage Maagemet as practiced at TCS, ad the uique modelig methodology that we have desiged ad implemeted as part of our busiess trasformatio programs for diverse cliets from the retail idustry to help them successfully maage chage. 2
About the Authors Rahul Mittal Rahul Mittal is a seior member of TCS Retail Supply Chai Practice. He focuses o Retail Ivetory Maagemet domai. He specializes i maagig retail ivetory reductio iitiatives to help large retail orgaizatio realize quick workig capital improvemets by pullig ivetory relevat ivetory levers that results i sigificat ivetory savigs. He comes from a comprehesive US based maagemet cosultig profile with strog experiece i retail supply chai. Taru Batra Taru Batra is a member of TCS Retail Supply Chai Cosultig practice. He has worked across diverse geographies, with some of the world s most established orgaizatios i their supply chai area o iitiatives such as Ivetory Optimizatio, Demad Forecastig & Logistics Process Optimizatio. He specializes i helpig large specialty retailers to idetify ad implemet ways to improve their fiacial ad operatioal performace by optimizig their supply chais. He holds a Masters degree i Supply Chai Maagemet ad carries a work experiece primarily i the areas of Busiess Cosultig, Busiess Aalysis ad Project Maagemet. Deepak Luthra Deepak Luthra is with the Supply Chai Ceter of Excellece at TCS Retail Idustry Solutios Uit ad has substatial years of experiece from Retail idustry especially i the area of Supply Chai & Operatios. He has worked o umerous cliet egagemets for implemetig ivetory optimizatio iitiatives resultig i reductio i ivetory ivestmets. He holds a Masters degree i Iteratioal Busiess ad expertise i providig busiess advisory support to cliets focusig o busiess trasformatio & sustaiable supply chai performace improvemets through cross vertical best practices & iitiatives. 3
Udit Maheshwari Udit Maheshwari is a PMP, ITIL, OCA Certified associate with a Egieerig Degree i Computer Sciece. I his eight years of idustry experiece he has worked closely with Busiess & IT as a Fuctioal Cosultat, Busiess Aalyst, Project Maager & Process Cosultat across various domais ad geographies. Curretly he is ivolved as a Fuctioal Cosultat i the supply chai domai, where he has assisted several iteratioal cliets to realize reductios i ivetory related costs by implemetig various ivetory optimizatio solutios. 4
Table of Cotets 1. Our cocept of chage maagemet 6 2. Our chage maagemet methodology 6 3. Our experiece 8 4. TCS value propositio 10 5
Our Cocept Of Chage Maagemet TCS idea of Chage Maagemet is to create a sese of owership of chage i employees at all levels of the orgaizatio ad to actively ivolve all levels of maagemet i the desig ad implemetatio of the chage strategy. We strogly believe that the outcome of a chage maagemet iitiative at a orgaizatio level depeds to a large extet o how well its people embrace ad support the proposed chage. Therefore, we believe that i order to make a chage maagemet effort successful, the orgaizatio eeds to: Build ad promote a bi-directioal commuicatio chael to: effectively commuicate the eed for chage throughout the orgaizatio, ad address employee suggestios, queries ad cocers regardig the proposed chage Iclude successive levels of maagemet i the decisio makig dialogue to: esure complete buy ito the eed for chage, ad foster a spirit of collaboratio, ad Egage people at all levels of the orgaizatio to: create a sese of owership i them, ad esure their acceptace of chage ad their support throughout the chage process Lastly, we also believe that the orgaizatio must esure that the team most affected by the chage is actively ivolved throughout the iitiative ad drives the chage across the orgaizatio. Our Chage Maagemet Methodology At TCS, we kow that effective chage maagemet is crucial to the success of a Busiess Trasformatio iitiative ad we strogly believe that it takes the amalgamatio of the art of trade, the sciece of techology ad the craft of itegratio to make a chage maagemet effort effective. Therefore, the TCS Retail Ivetory Maagemet (T.R.I.M) team derives its Chage Maagemet Methodology from the TCS Effective Chage Maagemet Model that emphasizes the importace of art, sciece ad craft for effective chage maagemet ad recogizes that the absece of ay oe elemet ca potetially spell failure for the chage maagemet iitiative. 6
ART SCIENCE CRAFT Effective Chage Maagemet Figure 1: TCS Effective Chage Maagemet Model Some of the saliet features of TCS Retail Ivetory Maagemet Chage Maagemet methodology are: A collaborative (rather tha prescriptive) approach to strategy formulatio. The collaborative approach is more cliet-cetered ad esures more cooperatio ad trasparecy from the cliet, thus, makig it relatively easier to implemet a chage tha the prescriptive approach, which may leave the cliet feelig hard doe by ad lead him ito reactig by ot cooperatig or withholdig iformatio. The ivolvemet of all levels of maagemet i the decisio makig process. Buy-is are sought ot just from the Seior Maagemet but also from the Middle Maagemet ad the Operatios team that works at the groud level ad is most affected by chage. Adoptig the Bottom-Up approach to create a visio for chage for the Operatios team ad havig them ultimately drive the chage (from root to tip) across the orgaizatio. While implemetig a chage at oe of the largest specialty retailers of North America, we used resposibility assigmet matrix - RACI (Resposible, Accoutable, Cosulted, Iformed) - to idetify the role of each stakeholder ad icluded the middle ad lowlevel maagemet ot just i the Iformed group (that eeds to kow of the decisio or actio) but also i the Cosulted group (that eeds to provide feedback ad cotribute to the activity). 7
Our Experiece TCS Retail Ivetory Maagemet team's chage maagemet exercise durig a busiess trasformatio iitiative for a North America specialty retail orgaizatio was both sigificat ad effective, resultig i the successful implemetatio of the trasformatio ad providig the desired outcomes. For this $4 billio, US-based, arts ad craft specialty retailer, the TCS Retail Ivetory Maagemet team desiged ad coducted a ivetory optimizatio program by implemetig certai process improvemets ad strategic implemetatio techiques. The goal of this busiess trasformatio program was to assist the orgaizatio i optimizig the ivetory levels ad improvig the ivetory turs towards becomig a High Performace, Lea-Ivetory-Maaged Orgaizatio - oe that delivers the right product at the right time ad i the right quatity, ad achieves outstadig customer value, experiece ad satisfactio. To accomplish this task of busiess trasformatio, TCS Retail Ivetory Maagemet team performed a comprehesive assessmet ad process mappig exercise to evaluate the prevailig ivetory sceario, which was setup at a value of $0.9 billio. Observatios from the assessmet ot oly revealed a low ivetory tur of less tha 2 but also idicated SKU proliferatio - a chroic retail ailmet that sigifies a orgaizatio s tedecy to build up/itroduce ew SKUs from time to time. The study also cofirmed that 35-40% of the retailer s assortmet was stuck i o-performig, slow-movig SKUs that cotributed less tha 5% to sales. As part of the orgaizatioal trasformatio program, our team recommeded two ivetory optimizatio iitiatives to address the retailer s challeges i ivetory maagemet. First, was the implemetatio of SKU Ratioalizatio to overcome SKU proliferatio ad to decommissio operformig assortmet, resultig i cosiderable ivetory savigs. Next, was the implemetatio of Product Facig Optimizatio techique to reduce the miimum presetatio levels of the merchadise across stores, resultig i sigificat reductio i ivetory. As part of the busiess trasformatio iitiative, we streamlied supply chai processes ad established KPIs for cotiuous moitorig ad bechmarkig. The overall service level for key categories improved by 2-3%, as the stores started receivig ad maitaiig the right ivetory levels. The most importat ad crucial factor i makig the retailer s busiess trasformatio jourey a success was effective chage maagemet. The ivetory maagemet busiess trasformatio program could ot have bee successful without our chage maagemet capabilities. Our cosultig team worked closely with both the seior maagemet ad the operatioal busiess owers, reviewed progress reports regularly with them to esure their cotiual egagemet i the program ad sought iputs from them time to time to keep the mometum goig. The TCS Retail Ivetory Maagemet (T.R.I.M) team used resposibility assigmet matrix - RACI (Resposible, Accoutable, Cosulted, Iformed) - to idetify the role of each stakeholder ad icluded the middle ad low-level maagemet ot just i the Iformed group (that eeds to kow of the decisio or actio) but also i the Cosulted group (that eeds to provide feedback ad cotribute to the activity), thus esurig a comparatively seamless implemetatio. 8
The followig diagram describes the busiess trasformatio jourey at the North America arts ad craft specialty retailer, where the solutios were implemeted i a icremetal maer ad effective chage maagemet methodology was employed to make the overall program a success. Seior Maagemet Operatioal Maagemet (Category Mgr, Buyer, Repleishmet Mgr) Orgaizatioal Challeges Idetified Challeges Qualitative & Quatitative Aalysis Data Gatherig & Validatio Ivetory Related & Operatioal Level Challeges ITO Ivetory Optimizatio Miimum Presetatio Quatity Reductio Iitiative SKU Ratioalizatio Techique Busiess Case Developmet & Scope Develop Category-wise Poit of View for Potetial Savigs Seior Maagemet Obtaiig Buy-I Form stakeholders Operatioal Staff (Category Mgr, Buyer, Repleishmet Mgr) Cosesus draw This is where Sciece met Art Comparatively seamless Implemetatio Figure 2: Busiess Trasformatio Jourey with A North America Specialty Retailer We bega with a rigorous review with the seior maagemet ad the operatioal staff to gather the orgaizatioal level challeges/goals ad the operatioal challeges/issues respectively. A quatitative ad qualitative aalysis of these challeges helped determie ivetory maagemet as the focus area for the busiess. Recogizig the eed for ivetory optimizatio, TCS Retail Ivetory Maagemet team developed a busiess case with category-wise poits-of-view, highlightig the potetial savigs. The busiess owers were the asked for their reviews ad feedback durig the decisio makig phase. There were istaces durig the decisio makig phase where the busiess owers showed resistace to the proposed chages. For example, for a small photo frame SKU, idetified as a slow velocity product, 26-52 weeks of supply was built up by simply adherig to the miimum presetatio level (visual merchadise display level) at the stores, resultig i high ivetory pile up for this product across the orgaizatio. Therefore, this SKU was idetified ad targeted for the Miimum Presetatio Quatity Reductio (facig optimizatio) iitiative. However, the buy-i process for the same saw some resistace from the operatioal level category maager as this SKU was cosidered to be a red cherry to draw customers to the stores. Moreover, these small photo frames were typically traded i large quatities due to their utility ad therefore, had to be maitaied as a high visibility, large ivetory product. Hece, o the category maager s recommedatio, this particular SKU was take out of the ratioalizatio scope. Here is aother example from the SKU Ratioalizatio exercise. The SKU Scope for ratioalizatio (determied by coductig sesitivity aalysis o the sorted SKU list) for a particular category came out to be a umber, which whe subtracted from the total umber of SKUs i the category, brought dow 9
the SKU stregth below the threshold defied by the category maager for the category. There was a obvious push back from the category maager, opposig the delistig of some SKUs. After a further detailed aalysis ad discussio of the SKU scope with the category maager, some of the SKUs were take off the to-be-delisted list. These examples show that buy-i from the stakeholders at all levels withi the orgaizatio is a itegral compoet of busiess trasformatio chage maagemet. I these cases, we uderstood the sesitivity of the matter ad respected the iputs from both seior ad the operatioal level maagemet. The art of retailig was give as high importace ad priority as was the sciece of techology. Ackowledgig their art of trade certaily established credibility ad motivated the orgaizatio to chage. We measured the tagible savigs ad shared them o a quarterly basis across various levels withi the orgaizatio. As positive beefits became icreasigly visible each quarter, the real umbers motivated the busiess owers. This eabled a comparatively seamless implemetatio of the busiess case ad made the trasformatio iitiative successful. TCS Value Propositio We use our pael of had-picked experts to offer best-i-class solutios to the market leaders i the retail idustry. Based o our extesive experiece with leadig retailers, we provide ed-to-ed solutios i the followig areas: Ivetory Workbech We have desiged ad developed a uique modelig methodology to idetify key ivetory drivers, uderstad the optimal ivetory levels for each possible product/sku ad idetify the steps eeded to reach those levels. We have bee able to help our cliets realize as much as 25% reductio i overall ivetory. I terms of value, we have helped them achieve savigs of up to $80M i ivetory ad have played defiig roles i iumerable success stories across the globe. Supply Chai Solutios We combie our expertise ad experiece to tur the modelig recommedatios ito quatifiable busiess beefits. Our Supply Chai Maagemet (SCM) solutios help orgaizatios stay coected with their suppliers, parters ad customers. We help trasform supply chais by usig LEAN ad Six Sigma priciples, to establish cost leadership, reduce waste i terms of ivetories ad lead times ad ehace competitiveess through agility ad flexibility. We ca help you build superior multi-chael distributio etworks ad ehace your global ivetory visibility ad order promisig capability. 10
Applicatio Developmet ad Itegratio Our collaborative methods, efficiet developmet techiques, ad alliaces with top techology compaies allow us to develop high-quality, cost-effective software solutios quickly. Our systems itegratio teams help cliets progress i a icremetal, pragmatic maer as opposed to the haphazard, ad-hoc itegratio patters of the past. Busiess Process ad Chage Maagemet As global orgaizatios strive to alig busiess ad IT strategies ad derive maximum value from their IT ivestmets, they eed optimal program maagemet frameworks ad skills to meet their ivestmet goals. TCS Busiess Process Maagemet (BPM) helps eterprises realize their visio of a process-maaged orgaizatio, by defiig agile busiess processes ad makig a fast ad positive impact, while eablig result-focused techology itegratio. TCS Chage Maagemet focuses o people to esure that chage is brought about smoothly, effectively ad with miimum resistace. Our chage maagemet activities are directed towards the idetificatio ad mitigatio of people-orieted risks associated with accomplishig the chage objectives. Retail Trasformatio Equipped with extesive idustry, techology ad delivery capabilities, we deliver solutios ad services that address strategic ad operatioal challeges, optimize busiess performace, alig techology with busiess priorities, reduce cost, improve margis ad costatly sharpe competitive advatage. We have ivested i a rich set of solutio offerigs, assets ad accelerators to icrease ROI ad decrease the time-to-value of busiesses ad IT programs. Today s wiers have adjusted to existig market realities. TCS structured approach will assess the readiess of your orgaizatio, techology ifrastructure ad processes to develop a comprehesive pla to take your orgaizatio to the ext level. We feel proud to protect our cliets hard-wo reputatio ad cotiue to strive towards makig them bigger ad better. 11
Cotact For more iformatio, cotact retail.solutios@tcs.com Subscribe to TCS White Papers TCS.com RSS: http://www.tcs.com/rss_feeds/pages/feed.aspx?f=w Feedburer: http://feeds2.feedburer.com/tcswhitepapers About Tata Cosultacy Services (TCS) Tata Cosultacy Services is a IT services, cosultig ad busiess solutios orgaizatio that delivers real results to global busiess, esurig a level of certaity o other firm ca match. TCS offers a cosultig-led, itegrated portfolio of IT ad IT-eabled ifrastructure, egieerig TM ad assurace services. This is delivered through its uique Global Network Delivery Model, recogized as the bechmark of excellece i software developmet. A part of the Tata Group, Idia s largest idustrial coglomerate, TCS has a global footprit ad is listed o the Natioal Stock Exchage ad Bombay Stock Exchage i Idia. For more iformatio, visit us at www.tcs.com IT Services Busiess Solutios Outsourcig All cotet / iformatio preset here is the exclusive property of Tata Cosultacy Services Limited (TCS). The cotet / iformatio cotaied here is correct at the time of publishig. No material from here may be copied, modified, reproduced, republished, uploaded, trasmitted, posted or distributed i ay form without prior writte permissio from TCS. Uauthorized use of the cotet / iformatio appearig here may violate copyright, trademark ad other applicable laws, ad could result i crimial or civil pealties. Copyright 2012 Tata Cosultacy Services Limited TCS Desig Services I M I 09 I 12