Meeting the challenge in 2025

This is the second of six articles on our research into High Performance Organization (HPO) best practices. In our first article, we discussed the challenges — from the speed of business to world events — driving the charge toward High Performance Organization (HPO) renewal. Industry leaders were actively pursuing the competitive advantages and adaptability HPO best practices provide even before COVID-19 disruptions. The focus is even stronger now. Recent research conducted by the University of Tennessee, Knoxville’s Global Supply Chain Institute (GSCI) on HPO yielded more than 250 best practices currently at play.

Why such active, renewed interest in HPO best practices amongst benchmark supply chains? Because supply chain and business leaders’ heightened expectations, driven by heightened customer expectations, have not been consistently met. Just a few of those expectations include:
 
• 100 percent on-time, accurate and complete customer fulfillment
• Zero employee injuries or environmental incidents
• Quality designed for the highest value to our consumers

Meeting these demands has become even more difficult with the increased complexity and speed driven by the customer revolution and consumer personalization mega trends. In short, our stakeholder needs (consumers, customers, communities, people and shareholders) have risen. We have more needs to fulfill and a more difficult environment in which to fulfill them. Renewal is a must in order to deliver what stakeholders demand today.

We condensed the 250 practices into a top ten, evenly split between “established, 1980s” practices and “new to the world, 2025” practices. In this article, we’ll look at the first two of the established 1980s best practices. They are:

• Business value creation
• Zero-loss mindset

Business value creation: Creating business value has always been at the center of a high performance organization (HPO). A fundamental HPO belief is that exceeding business needs results in success for everyone in the supply chain. (suppliers, customers and partners). In the 1980s, companies centered HPO around exceeding supply chain goals and results.

The principle has evolved in practice today as proactive engagement in the end-to-end business. HPO leaders have learned that supply chain people are core to delivering their products, and that supply chain people have the skills and experience to be the highest contributors to the business goals. Achieving competitive advantage in 2025 is only possible when every supply chain person drives the total business.

Zero-loss mindset: Eliminating waste and inefficiency has also been a core HPO best practice since its initial development. The 1980s focused on personal and team improvements that only took the first step in Lean trends just emerging at the time.

A modern zero-loss mindset challenges the status quo and fuels a commitment to continuous improvement. It fully embraces Lean principles, recognizing that most waste is driven by a lack of standard work processes, weak change management foundations and non-value-added, self-induced volatility. Benchmark HPOs address these issues by fully engaging employees and partners at every level to simplify, standardize and continuously improve how they do their work, with advanced, strong external benchmarking. They include suppliers and customers in the annual loss analyses and masterplans that cascade into shorter continuous improvement cycles, as up to 60 percent of losses occur between silos. The modern zero-waste is a value-creation tool, not just a cost-cutting tool.

The modern zero-waste mindset also means zero-defects: Benchmark businesses analyze every defect in their work to prevent future incidents. They also know that while defects may be found in equipment, materials and/or processes, the organization’s capability and overall success is the most strategic element. An organization can prevent strategic defects even when equipment, materials, and processes fail.

Business value creation and a zero-loss mindset are two established and evolving HPO best practices that leverage the skills of every supply chain person and give scope to the end-to-end business. Benchmark company supply chains develop supply chain people to be business owners — the best they can be — focused on exceeding business needs. Taking advantage of the focus the pandemic brought to supply chain to drive HPO renewal is a critical capability for companies and supply chain leaders to deliver sustained excellence.

Click here to download the GSCI White Paper for a full explanation of each best practice.

About the authors: Mike Burnette is a distinguished fellow at the Global Supply Chain Institute, University of Tennessee, Knoxville and a retired supply chain executive.

Mike Policastro is a researcher at the Global Supply Chain Institute, University of Tennessee, Knoxville and a retired supply chain executive.