Golf-club maker re-invents supply chain -- and itself; shooting for the green; the 24-hour, custom made club
Posted Aug 30, 2002
Rob McClellan works within a golf shot of every senior executive at TaylorMade-adidas Golf Company, headquartered in Carlsbad, California. This physical presence helps bring people from many functions together, ensuring a smooth transition as the company shoots for the green with e-business. "By being able to touch everyone on the shoulder, you can get a lot of things done in a $600 million company," McClellan, global e-marketing manager, says.
Three years ago, the company faced dire straights -- that is, warehouses full of superseded golf clubs and a poor reputation with customers. That's when TaylorMade-adidas' brass demanded a complete overhaul in the way the company brought products to market. Specifically, this meant reinventing its approach to supply and demand chain management in order to increase inventory turns. "We had to face reality," recalls Mark Leposky, vice president of global operations at TaylorMade-adidas. "The nice thing about it was that everyone was ready for change."
To achieve this goal, the company formed a steering committee made up of top executives from four key functions: operations, marketing, sales/customer service, and IT (with occasional input from finance). After much discussion that included drafting 22 pages worth of technical and operational demands, TaylorMade-adidas signed a major contract with supply chain management software vendor i2 Technologies. And in the summer of 2001, it took its first implementation steps as a re-born, e-business company.
Today, TaylorMade-adidas offers something special: 24-hour custom made golf clubs. No longer the laughing stock of the industry as a Johnny-come-lately, TaylorMade-adidas now leads nearly all its competitors in time-to-market of products and ability to turn on a dime to accommodate sudden shifts in demand. "Everything eventually comes down to the supply chain," says McClellan. "You can't sell something unless you build it first."
A close-knit foursome
Pulling off the i2 project took more than a simple directive from the top. It took teamwork, and this meant creating a high level steering committee. For the first time in the company's history, vice presidents from four critical corporate functions sat together in bi-weekly meetings, updating the status of e-business projects and formalizing approvals for minor e-business plans. Most heated debates were hammered out before the bi-weekly meetings, according to McClellan. The group felt compelled to show a united front to Leposky, the executive sponsor of the steering committee. "We're working together day in and day out," McClellan says. "When we go into the meeting, we all shake our heads in the same direction." And there's added pressure to come to consensus, or else the steering committee will be forced to answer to a higher body. If the steering committee can't agree on certain things, then the president of TaylorMade-adidas and potentially, parent company Adidas-Solomon, may weigh in.
The benefit of the steering committee model is instant executive management support, often followed by clear mandates that align with the overall corporate strategy. In general, the problem with most committees is that it's often difficult to build consensus among so many egos, which means innovative and risky solutions tend to miss the cut, says Jim Shepherd, senior vice president at AMR Research, adding, "There's less departmental accountability, as employees view e-business decisions as hierarchical and bureaucratic."
Taking a harsher stance on the model, Ben Smith, former vice president at A.T. Kearney, believes an executive steering committee is a sure indication of chaos and confusion. Simply put, a steering committee made up of top people is basically a third power structure forced together because of previous failures. "Executive-level, e-business committees are great when you want to hide," Smith says. "If there is such a committee, it better not last more than a budget cycle."
Hogwash, counters McClellan. In the case of TaylorMade-adidas, the steering committee model has worked so well at bringing once siloed departments together that the company has now implemented a steering committee to direct forecasting efforts. Executives from sales/customer service, operations, and finance now work together to create a single corporate forecast, whereas before there used to be multiple, disparate forecasts. All of which has helped TaylorMade-adidas' bottom line. "It was a struggle coming up with one forecast, but you can't execute unless you're all marching to the same beat," says McClellan. "In order to increase inventory turns and free up cash flow and capital, you have to manage the variance between your operational forecast and what's happening in the market. Demand variability, supply variability and customer service levels tell you how much safety stock you're going to carry."
Change management's driver
With the ongoing i2 project, the steering committee makes decisions and McClellan plays the role of liaison between the committee and departmental managers and directors. He makes sure projects are being embraced by workers. It's called change management, and it's the moving target of e-business.
Change management is easier when the technology is defined around departmental business processes and solves workers' real problems, advises McClellan. To this end, it's vital that business people make e-business decisions; they know most about how to make business processes more efficient. Still, McClellan faces inevitable gaps, whereby employees must adapt to both change of business process and new technology.
"I'm so glad we changed a lot of the processes before we got into the technology solution... but we still have little misses," McClellan says. "There are a few times where we are having to change, a tactical shift, to processes as well as implement technology -- and those are harder. Now it's going to be a significant shift. What you don't want to get into this late in the game is a shift that requires reallocation or redefined job descriptions."
Another loaded gun facing the e-business liaison is dealing with many micro-cultures within an organization. As the i2 project expands from supply chain to demand chain management, McClellan has had to adjust his pitch from operations-laden prose to marketing and sales speak.
"These people have different motivations, they're more revenue focused verses cost focused and probably less technical," he says. "Getting folks engaged in e-business is difficult, but if you want to get a product to market, you have to have a holistic management and team approach."
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