To cope with the increased unpredictability and disruptions that define the digital era, companies are fundamentally transforming their ways of working. As a result, it’s no longer enough that quality processes like change control, inspections and supplier qualifications, reduce risk or prevent errors — they have to achieve the same thing with greater speed and flexibility.
Asked by quality leaders to help them solve this challenge, we conducted a nearly year-long investigation into the state of quality processes in the digital era and how to improve them. First, we leveraged a survey of nearly 300 employees to understand the condition and result of quality processes today. Next, we conducted a comprehensive investigation of over 300 quality process change initiatives. Using statistical analysis, we identified the companies that successfully redesigned their quality processes to be more flexible without sacrificing quality. Finally, we interviewed 75 heads of quality across various industries to validate our results.
I want to share three key findings from our efforts, which have implications across the supply chain in general.
Finding 1: Quality Processes Increasingly Inhibit Organizational Agility
Cumbersome quality processes are increasingly preventing supply chains from achieving their digital business priorities. And as a result, employees are avoiding them.
Employees report that many quality processes impede rather than enable success. When asked how frequently inflexible quality processes cause product launch delays, 74% of employees report frequently to very frequently.
This lack of process flexibility puts employees in a bind: complete the process and miss a key business objective or circumvent the process. And employees are increasingly choosing circumvention. Sixty percent of employees say people at their company regularly find ways around quality processes to meet other business objectives. Given that roughly half of customer complaints can be traced back to a failure to follow processes, this means inflexible quality processes are hurting customer outcomes as well.
The problem is that today’s processes are really yesterday’s processes. Most quality processes were designed more than a decade ago, when stability, long business cycles and achieving economies of scale were the name of the game. They might be technically sound, but they are hindering our ability to compete in today’s market. To meet our customers’ unpredictable needs in the digital era, we need something different.
Finding 2: Flexible Quality Processes Enable Agility and Drive Quality
To meet the needs of today’s constantly changing environment, quality processes need to be flexible. But what does flexible mean?
Through our conversations with quality leaders, we discovered that flexible quality processes are defined by four key shifts (see Figure 1).
- From always-the-same to adaptable: In the digital era, when business needs change rapidly and market demands are unpredictable, processes need to be able to adapt in real-time as business needs change.
- From standardized to customizable: As product lines multiply and customers demand greater personalization, businesses must be able to customize processes to meet vastly differing needs.
- From policy-based to judgement-driven: To respond quickly to unpredictable changes and new customer demands, employees need to be empowered and equipped to make independent process decisions based on how best to achieve the most critical business goal.
- From external check to embedded: As frontline employees are increasingly asked to own more tasks and processes, quality processes need to be integrated into the business workflow.
Companies that invest in making the shift to highly flexible quality processes are rewarded with greater agility and better quality outcomes (see Figure 2). These companies are nearly three times as likely to be able to quickly respond to market changes and manage unanticipated disruptions, and their processes are far less likely to be circumvented by employees.
Finding 3: To Get Flexibility, You Need to Reinvent Your Processes
So, how do you get flexible processes without sacrificing quality?
From our investigation, we learned there are three primary approaches, but our data pointed unambiguously to only one winner (see Figure 3):
- Streamlining: Most companies try to achieve flexibility by simplifying existing processes. But we found most unnecessary process steps and redundancies have already been removed. So streamlining only achieves flexibility 36% of the time.
- Rebuilding: Some companies recognize that a dramatic change is needed and rebuild their processes completely from scratch. Surprisingly, this isn’t much more effective. The conservative nature of process redesign teams led them to produce a brand-new process that more often than not was just as cumbersome as the original process. Only 20% of rebuilt processes achieve high flexibility.
- Reinventing: A third group of companies combines the first two approaches into what we call “reinventing processes”— starting by designing a brand-new process, but with a ruthless focus on simplicity. For example, one reinventing company we talked to created a cross-functional team whose sole purpose was to challenge the necessity of every possible process element, thereby ensuring the new process was as lean as possible. This combination of starting from scratch while driving simplicity — reinventing — results in high flexibility while maintaining quality standards 76% of the time.
So what does this all mean for supply chain executives? Simple. Don’t expect to achieve organizational agility using legacy processes. Instead, identify core processes inhibiting the business, challenge your team to go beyond existing process conventions, and reinvent them. If it can work for processes as notoriously cumbersome as quality processes, it should work for any business process.
Gartner Supply Chain