Stakeholders and Relationships
Don Benson – www.warehousecoach.com
I often talk with clients and students about how a successful Distribution Center (DC) exists primarily to provide a service to satisfy the needs of others. I expand this perspective by acknowledging that every organizational role, task, department, or function exists serve another, a task, department, function within or outside the company. The resulting discussion then includes many thoughts, ideas, and issues, and often develops into a set of questions:
- What is success;
- What might be the best measures of success; and
- How does a DC contribute to those measures and success?
While specific answers to these questions are unique to each organization, these discussions have yielded a new framework for thinking and managing, that I have not seen presented in the warehousing or supply chain literature, identifying two dimensions that significantly influence DC success and its contribution to the company, who are those we serve and how do we best serve them.
Stakeholders
Each DC serves a wide variety of individuals and organizations, some of which have a direct relationship with the DC and some do not. Those individuals and organizations are generally referred to as “stakeholders,” because they have a stake in the performance of the DC, and its contribution and success of the its company.
I have created a framework that organizes DC stakeholders into a hierarchy of four levels. Starting at the bottom, with the DC tasks, company functions, Supply Chain organizations, and the broader environment that is less consistently organized and motivated relative to your specific company. Table 1 (below) describes one typical set of levels, organization types, functions and tasks.
This frame work presents the idea/structure in which each of the parts and functions have a stake in the success of the other at each level and in the success of those above and below, although some links may be much stronger than others. For example, a DC requires several basic tasks/functions to be a complete and effective operation. Similarly, a DC needs to work effectively with other functions within its company so that the company can be an effective link in its supply chains, etc.
This understanding of stakeholders is the first and critical dimension. Knowing who stakeholders are provides a foundation for the next step, developing and sustaining effective relationships through which to communicate what each organization needs from the other.
This framework allows us to then begin to think about DC stakeholders and for each of them to
- Identify who are they
- Understand what they want/need;
- Understand how they measure, judge, and report DC performance; and
- Monitor how effectively the DC is satisfying their needs and wants, over time?
Relationships
The challenge then becomes to develop relationships between the DC and its stakeholders that reflect an understanding of the mutual interdependence, and supports defining and developing a deep understanding of stakeholder expectations or requirements to guide the design and ongoing improvement of each distribution center to sustain and improve results over time.
It does not take long to begin to identify an initial set of stakeholders, and what they want from a DC. In this task, we begin to understand that each of them make meaning of and judge us differently, often with unique perspectives, ways of measuring, and time frames. For example, within a DC, we can pay attention to the use of resources, e.g., staff through procedures, scheduling and performance, the facility through layout and systems, and measure results by day, week, month and year, accordingly.
Gathering this information, and keeping it current, provides the foundation for defining functional requirements to guide the design of buildings, storage and material handling equipment, systems and operating processes, and select and manage staff and operations.
For established DCs, the chalenge is how to sustain success. Typically this effort requires assigning responsibility to staff to support ongoing relationships with stakeholders in the Environment, Supply Chains, the company and customers that also provides the ability to adapt over time, in managing of the flow of information and materials across organizational boundaries in both directions, that can include
- Obtaining feedback data describing how well the DC is serving customers, and not just identifying and solving problems;
- Scheduling carrier arrival to optimize the material flow across docks.
- A chart of accounts from Accounting, with which to better identify and control expenses into the future;
- Active promotion planning inforamtion from Marketing and Purchasing to prepare for inventory buildup or plan for order processing staffing peaks;
- Regulations and laws
Successful DCs recognize the importance of stakeholders and each distribution center, and the need to build and sustain a mutual interdependent relationship between them. Recognizing this interdependence and actively working to build and sustain relationships with stakeholders provide the ability to adapt to change and serve all stakeholders effectively and efficiently over time.
Mitchel, Ronald K., Agle, Bradley R., & Wood, Donna J. 1997, Toward a Theory of Stakeholders Identification and Salience: Defining the Principle of Who and What Really Counts, Academy of Management Review, Vol. 22, No. 4, 853-886
Gittell, J. H. 2015, How Interdependent Parties Build Relational Coordination to Achieve Their Desired Outcomes, Negotiation Journal, October, p 387-391