Fostering a Bottom-Up Supply Chain Strategy

So much of supply chain management is, and must be, top down and focused on tight process control. Companies have applied Six Sigma and Lean to factories and warehouses to lock down processes in pursuit of high quality and throughput. While there is room for input from floor-level workers, there is not a lot of room for them to do their own thing.

New tools for collaboration have emerged that are said to be changing the world based on bottom-up feedback and peer democracy. In general, social media and other peer collaboration tools are a better fit for the edges of the value chain – marketing, sales, ongoing service – than core manufacturing and distribution processes.

Many companies go through an annual budgeting process where they set targets and refine their strategy. For most companies, participation is limited to top executives, either in fact or in practice. Even if a meeting is called where the rank and file can give their feedback, lower-level employees will be very reluctant to contradict someone higher in rank. Usually these meetings devolve into top management selling their strategy. The high-level strategy document that accompanies the budget ends up reflecting the vision of the bosses.

At a high level, companies do need to set a strategy. For example, if you are a 3PL like Ryder, you might decide that being excellent at execution is core to your strategy. And if that is your strategy, you need to continuously pursue that vision. It would be counterproductive to fundamentally change your strategy every year. You would end up trying to be everything to everyone, which would be a recipe for failure.

However, once the broad contours of a strategy are set, whatever it is, bottom-up participation in fleshing out the vision could enhance the strategy.

Wikis are one tool for mass, nonhierarchical collaboration that can have a role in refining a company’s strategy. The best example of peer-created content is Wikipedia, the best encyclopedia that has ever existed. According to the book “Wikinomics” by Don Tapscott and Anthony Williams, each Wikipedia article has been edited an average of twenty times. “On occasion, ‘edit wars’ break out, in which users repeatedly reverse each other’s changes,” the authors write. “In these rare cases, a Wikipedia staffer makes the final judgment.”

Personal productivity tools, like Microsoft Word, are very structured when it comes to the editing function. In contrast, a wiki invites all users to edit any page, or to create new pages, within the wiki Web site.

The budgeting process also involves thinking about what sort of revenue new product introductions might generate in the coming year, how emerging trends could affect the business, and whether there are competing products built on newer technologies that could begin to erode the core business.

Internal prediction markets can be used to tap the broader insights of the company for these purposes. Consensus Point sells such a solution. In effect, a company asks a question and then invites as many people as it wants – including employees, but also perhaps partners and customers – to buy and sell “virtual stock” based on their confidence in a particular outcome (e.g., this product will really take off). Economists are researching these prediction markets and when and where they work best. However, it seems safe to say that prediction markets often outperform traditionally generated internal corporate forecasts.

These new peer-based social media tools seek to involve participants in an ongoing process of creation and collaboration. Just like good writing involves rewriting, good strategy needs to be continuously refined. And it makes sense that in refining your strategy, tapping the experiences, knowledge, and commitment of the broader organization will lead to better results.