Despite being aware of the need to take an end-to-end view of the value chain and the importance of cross-functional decision-making, many businesses are still structured around ‘functional silos’. This results in internal operational barriers that hold back the efficient and effective value chain performance needed to cope with today’s ever-changing world. In this blog, Stefan Hoogervorst outlines how to create impact with cross-functional decision-making in the value chain to achieve improved collaboration, more agility and resilience, and stronger employee loyalty – all of which are key ingredients for an organization’s lasting success.

Understanding the impact of silo thinking and working

Many of today’s organizations are still structured around ‘functional silos’ and operate accordingly. Sometimes, the employees in those silos may be physically separated, based in different locations and perhaps even in different countries. Alternatively, they can also be in the same building and even right next to one another. But what does ‘silo working’ mean, exactly? In a silo-based approach, the employees in each respective department are skilled at the tasks within their own scope, and also held responsible for fulfilling those tasks competently, monitored based on functional KPIs.

However, this setup means that people are not encouraged to consider the impact of their decisions on other departments and on the company’s total performance. This is particularly a problem from a supply chain perspective. After all, supply chain is the ‘cement’ between the various departments and essential for delivering on the organization’s promises. But many decisions that influence supply chain performance are made in different functional areas. Think of supplier agreements made by purchasing, batch size decisions taken by manufacturing, product-design (and therefore materials) decisions made by engineering, and customer delivery deadlines set by sales. As a result, silo-based thinking and working continues to be a major barrier for the cross-functional collaboration that is needed for supply chain performance, agility, and resilience. And these just happen to be three key pillars for a strong competitive position and bright long-term future – especially in today’s volatile, uncertain, complex and ambiguous (VUCA) world.

The role of leadership in silo organizations

So it is clearly important to break down the barriers to collaboration in silo organizations and to drive cross-functional decision-making in the value chain – but how? Leadership plays a key role in this. For example, leaders can support and implement structured collaborative processes such as Sales & Operations Planning (S&OP), where colleagues from different functions align their decisions. Leaders can also implement KPIs that measure each function’s contribution to overall organizational value rather than just the respective department.

Nevertheless, it is not enough to merely change the processes. Leaders must also create a cross-functional culture and mindset from the top down. They need to be champions of collaboration and lead by example – starting within their own management team.

Bringing colleagues together to overcome working in silos

To accelerate the necessary mindset shift among employees as the basis for lasting change in the organizational culture, it helps to bring them together in a shared learning environment. After all, silo-based thinking is often deeply engrained as the result of assumptions or misconceptions between colleagues in different departments. Bringing those colleagues together in structured training sessions, facilitated by an experienced external party, allows them to talk about their own function and the bottlenecks they face, and also to gain insights and learn from their colleagues in other functions. The key is to create a neutral, safe, and open learning environment that encourages honest discussion.

When we’re facilitating such training sessions, we also encourage the mixed group of colleagues to discuss and solve the issues together. That way, this shared experience not only helps them to develop a common language and a deeper understanding of their own role in the bigger picture, but it also gives them ‘ownership’ of the solutions. This makes them more motivated to transfer their learnings and apply the new ways of working in practice.

The long-term benefits of a continuous learning culture

While a single session can provide a good starting point for breaking down barriers in a company, implementing a more structured training and development programme is more likely to lead to long-term benefits and lasting results. First and foremost, a continuous learning culture brings people together more often, making it feel more ‘normal’ for them to reach out to colleagues from other disciplines in their daily work. The resulting collaboration and knowledge sharing fosters innovation, strengthening the organization’s competitive edge.

Needless to say, a cross-functional way of working calls for more collaborative skills such as openness, communication, and the ability to see other perspectives and find compromise – all of which can be developed with the right training. As an added bonus, these new capabilities and competencies are empowering for employees, which helps the organization to attract and retain talent. All of these aspects came together in a training and development programme we recently implemented to help Rituals’ supply chain department keep pace with the company’s rapid growth.

Investing in training and development pays off

To drive cross-functional decision-making in the value chain, it is not enough for leaders to put the right structures and processes in place; they also need to support the necessary mindset shift among employees. A tailored training and development programme by an experienced, external partner can play a key role in this by helping to improve cross-functional decision-making. Moreover, by investing in ongoing professional development as part of a continuous learning culture, leaders can empower their employees. This supports recruitment and retention, and fosters innovation, both of which ultimately strengthen the organization’s resilience and long-term success.

For more insight into how cross-functional decision-making can transform your value chain, enhance collaboration, and boost organizational resilience, download our whitepaper: The Involvation-Rituals Partnership. Learn how companies like Rituals have successfully implemented these strategies to foster a culture of continuous learning and drive long-term success.

To find out more about shaping your supply chain learning program, contact Stefan Hoogervorst.