Disconnect

Disconnect

Copyright 2006, Traffic World, Inc.

There''s a tendency among shippers and their transport and logistics providers to believe they are outside the corporate mainstream.

From seminars on how to get senior-level attention on supply chains to the talk in Washington about how concerns about capacity and infrastructure are shunted to the side, there''s clear frustration from a segment of business that too often enters the planning far too late and too often is seen as a cost center in the way of larger corporate goals.

There''s new evidence, however, that the logistics wing is very much in the mainstream of corporate behavior, although that''s not exactly good news for the logistics world. A new report published by the Harvard Business Review says the gap between strategy and execution is hardly exclusive to the logistics divisions of most companies. In fact, the gap looks to be as common to business as Excel spread sheets and overlong conference calls.

That''s how it looks in "The Office of Strategy Management," a report by Harvard Business School professor Robert Kaplan and colleague Andrew Pateman that suggests profits and broader success in markets are falling straight through the gap between companies'' strategic goals and their ability to execute a strategy in the day-to-day world.

"There''s an alarming disconnect between the parts of the organization that formulate corporate strategy and the functions, processes and people required to execute it," they write.

Sound familiar?

Kaplan and Pateman aren''t writing specifically about the logistics department, but their observations resonate in the transport and logistics world. The truth is, there are few other operations within a company so thoroughly tied up in process and execution, particularly in an era dominated by outsourcing.

The authors cite a study by Bain Consulting that found some 90 percent of the 1,854 companies surveyed failed to reach the growth targets set in their strategic plans. Kaplan and Pateman found many companies "have strategic plans, but no coherent approach to manage the execution of those plans. Consequently, many key management processes remain disconnected from strategy."

As far as we''re concerned, it''s a bigger problem than they suggest. Although Kaplan and Pateman write about the impact on individual companies, it''s no secret in transportation that the disconnect is leaving the nation''s logistics networks straining to keep up with the demand.

Kaplan and Pateman have a solution, or least a strategy for a solution, for corporations. They recommend organizations create an Office of Strategy Management to carry through strategy to execution and they recommend using a business initiative called the Balanced Scorecard to set up and measure the progress of strategic initiatives.

For many managers that will sound like a new level of bureaucracy, but for logistics departments the recommendations are accepted wisdom. Most, in fact, are anxious to find a way to "actively manage organizational alignment with corporate strategy," as Kaplan and Pateman write.

All they need to do is to get strategic planners to come along for the ride.