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How to solve cross-border organizational RTV problems?

General introduction

Solving RTV problems, in which retail products are shipped back to the manufacturer for disposition, can save companies millions of dollars. Some retailers report as much as 10%-20% of products returned, while only 4%-6% may be perceived as an unavoidable cost of doing business.

Logistics professionals are always searching for innovative methods to better identify major drivers for production, packaging, storing, shipping, and warehousing malfunctions, but most efforts focus on optimizing existing knowledge and expertise.

RTV is a typical cross-organizational problem, spanning different components of the business ecosystem (manufactures, warehousing, transportation etc.). Its solutions therefore often lie outside the company boundaries, and the majority of ‘RTV experts’ don’t even realize they are experts. They don't know that they know.

For example, while employees of a third-party transportation company hold highly valuable RTV information concerning your company's packaging and warehousing processes, not only do you lack formal access to their organizational domain, but they also perceive themselves as ‘transportation professionals' and not as ‘packaging experts’.

RTV problems are in many cases just one part of much wider SCM management malfunctions. Looking at the big picture of losses, a typical organization loses 6% of its annual revenue to other cross-organizational operation problems, such as fraud.

Concerning fraud, effective prevention must properly approach the basic components of cross-organizational problems.

A Case Study

A company and an overview of its market

Starting as relatively small family business, a company grows to become a successful multinational company. Its growth strategy was based on the acquisition of competitors.

Beyond its cutting edge R&D and impressive products portfolio, the company has an advanced information system which provides its decisions-makers with a wide range of required information.

The expansion into a global, multinational enterprise, widen as well RTV challenges, generating demand for better control capabilities. Through the years the company suffered from what was perceived as isolated RTV cases, mostly small cases which were perceived as the normal cost of doing business. But after increasing of complains by leading retailers, the company started to revise its RTV control methods.

Following their highly creative legacy, the company also searched for out-of-the-box solutions. A short analysis done  with a program sponsor using the TINO 8WH Matrix defined the initial program scope as concerning problems in one core products line deciding, asking to take analyze and suggest solution to all supply chain process starting from raw materials till final clients.

Business challenges

The challenges were

·        Identifying vulnerabilities  – identifying the internal and external vulnerabilities that have or may trigger an RTV

·        Preventing & minimizing future RTV problems – building an effective and friendly preventive control process.

·        Achieving the best low RTV records in the market – transforming common RTV issues into opportunities. Communicating solutions in a way that will help to brand the company as highly efficient.

Here's how the TINO program helped:

1^st stage - allocating resources

The president of the company acted as program sponsor; the CEO of one out of three global regions was chosen to head the TINO–RTV program, as part of a wider RTV program. Three employees from the CEO counseling team were appointed as part-time (1/3) members of the TINO team. The team structure was based on two profiles, two of Type B (‘collecting’) and one of Type A (‘integration and Analysis‘).

2^nd stage – generating BQs and TIKO profiles

After defining some initial business objectives together with the company president, the TINO experts worked with the CEO using tools like the 8WH Matrix to transform program objectives into a set of business questions. Secondly, using the web-based TIKOs FINDER, the TINO experts and the sponsor identified initial TIKO profiles.

3^rd stage – short theoretical training

The RTV TINO team participated in a two-days TINO workshop. The workshop focused on managing TIKO networks, meeting management, and the analysis, integration, validation and reporting of undocumented information.

4^th stage - four modules of on-the-job training (OJT)

·        Time & resources – the OJT lasted six months, during which each Type B TINO conducted 3-5 interviews per week. One of them mostly conducted meetings already scheduled as part of the existing control process, while the other mostly interviewed people from outside the company. The third TINO (Type A) mainly worked on analysis, validation, and so on.

·        Two HUMINT TINO experts focused mostly on the external business environment, conducting 3-5 interviews per week.

·        One Type A member of the team was trained, guided and assisted in integrating, analyzing, validating and reporting.

Deliveries summary

Challenges	deliverable  highlights
Identifying vulnerabilities  & structuring solutions	The Process: After several TIKOs have been identified, a list of initial vulnerabilities was generated. Following an analysis using the company's impressive amount of documented information, vulnerabilities have both been validated and quantified. Initial TIKOs pointed to new TIKOs among their personal networks, generating further interviews cycles. TIKOs shared both subjective knowledge of vulnerabilities, and in many cases also suggested solutions. Later, after being validated, the gathered information was transformed into structured quick-wins and longer-term solutions. After being prioritized by program sponsors, new policies were formed and communicated, assisted intensively by the same internal and external TIKOs,  maximizing both control and the continuation of problem solving process. The Results: External TIKOs belonging to raw materials providers suggested creative solutions based on their contacts with other clients, free of charge. Other external TIKOs, working for third-party transportation providers, related many vulnerabilities concerning manufacture centers. Warehousing TIKOs provided innovative ideas to development and design experts, and packaging TIKOs suggested innovative sets of measurements criteria to the ERP system. Other internal and external TIKOs described certain shortcuts related to routine inventory checks. Further data analysis of company BI and other databases, conducted by the internal TINO (Type A), indicated several information gaps related to informal excel-based databases and ERP system. Moreover, severe authorization problems were identified, such which could be used for extremely costly bad-intentioned acts. Quick data-TIKOs cross-analysis led to quick-win solutions. In some plants, local RTV teams have been established in order to handle the identified vulnerabilities and opportunities in the best way. In parallel, the TINO-RTV team continues to act as an RTV knowledge center.
Key factors & deliverables	Key factors: (1)   Most of the TIKOs were external (2)   Key internal workers realized that management and control processes have become much more effective (3)   The ongoing nature of the TINO process (unlike ad-hoc, external, consultancy solutions) increased cooperation from all company levels (4)   The in-house, friendly, ethical and collaborative nature of the program provided a higher sense of urgency among company workers and external business partnerships, helping them to act proactively and report on new kinds of vulnerabilities
Achieving the best image in the market	Regardless of the relatively low number of external TIKOs, effective communication of the program as an ongoing search for vulnerabilities has generated positive reactions by suppliers, clients and competitors. The positive image of being assisted by many external TIKOs, including ex-workers, and of using an outside-of-the-box approach, not only helped to minimize further failures, but helped to brand the company as a highly efficient player in the market (e.g. improving their negotiation power versus their retailers).
Reducing company costs of doing business	RTV percentages were decreased profoundly

Correction through evaluation

Every two weeks, a Gap Meeting was conducted. The sponsor was updated by the TINOs and the HUMINT TINO experts about:

·        The raw insights and vulnerabilities which have been gathered

·        The status of the ongoing building of TIKOs network

·        The actionable preventive ideas collected, along with recommendations for their implementation.

 

The sponsor tuned-up and prioritized the input, and often added more business questions. Next, these questions, the interviews program, and other components, were adjusted.

 

Return of Investment

Compared to traditional services, the TINO-RTV program generates great short-term and long-term returns:

Cost-benefits	TINO	Other solutions
Paying for information	No TIKO was paid	Participants are paid (e.g. focus groups)
Range of perspectives	Wide, evolving	Narrow, ad-hoc
Exclusive ideas	Many – most are found by the program	Few – most are supplied by the providers
Building an internal RTV Knowledge Center	Designed to provide it!	Conflict of interests with their RTV experts
Leaking of confidential strategic information	Very low, eventually zero	High
Modularity	TIKOs networks are generic human information solutions, and can be used for a wide range of  business domains (e.g. business development, cost reduction and many others), with little modification	None

Finally, as with other specific solutions (such TINO for Strategy Development) the TINO-RTV program can be easily modified and customized in order to support other business processes.

For more information contact haim[@]humints[.]com