How to reduce the silo effect in Supply Chain Management to improve your performance?

A real brake on productivity, siloed operation is now obsolete within organizations. But how can this “silo effect” be broken, especially within supply chain management? What are the levers to use to decompartmentalize information in the supply chain and thus maximize your performance? Here are our tips.

 

What is the silo effect?

The “silo effect” or “silo communication” is when groups of employees in an organization work and communicate in a siloed manner within their department, without taking into consideration the overall direction of the company and the goals of other business units.

This silo operation is often criticized in the business world. Indeed, it promotes an individualistic mindset, impacts the sharing of information, hinders collective intelligence and can seriously undermine Operational efficiency. In the long term, this siloed organization can have an impact on the company’s performance and competitiveness.

 

The silo effect within the supply chain

For retail companies, the silo effect within supply chain management (SCM), raises very specific issues. Indeed, the supply chain brings together a very wide range of players in charge of the transport of goods, manufacturing, distribution, warehousing, inventory management, cost management, handling, quality control, order preparation, etc.

Supply chain players, guarantors of product quality and customer satisfaction, therefore play a key role in the company’s performance.

However, within supply chain management teams, close communication is essential to ensure team productivity, smooth processes and good coordination.

 

Breaking down silos within the supply chain can thus make it possible to:

• Save time in logistics management and speed up processes
• Improve the operational efficiency of the teams
• Improve logistics at all levels: optimization of flow management, traceability, scheduling, etc.
• Strengthen employee engagement and sense of belonging
• Improve quality, reduce delivery times and increase customer satisfaction
• Reduce malfunctions
• Strengthen the organization’s agility and responsiveness
• Simplify exchanges and communication with stakeholders (suppliers, carriers, customers, partners, etc.)
• Improve risk management
• Strengthen connectivity between the different actors and decompartmentalize information

 

How can the silo effect be reduced to maximize performance?

There are many levers that can be used to reduce silos within the Supply Chain department and thus maximize the overall performance of the company, such as:

• Implement intranet collaborative tools

In the digital age, the flow of information has never been easier. To promote instantaneous, fast and transparent exchanges, it is essential to install collaborative digital tools (Slack, Asana, Monday, etc.) in order to break down the silos between all employees.

• Adopting a participative management style

To put an end to the silo effect, the manager plays a key role. Indeed, it is up to him to set up A collaborative management style, which places employees on an equal footing and promotes mutual aid, team spirit, collective intelligence, etc. This managerial style will greatly contribute to breaking down the silo operation and strengthening close communication between the different departments of the company.

• Organize team-building events

In order to foster collaboration and team spirit and strengthen ties, it will also be beneficial to organize dedicated events, such as teambuilding activities, group coaching, training… It will also be necessary to make sure to organize team meetings and regular meetings with representatives of the different departments of the company.

• Embed a collective mindset within the corporate culture itself

To be able to reduce the silo effect, governance must strive to integrate the values of sharing and mutual aid within the company’s culture. To do this, it may sometimes be necessary to review the entire organizational model of the company. It is necessary to break down hierarchical silos and Establish a true cross-cutting model.

• Install production management software

Within the supply chain, production management and optimization software are essential tools to maximize performance and reduce the silo effect.

 

Software such as ERP (Enterprise Resource Planning), the MES (Manufacturing Execution System) and the WMS (Warehouse Management System) allow:

• to manage and optimize the management of logistics operations within all the company’s functions: finance, logistics, HR, marketing, purchasing and procurement, DSI (information systems department)…
• Collect, in real time, production data on the entire supply chain, from the reception of raw materials to the delivery of finished products.
• to facilitate the management of goods stocks , to rationalize the use of warehouse space, to optimize supply management, to improve scheduling, transport and logistics, order planning, etc.

 

These are key tools for simplifying data exchange, creating links between different departments and providing employees with an overview of the supply chain.