Cross-functional capabilities are key to be successful.

There are several cross-functional capabilities that a company must execute to be successful. Companies normally excel in some functional capabilities (i.e. procurement, manufacturing, sales, marketing) but they have challenge difficulties when trying to execute cross-functional capabilities.

What are such cross-functional capabilities? As the name describes, it refers to the combination of processes, organization and technology that add value to the client of the company, but additional, involves several functions in a coordinated and effective way. Some of such capabilities are:

- Strategic Planning
- Product Lifecycle Management (PLM)
- Sales and Operations Planning (S&OP)
- Enterprise Performance Management (EPM)

Why are so difficult to execute properly? These capabilities are difficult to implement in companies where "functional silos" are very strong. It means, the functions are so oriented to their own objectives that forget that its main objective is to satisfy the client needs. For example, a "manufacturing silo" can be devoted to its cost-per-unit KPI that forgets that it can affect the inventories of finished goods or the distribution costs.

* Source: http://behindbricks.wordpress.com/2011/01/11/a-new-silo-a-new-obstacle/

Working for generating results in the cross-functional capabilities implies to accept that, in some cases, its functional KPI will be lower than expected but the end-to-end KPI will be better, and that the company as a whole will win.

One way to make these key cross-functional capabilities to work in the proper way is to take in account the following aspects during the implementation:

- Transparency. Make the data available to all participants. Have a single version of the data, and avoid that each participant comes with his own version of the truth.

- Common goals. Define KPIs that will be shared by all participants. Define lagging and leading KPIs. For example, in S&OP all participants should be responsible of the OTIF (On Time-In Full compliance of customer orders). Define a rule of "degree of responsability" over the KPI.

- Clear governance. Define who makes decision and when. Define decision rights using a RACI.

- Scope. It must be clear where the capability begins and where it ends. I have heard complaints about the S&OP capability, when it is really clear that is a PLM problem.

- Do not improvise. Prepare throughly commitee and meetings. Make the neccesary analytics beforehand. Create a real-time "what-if" capability, to test any new solution that arises during the meetings.


Any thoughts?