The problem
Agility DGS is currently facing an enormous challenge; the court has suspended its contract with DLA. Consequently, the firm has reported minimal revenue and even had to layoff seventy percent of its employees. The incident ruined the trust that the company worked so hard to build with DLA.
Furthermore, the organization is already struggling with a demoralized workforce. Workers no longer feel loyal to the company because they watched most of their colleagues loose their jobs. Clearly, the firm needs to consider re-entering the defense and governing services in a different way if it has any hope for survival.
One can argue that the main difficulty for this organization is with the suppliers. Since the organization often outsources its services to third-party suppliers, then it transfers control over the quality of service delivery to these partners. The organization has a strong influence over its suppliers.
Since it is a strategic partner with the government and has a strong market position, it can command better terms from these suppliers. Nonetheless, the independence of the suppliers restricts DGS’ influence. During the suspension of the contract, DGS had to bear the brunt of the deferral on its own, as the supplier’s government protected it. DGS needs to reconsider some of the factors that affect its business before conducting business with suppliers.
Structural strategy for the firm
Currently the organization may either employ the structuralist strategy or the reconstructionist approach. A thorough analysis of the company’s environmental forces reveals that a reconstructionist strategy would be the best choice. Although the company has a wide pool of resources and expertise, it would still like to keep its vision and mission; the only way this is possible will be through reconstruction.
The latter strategy works well during times when profit margins are low, and cut-throat competition exists. In the current situation, DGS’s market conditions are not favorable. It abandoned the high profit, low volume services such as freight and instead focused on defense and governance.
The organization now finds that it is dealing with a problem that it has never faced before. It needs to innovate and use new strategies to deal with the problem. As such, the company needs to instate reconstructionist approaches based on the following propositions.
Value proposition
The main value proposition for this organization is redefining the relationship it has with its suppliers. The contract with DLA is the most valuable business arrangement to DGS. As such, the company cannot jeopardize this agreement by using contractors who are incompetent or unethical.
The company will be offering its buyer, DLA, additional utility in services by changing suppliers. It will give them a superior logistical service at a low price. In other words, the company needs to select suppliers who can offer their services at affordable prices, but still deliver high quality products. This will differentiate the company from its competitors and will also leverage on price as is the case with the reconstructionist approach.
Profit proposition
The company’s suppliers need to pursue different ways of purchasing products. Bulk purchase would be an insightful way for suppliers to guarantee low prices for the commodities they supply to DLA. The method has already proven to be successful for DGS when carrying out its core activities. Because of this, the organization should demand the same from its suppliers.
DGS is in a favorable position, in the market; it plays a dominant role in government logistics management, so it can raise its expectations without worrying about losing its suppliers. It needs to look for those organizations that can offer low unit prices. Since overcharging was the main challenge in the defunct contract with DLA, then direct approaches should be selected to deal with the problem. The organization is likely to differentiate itself from other suppliers by offering specialized supply chain services at reasonable prices.
The company can borrow ideas from the balanced scorecard. When two entities partner together, they must work on three key perspectives in order to boost their performance. First, they need to work on their relationship value. Here, the concerned partners should outline their objectives and iron out any issues that deal with productivity. In the case of DGS and its suppliers, the company should only allow its partners to supply DLA when they understand their objectives.
Secondly, the balanced scorecard talks about the importance of relationship strength. The suppliers and DGS should share opportunities and expectations with DGS in order to foster and strengthen their relation. This will ensure that some of the things delivered by the organization fall in the rightful place.
Thirdly, strategic partners need to plan on the future value and growth of their organization. They can achieve this by anticipating future needs of DLA and determining solutions to meet those needs. By doing this, DGS will ensure that they deliver promptly to DLA, without losing their competitive edge.
People proposition
Human resources in an organization are quite an indispensable part of service delivery. This organization needs to consider motivating its workforce. Only 30% of the previous workforce is still in the company.
Most of the employees feel demoralized and insecure. The organization should think of coming up with an incentive program or a value-creating scheme that would revitalize the workforce. They need to feel valued and highly appreciated in their organization. The firm can achieve this by offering them opportunities for higher learning, training, mentorship or development.
Studies have shown that most employees’ productivity tends to go down whenever a significant restructuring program occurs in an organization, and this is certainly the case with DGS. First, the company ought to rebuild trust between the administration and the staff members.
It can streamline its communication processes as a first step. DGS should plan meetings that communicate to staff members any key changes that will take place within the organization. In this way, employees will always make their decisions based on facts, not rumors. They will learn to trust their organization again, and their productivity will increase.
Since communication is two-way, then the company needs to go out of its way to listen to its employees, as well. Because they interact with clients directly, they probably know a lot more about the detailed challenges in the business than the administrators. As such, senior management should listen to its employees.
It should obtain feedback about their predicaments in the field and should take positive steps to solve those problems. This would contribute towards the feeling of loyalty and the value in the employees. DGS should be a perfect example of how trust and transparency go hand in hand.