Key person dependency risk occurs when a business puts its entire operations or specific departments in the hands of one or a few individuals. When you limit the sharing of knowledge within your business or rely on the knowledge and skills of a small team to drive your business, these individuals become irreplaceable. As a result, should they leave or become incapacitated even for a short period of time, your business activities and performance are at risk.
Here we look at the importance of using 3PL logic integration to unlock and document key business logic to reduce dependency on individuals, enabling smoother operations and minimizing disruptions.
How to Recognize Key Persons in Your Business
A key person is someone who:
- Has a specialized skill and/or critical knowledge in any area of your business not shared with any other team members
- Has been with you for many years, so you depend on their performance to keep your business moving forward
- Have access to critical information that others do not
- Know the methods and tools required in practically any scenario
- Is the one person everyone depends on in critical situations or to make critical decisions
- Can carry out any function regardless of being management or even a designated expert, but instead, because of their intimate knowledge of your business
- Can identify bad decisions and implement effective solutions more likely to work
- Can resolve issues with limited risk of creating new ones
What are the Dangers of Key Person Dependency?
The biggest threat of key person dependency is that these individuals have “tacit knowledge” of the business that no one else has or can access. As a result, should they leave the company or be unavailable, your business will no longer benefit from their inherent expert responses related to their unique experience.
No one else can replace this person because they have gathered their knowledge and skills during their employment with your company without passing it on. Once gone, so too are their abilities, resulting in a disruption to your business activities and success. The only way to reduce risk is by reducing dependency on key persons to minimize their impact on your success.
How Does 3PL Logic Integration Reduce the Risk of Key Person Dependency?
Through 3PL logic integrations, you allow information to be shared so that key functions can be carried out by other team members. Integrated systems leverage functions such as automation, taking the guesswork out of key warehouse processes. At the time of deployment, you can create a checklist of information created by key persons so that you can apply their techniques to your warehouse management system.
This then becomes a common repository for your processes. Having your key persons contribute to deployment ensures their domain is protected and the need for training is reduced. Should they leave the company, operations continue without missing a beat, minimizing disruptions as you no longer depend on their critical knowledge to share key business logic or ensure smoother operations.
What Core Functions Does 3PL Logic Integration Facilitate?
An integrated 3PL covers core functions within the warehouse management, client management, and order fulfillment process, including:
- Full visibility and control of your operation so all team members can support your clients with equal knowledge
- Streamlined processes for receiving inventory from clients and suppliers to maintain inventory accuracy
- Managing and controlling outbound order fulfillment to meet the demands of complicated or less formal promises made by key persons that impact SLA’s
- Smart business decisions with access to real-time reporting, data, analytics, etc.
- Intelligent automation based on defined rules created with key person input to ensure everyone follows the correct workflow
- Avoiding inventory shortfalls
- Understanding the types of orders that need to be held back based on approval criteria
Leveraging Key Business Knowledge
Key persons tend to retain key business knowledge that contributes directly to efficiencies and the core competencies of your entire team. Although they might not be managers, they are leaders and the go-to person with knowledge about all the information and processes that exist in your business. However, once they leave, this business knowledge goes with them.
As a result, you need to find ways to leverage key business knowledge in a more permanent way. 3PL logic integration can help secure your key business knowledge by automating the processes used to deliver your services. It retains your order files and documents, inventory counts, customer data, partners such as carriers, and the critical data needed to conduct day-to-day activities and plan for the future.
The risk of key person dependency is that your organization lacks an understanding of what your customers want and what it takes to deliver on your SLAs. 3PL logic integration allows you to collect and store key person know-how so it is integrated into your system. As a result, you avoid operational disruptions and maintain a high standard of service to decrease business risks.
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