Now that technology designed to improve supply chain performance has been around for awhile, there's really no excuse for seriously blowing the implementation. Yet far too many companies still make major mistakes when purchasing supply chain IT systems.
Managers have described to me what typically happens: First, a mandate comes down from the top to boost profitability by creating a faster, more demanddriven supply chain. Managers rush to slap what they hope will be quick technological fixes onto the processes they've long had in place for moving and tracking inventory through the chain. But when it comes time to assess their accomplishments, they find they haven't cut cycle time or reduced inventory after all. Instead, it becomes clear they've wasted a lot of time and money on efforts that fall far short of the goals.
The reasons for the disappointing results are sadly familiar. Too often, managers at these companies don't have a good appreciation of the importance of business processes. Because of the company's structure, their thinking focuses more on managing internal functional "silos" and not on optimizing the supply chain. They fail to integrate internal processes seamlessly to perform as one overall smooth process focused on customer satisfaction. And they're unable to get key supply chain partners involved in ongoing collaborative efforts aimed at continuous supply chain improvement.
Supply chain excellence never comes easily. The companies that achieve stellar results spend hours on detailed up-front analysis, long before technology makes any impact. There's a lesson to be learned here: Before you start asking technology vendors for quotes, make sure your supply chain processes are as good as they can be. That means asking—and answering—questions like the following:
- What specific supply chain processes are most critical to customer satisfaction and company profitability?
- Have internal supply chain processes been benchmarked against world-class performers, both within the company's industry and outside of it?
- Is inventory visible at all times as it moves through the chain? If not, what is needed to achieve full visibility?
- How accurate are sales forecasts? Are processes established that maximize accuracy and flexibility of sales forecasts?
- Are key sales and inventory data captured and shared internally and externally? Is too much time and effort spent collecting data that will not lead to supply chain improvement?
- Does executive management of the company truly understand the cost and complexity of supply chain improvement efforts? What can be done to educate key members of the management team, both internally and at key supply chain partners?
- Have any supply chain partners conducted major improvement efforts? What can be learned from their experience?
- Are information systems linked to those of supply chain partners? If not, what steps must be taken to integrate them?
- If processes must be changed, who's responsible for designing new processes and implementing them? Will retraining be needed?
- Are current personnel, at both the line worker and manager level, capable of adapting to needed change? Should outside talent, either permanent or temporary, be acquired? Does a natural "change management leader" exist in the company who can help drive change through the organization?
- Who is responsible for interfacing with supply chain partners to ensure their processes are maximized? How will process re-engineering be conducted with these partners?
