The pattern has become all too familiar: A technological breakthrough is announced and the technology vendors—with their accomplices in market research, consulting and, yes, the business media—crank up the hype machine. Then reality sets in. Word begins to leak out about implementation and integration challenges, poor vendor performance and other problems. The backlash phase follows quickly: Instead of being the next big thing, the new technology is dismissed as worthless or worse, harmful.
Most—if not all—new technologies have gone through these phases, including supply chain management software, enterprise resource planning (ERP) systems and the whole gamut of e-procurement technologies. Those of us who've been around long enough may recall that even personal computers weren't exempt. I remember a consultant friend—a very intelligent one, at that—saying to me, "I don't care what the computer manufacturers say, no company is going to buy a computer for every employee." That may seem foolish now, but other industry observers at the time shared his opinion. PCs had reached the backlash phase.
Where most people go wrong is by focusing far too much on the technology itself and far too little on the inherent difficulties of implementing a new technology into an existing business. They also fail to realize what the technology may be able to do to improve business processes and, in the most dramatic cases, even business models.
It's rare that new technology is powerful enough that it can be used to fundamentally change a business model, but it does happen. An example is the "merge in transit" a pproach to manufacturing that companies like Sun Microsystems and Dell Computer are using to manufacture their products. In this manufacturing model, components of the final product are assembled "on the fly " by supply chain partners not traditionally viewed as part of the manufacturing process, such as third-party logistics providers. Merge-in-transit reduces inventory and, more importantly, enables customization of the product with no trade-offs in cost or delivery time.
Without advanced information technologies, it would have been impossible for Sun Microsystems and Dell to be able to transform how—and where—customers order their products and the way the items are assembled at various points in their supply chains. Advanced technology enables Dell and Sun to know exactly where inventory is located and to communicate rapidly to supply chain partners all information required to make merge-in-transit work. Dell has used merge-in-transit to gain a strong competitive position. As a result, the company continues to perform very well through our current rough economy.
Technology tools are now readily available that enable supply chain activities that would have been extremely difficult, if not impossible, just a few years ago. With today's whiz-bang tools in place, companies can fully automate the transaction process, trap and store buying data at the retail point of sale and display it throughout the supply chain in real time, provide complete visibility of inventory, and reduce picking errors to a minimum.
When you evaluate advanced technologies, the secret is not to allow yourself to be distracted by the three phases. Clear your mind of how your company currently does business and try to envision how the technology can be harnessed to increase value for customers. Management at Dell Computer could have used new technologies to simply improve existing operations. Instead, they changed the way customers order computers and the way they—and their supply chain partners—assemble and deliver computers. They weren't distracted by the hype. They focused on using technology to create new value for customers, and the results speak volumes.
Gartner, Inc.
