Some companies have installed supply chain software and succeeded magnificently, achieving breathtaking gains in performance and profitability. Others, like Nike Corp., fail miserably, wasting hundreds of millions of dollars and actually impairing operations. What makes one company succeed and another fail? Who or what's to blame for the expensive failures?
Some point their fingers at the technology vendors. "This is what I get for our $400 million?" CEO Phil Knight of Nike Corp. asked incredulously in a published statement three years ago, after the company's supply chain software solution ran afoul of implementation problems, with unfortunate results for both operations and profitability. Experiences like Nike's produced a black eye for the vendors involved and, more importantly, for supply chain technology itself.
Technology vendors are admittedly far from perfect. But if I were a Nike shareholder, my ire would be directed not at the software vendor but at the CEO and his management team. To my way of thinking, it's their responsibility to ensure that shareholders' money is well spent, it's their responsibility to make sure that their supply chain keeps running, and it's their responsibility to satisfy customers. Applying technology to manufacturing and distribution operations may be complex and demanding, but isn't that what they're paid for?
In my experience, failures of technology initiatives can nearly always be traced to one of the following management failures:
- Lack of a strategy. Particularly in the early days, when enterprise resource planning (ERP), e-procurement and supply chain management software were the hot new thing, many companies rushed to order complex systems to keep pace with the competition. What they overlooked in the frenzy was that software solutions were tools designed to help them achieve business goals, but nothing more than tools. If the company has neither a sound business strategy nor a clear-cut plan for using technology to advance that strategy, technology may do little but drain away cash reserves and disrupt operations.
- Not enough management involvement. Many managers simply delegate the authority for a major tech initiative to their IT and/or business team, then walk away. Company leaders do not necessarily have to be there fiddling with code, but they must make sure that everybody at all levels understands the importance of the initiative and that the initiative has support from the very top.
- Refusal to fix existing processes. Too many companies simply slap a technology fix on to existing business processes without reviewing those processes first. If they spent a little time, they'd realize that some of those business processes were inefficient and costly and added little value to their products. Automating those processes without fixing them first is a recipe for disaster.
- In adequate attention to change management. New technology nearly always requires new business processes. And new business processes nearly always require an attitude adjustment: Human nature dictates that users - even managers - will resist change. A well-thought-out change management strategy can go a long way toward helping them accept their new roles.
- Lack of preparation. Whether it's out of ignorance or time pressures, many management teams fall down when it comes to carrying out the "due diligence" for a technology project. But no company should allow a team to press forward with a project before it has checked out vendors, talked to references and generally educated itself on what has worked for other companies and what hasn't worked .
Supply chain executives are justified in expecting help and continued support from their technology vendors. But they must never forget that they can't "pass the buck" on technology failures. The buck stops, as it should, at their desks.
Gartner, Inc.