For companies anxious to improve supply chain performance, advanced technology may look like the easy answer. And there's no disputing that high-tech systems—whether wireless technology, voice technology, supply chain management software, warehouse management systems, enterprise software systems, e-commerce/e-procurement technologies, visibility technology, or transportation management systems—offer the potential to greatly improve the efficiency with which goods move through the supply chain.
Existing and emerging technologies can, theoretically, tie entire supply chains together from end to end and help reduce inventory and its associated costs. Supply can be matched much more closely with demand by capturing end-use data, such as point-of-purchase information at retail outlets and continuously adjusting upstream supply level based on this demand data. Data and information on in-transit inventory are accessible in realtime greatly enhancing the ability of DC managers to react to—or prevent—shipping errors. Real-time supply chain information enables a company to take steps to provide its best service and support to the "best" or most strategically important customers, and to raise customer satisfaction across the board.
But obtaining these benefits is not easy. Any major application of technology requires detailed up-front analysis, short-and long-term investment, and a major commitment by key managers and executives. When a company is tackling something as complex as an entire supply chain, which by definition contains many disparate elements, technology implementation is a formidable task, to say the least.
Many technology initiatives do not produce expected benefits, for many different reasons. Some of the most critical factors needed to succeed are:
- Strong support from executive management. Without top-level support, long-term success from technology investment is nearly impossible.
- Increased collaboration with customers, suppliers and other supply chain stakeholders . Any kink in the supply chain can create problems that ripple through the entire chain, so it's important that all players be kept well informed about new technology initiatives and how they will benefit all links in the chain.
- Well-designed business processes. Many companies simply slap technology tools onto existing processes, which often are not the best processes for delivering maximum value to customers. Business processes should be examined—and redesigned if needed—before new technology is implemented.
- Change management. People naturally resist change, so it's important that an effective change management program be in place. That program should be designed not only to help employees learn to use new technologies, but also to educate them about how the change will help them perform their jobs more effectively.
Future columns in this space will explore each of the above factors in more detail and will also present readers of DC VELOCITY with news and analysis of emerging technologies that can enhance DC operations.
Gartner, Inc.
