April 2005 | Commentary | Checking In

Stick to the Core When Playing IT Pong

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Do any of you old-timers recall the first Atari video game, Pong? It was the only video game in the world back then. You just hit a video puck back and forth, forth and back, no matter how long you played it. One reader told us that evaluating the myriad logistics IT choices sometimes feels like playing that game: Pong, this white paper; Pong, that webinar; Pong, this consultant; Pong, that sales pitch; Pong, this magazine article?

Here's a perfect example of this kind of mixed message. According to a recent Reuters article, many leading companies that invested in technology to drive lean inventory initiatives are beginning to think they've overdone it. Pong. At the same time, a major consultant published research indicating that the chief concern of large companies is to use technology to reduce inventory even further. Pong.

The business media, IT salespeople, and consultants continue to produce conflicting, competing, and sometimes contradictory messages on how best to apply logistics technology to your enterprise. As competing advice and information pongs off your forehead, remember this: the core reason for adopting logistics IT is to drive your enterprise's efficiency and effectiveness. But it requires balance.

Early adopters of inbound practices turned to technology to increase efficiency of transport sourcing. Seeking better effectiveness, many companies migrated from push to pull logistics systems, providing fundamental competitive advantages. Sell more, sell faster, sell cheaper, use time as a weapon—all effective ways to compete. Naturally, logistics technology was needed to manage the increased number of variables and to get the real-time decision support that makes migration successful and the effort maintainable.

But, for example, overdoing IT investment to drive lean inventories for the sake of pure cost-cutting—without company-wide demand-driven logistics practices in place—is just another example of optimizing a function and sub-optimizing the whole. You can invest in an awful lot of technology and do more harm than good if your approach is not balanced.

As you contemplate the Pong game of competing and conflicting input, trying to decide which strategy is right for you, try not to get distracted by the biggest new thing. We continue to struggle with IT choices because the payoffs are huge. That's why investment in logistics IT keeps growing. But the risks are huge, too. That's why IT decisions, both good and bad, have such tension attached to them.

Keeping your eye on the mission of enhancing effectiveness and efficiency in a balanced way can help you avoid the Pong effect when making logistics technology choices.

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