Technology Is Not a Cure-All
It isn't always about technology. That sounds a bit heretical to modern ears. Technology has done so much to alter our world, make our lives easier, and provide answers to decades-old business problems. We have come to depend so heavily on the value of technology that our first response to most business problems is investing capital in new software or hardware.
But today's business people, especially those looking for better ways to manage their supply chains, find that technology alone isn't a panacea. Companies are doing a good job of reducing overall costs, but customer service levels are still not improving and average logistics costs remain high at 7.65 percent of sales, according to Herbert W. Davis' annual logistics cost and service report for 2002.
The following three lessons can help you integrate technology and service requirements to better serve your customers.
Lesson 1: Haste Equals Waste
While some companies implement new solutions to fix problems with incredible success, others are forced, often in mid-stream, to abandon what they thought were technological solutions, even after spending more than one million dollars.
Although many of us bought into the 1990's approach that millions of dollars spent on complex supply chain consulting and technology projects was the answer, I would offer that keeping things simple can set the course to success.
To get started, follow this checklist:
- Establish clear objectives.
- Define the real problem you're trying to solve.
- Identify all the stakeholders so you can mitigate change management risks and capture additional value.
- Agree on the desired results.
- Map the information flow and physical process to enable the work flow.
- Apply the appropriate amount of technology.
Don't forget to break the project into multiple releases to maintain momentum and realize benefits more quickly. With this scenario you have a much higher probability of applying the right technology, saving time and money, and delivering the return on investment that you seek.
Lesson 2: Passing the 'So What?' Test
Why do so many companies get sidetracked? Often it's because they try to "solve" a problem before fully understanding it. For example, a company trying to improve customer service may decide that visibility is the solution. Implementing a visibility tool may identify the points of failure, but if there's no process designed to enable performance improvement, it won't pass the "so what?" test.
To further exacerbate the problem, many jobs for monitoring performance and analyzing results have been eliminated, so even manual processes to catch problems have been lost.
If a consignee doesn't want to fall short of product, it will likely order extra days of supply, or demand expedited transportation to mitigate that risk. At the same time, the transportation team is charged with lowering costs. There can be inherent conflict in the needs of these two groups. Without effective monitoring and communication this can lead to an unnecessary problem.
Lesson 3: Back to Basics
The real answer is to focus on the basics: define the problem, look at the needs of user groups to enable the most efficient process, and deliver applications that are easily configurable and executed.
Myriad problems can arise—failure to develop a strong business case, over-engineering the wrong solution, poor project management, scope creep—but technology tools exist to fix these difficulties.
Today companies have little tolerance for massive projects that don't deliver rapid ROI. As a result, many are adopting a rapid succession of projects of short duration to achieve performance improvement and reduce risk.
Rolling out new programs can be especially challenging for decentralized organizations with small corporate logistics teams. In these environments, clear process definition and shared connectivity for stakeholders to access key data points can make your supply chain hum.
And it's not just about technology.