By Paul Oakes
The current vision of supply chain management (SCM) touts the myriad benefits of productive Web-based collaboration between trading partners and customers—an impetus that immediately increases the importance of choosing and implementing the right SCM software for many CIOs. But many tech leaders are forging ahead to implement SCM solutions without the full picture of what SCM can do or are laboring under misconceptions about its role and benefits within the enterprise.
After 10 years of experience in project management, supply chain, logistics, and procurement, I have come to believe that there are still more than a few myths swirling around SCM applications and their capabilities. Here are what I believe to be today’s top five SCM myths—some points your company should consider before jumping headfirst onto the SCM bandwagon.
Myth #1: Implementing SCM solutions always creates benefits
Actually, some supply chains may not benefit from the application of new SCM technologies. The inherent complexity of supply chains is tied to the interdependency of the processes, people, and technology at each of the supply chain’s partners. This interdependency means that the introduction of any SCM technology at any one partner likely won’t produce the expected benefits because not all partners are involved in the effort.
Realistic and diligent ROI efforts, which are based on supply-chain modeling, can save organizations significant time and money in wasted SCM technology projects.
Myth #2: The Internet has dramatically reduced supply-chain cycle times
While the Internet has clearly reduced order taking/processing-cycle times—from days/hours to minutes/seconds in many cases—this has really only been realized in the front office through e-commerce and B2B applications.
Back office supply-chain cycle times, however, have not been reduced significantly. Information links between customers, suppliers, third-party providers, and transportation companies are, for the most part, still based on file sharing and EDI mechanisms—not on Web-based SCM technology. However, in some instances, significant reductions in inventory investments can be realized by utilizing the Internet to reduce back office supply-chain cycle times. I believe XML-based integration initiatives are the key to success.
Myth #3: SCM portals are just another short-term fad
While the word “portal” has indeed been so overused that it has almost become meaningless, it is nonetheless a concept that is here to stay—especially as it relates to SCM.
SCM portals are used to create and link supply-chain communities (suppliers, customers, third-party providers, and transportation companies) together in a real-time and meaningful manner. But establishing and communicating via portals doesn’t always work smoothly in the real world.
Many organizations need to belong to multiple supply-chain communities, which requires those parties to access and utilize multiple SCM portals. This brings the added burden of connectivity and platform compatibility issues for connecting to each community.
There are some workarounds to that obstacle, however. Organizations facing the challenge of participating in a number of SCM portals can use technologies from companies such as Corechange to streamline their portal needs and achieve the true benefits that SCM portals can deliver.
Myth #4: Everything inside the four walls works just fine
Many enterprises are still working in “stovepiped” structures and are failing to connect and synchronize across departments and business units, let alone with their trading partners.
Large investments in ERP systems have, in many cases, only served to make the management of supply-chain flows more complex and irrational. Logistics have been computerized instead of simplified. Basic practices like setting meaningful batch sizes and lead times are becoming difficult, as the reliance on ERP has de-skilled many logistics planning departments.
Myth #5: Investing in SCM applications will always result in a rapid return
It’s important to realize that the pragmatic application of SCM products to real business issues and problems can indeed deliver rapid returns. But the downfall of so many organizations’ SCM efforts is poorly specified implementation and investment (including implementation and interfacing costs), which can lead to a cycle of continued investment to support unrealized but promised benefits.
The promises of application vendors can only be realized through focus on delivery, quality, and time targets. Effective detailed planning of implementations cannot be overlooked simply because of promised high returns.
Paul Oakes is Head of Delivery for Silverline Europe Client Services, Silverline Technologies UK. Oakes has over 10 years of experience in project management, supply chain, logistics, and procurement. He gained much of his experience in relation to manufactured components, following initial training in electronic engineering and an engineering apprenticeship in the space and defense sector.