Why Your Supply Chain Technology Doesn’t Work

In today’s market, there are many software packages available to assist companies in their supply chain operations and management. Too often companies view best-of-breed systems and ERP solutions as a “silver bullet” to their supply chain issues, yet fail to see that there are many factors outside of the core technology that dictate the success of their system. Ultimately, successful supply chain management is a marriage of strategy, people, process and technology.

Supply chain optimization solutions can provide a wealth of information to an organization, but require dedicated individuals and teams to turn that information into a tactical and strategic benefit. Having the right individuals in the right role is crucial: from employees on the shop floor to C-Suite management, the success of a supply chain solution implementation is an organization-wide effort. Supply chain decision makers within the organization must be able to understand the new solution capabilities from both a functional perspective as well as a strategic perspective. To put it simply, a top-tier supply chain demand management solution is a useless investment without a qualified, invested demand planner. Workers at the production facility also directly impact the success of the supply chain solution. Often the production schedule proposed by a supply chain software differs from the strategy of a production line (which is usually “put out any fires and expedite any late orders”). Aligning actual production schedules with optimized schedules relies heavily on the training and buy-in of line workers and schedulers. Overall, an organization’s ability to manage its people can directly affect the long-term performance of its supply chain system and its alignment with the corporate strategy.

Just as a house is only as strong as its foundation, a supply chain solution requires a streamlined business process in order to be valuable. Assuming that implementing a supply chain tool will automatically solve complex issues and speed up the process is a common mistake. In reality, companies with complex processes will require more business rule configuration during the implementation of the software. This can lead to longer and more costly implementations, and increases the risk of errors after the fact. Similarly, inefficient processes can also have a negative impact in the success of a system. For example, Warehouse Management Systems (WMS) try to optimize the picking and shipping processes within a warehouse by reducing touches during picking and optimize metrics such as total distance traveled. However, WMS programs only optimize based on the current state of the warehouse. If a common order has to pick items from opposite ends of the warehouse, the optimized picking order is still relatively inefficient. Therefore, optimizing warehouse layout may need to be conducted in order to fully utilize a WMS tool. In general, a good practice for companies prior to installing a new supply chain solution is to conduct business process improvement, eliminating any non-value activities that may act as speed bumps for the new software.

It is very rare to see a company purchase a new ERP or supply chain planning optimization software and simply “flip the switch.”  Companies seeking to derive true competitive advantage from these systems need to also consider factors like change management, organizational buy-in, and lean business processes.  When a company is able to harmonize the strategy, people, process, and technology aspects of supply chain management, they will be positioned to outperform their competitors and see a significant impact to their business.

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