Supply chain technology has become an imperative for process efficiency and competitive capability, that’s a reality which can’t be denied.
Contrary to what you’ll see at technology vendor’s dog and pony shows though, no ERP platform, warehouse management system, or other supply chain IT application will solve your business problems.
The reason for this is simple. Most business problems, challenges, and issues are related to process. The implementation of supply chain technology to manage a problem process serves only to create an automated problem process.
Think Process Before Technology
Without an understanding of where a process is adding value, and where it’s adding cost to your supply chain, you’ve no way to know if a particular supply chain technology solution will facilitate improvements—or what the payback will be on investment. Perhaps technology will even add cost to the process. It happens, believe me.
It’s important to note of course, that some process improvements will be very difficult, perhaps even impossible, without the aid of a technological solution.
Process improvement therefore, must first be planned and simulated using some form of model, which can be as simple as (dare I say it) a process flow drawn on paper (Post-it Notes on a wall are great for this), or as complex as an animated digital simulation.
Determining Your Supply Chain Technology Goals
As you model your process flows, you should identify and highlight where existing processes are adding value or conversely, cost. Next you should brainstorm ways in which the process might be improved.
Improvements might be related to cost reduction, or the addition of extra value. Either way the case for improvement should be quantifiable. You’re not looking for arbitrary benefits here. For instance, reducing process steps does not necessarily equate to lower costs.
Will removing this process step save money, or will it result in additional cost elsewhere? If we change a process and make it like this, how much do we add to product value in dollar terms?
These are the types of questions to ask when considering technology to solve business problems. After you have the answers and make your decisions, then you can ask the $100,000 question:
Do we need digital supply chain technology to make these improvements?
Not only will this allow you to see where technology will facilitate your goals, you’ll also be able to identify which components or features of a solution are necessary. This is important, given that many applications are modular. Why pay for modules you have no immediate need for?
Your new-found process knowledge will help you view supply chain technology as an enabler for problem-solving, instead of the bright, shiny object which vendors love to flash in front of your eyes. Beware though, the return of bright, shiny object-syndrome when the software evaluation begins.
Maintain a Prioritised Perspective
So now you know where technology can support your processes and enable implementation of the improvements you’ve modelled. You will have a list of improvements for which an IT solution is necessary, and you will know exactly what functions a software solution must perform.
When you start evaluating solutions, you’ll be in a good place to make choices based on your process needs, but it’s important to maintain perspective.
This is not always easy when vendors demonstrate all the whistles and bells incorporated into their solutions. I’ve seen many cases where a company procures a solution, only to start changing processes to enable the use of features which in reality, did little to add value or reduce costs.
Don’t fall into this trap. Keep the needs of your business in sight, and avoid the distractions of “nice to have” solution features, unless you can clearly see how their use will deliver a return.
Choose the Right Supply Chain Technology
Without supply chain technology, small businesses have little chance of competing with their peers, let alone taking on bigger players in the marketplace.
It’s a shame though, that the emphasis on IT as a panacea is continually being pressed home, mainly by vendors, technology-obsessed supply chain commentators, and consulting firms with agendas based more on product sales than problem-solving.
The reality is that most of your supply chain business problems will lie within processes—whether those processes are internal or those of your suppliers and partners.
As an aid to improving your processes, by all means integrate technology where and when it makes sense to do so, but buy only what you really need. That’s the best way to improve performance without adding unnecessary IT expenditure to your list of business problems.