Experienced supply chain practitioners know that information should be passed on only to those who need to know it when they need to know it and in the form they need to have it.
Demand information, inventory positions, order fulfillment, supply management and a whole host of other information exchange activities can change how we sell products, supply products and make and receive payments for goods and services. The e-supply chain can have customers and suppliers seamlessly linked together, throughout the world, exchanging information almost instantly. Fast access to relevant supply chain information can pay off handsomely in lower costs, less inventory, higher quality decision making, shorter cycle times and better customer service. One of the biggest cost savings is in the overhead activity associated with lots of paperwork, and its inherent redundancies. The non-value-added time of manual transaction processing can instead be focused on higher revenue creation without proportional increases in expense. The result in cycle time compression, lower inventories, decision- making quality and reduced overhead costs, among other benefits, makes e-supply chains highly desirable Web applications. Supply chain processes can be more streamlined and efficient than could have been imagined just a few years ago. For many companies, more effective supply chain management is where the profit and competitive advantages will emerge.
Developing an e-Supply Chain Strategy
The profit-making possibilities that e-commerce brings has significantly, and forever, changed the way management must view and serve its markets. Every executive team I work with is at some stage of developing an improved approach to supply chain management. It has become an area of emphasis primarily because of the business improvement potential which compels some managements to take action in search of a big win, as well as not to risk being left behind. Others have been a little more conservative. Motivated by the concerns raised by the many pundits saying things such as, “Without modern supply chain management you are dead,” management becomes more focused on the risk and potential of the e-Supply Chain. As a result, some managements are eager to become early adopters to establish stature and market presence using Web-based e-Supply Chain operating strategies. Supply chain management systems will
be substantially altered in terms of strategy, process, and system. Mistakes here could prove very costly in the near and longer terms. e-Supply Chain management has redefined and will continue to redefine how companies will compete for customers. While e-commerce offers some exciting opportunities to improve supply chain management effectiveness by lowering costs and increasing the speed of order-to-delivery, it is by no means the first stop on the path to having highly competitive e-supply chain capabilities. Just throwing more software at the problem is not the answer to the core issues of supply chain management. Although software is needed, it is very necessary to define the process of information flow that will activate material flow at the right time. Lessons learned by early adopters of new technologies is that overzealous adoption of those technologies without a carefully planned strategy can prove very costly, especially when the target is missed, or worse, not defined in the first place.
Why take the leap?
Certainly, before taking a big leap into the e-supply chain, companies need to know why they are taking the leap. By no means should any company make the all-too-common mistake of applying the latest
technology without getting thorough and appropriate answers to questions such as:
• What business opportunities are available for us to improve market presence, sales, cost of operation, service, communication, cycle time, supply- base management, etc.?
• Do we know and understand our supply chain priorities?
• How should we structure Web enabled linkages with our customers and s suppliers for preeminent supply chain performance?
• What e-supply chain approaches can we appropriately invest in for near- and longer-term business performance gains?
• Do we have an executive-level champion providing the necessary linkage to top management for effective implementation of e-supply chain management?
• Have we carefully defined an action plan for pre-implementation preparation activities?
• What are the missing technical links in our current system or our software of choice?
• What planning and implementation tasks will be accomplished and when?
• Do we understand the real benefits of an e-supply chain versus the cost to develop?
• What e-supply chain strategy will give us the leverage to transform ourselves into marketplace leaders?
Spend time up-front
Spending time on up-front strategy development for improving the order-to-delivery cycle and supply chain management will pay big dividends. The hard part is discovering and thinking through supply chain opportunities and then developing a strategy and plan for an e-supply chain that will improve your performance more than that of your competitors. But without an e-supply chain roadmap, the direction you take may not get you to the desired destination. The biggest loss from missing the target can never be regained—time. It is essential to do it right the first time. For all the promise of the e-supply chain, there will be many problems to solve. Remember, however, that the business use of the Internet is still in its infancy, and that means many opportunities will be coming in the years ahead. Your supply chain strategy will need to evolve and improve constantly to take advantage of these opportunities. The big risk is in standing still
R. Michael Donovan is a management consultant based in Framingham, Mass. He can be reached at ( 5 0 8 ) 7 8 8 – 1 1 0 0 . Readers may obtain a copy of the book, Strengthening Manufacturings Weak Links, and other educational materials through www.rmdonovan.com.
