Supply Chains often become overly complex when traceability principles aren’t applied at the design phase. It is often seen that companies spend several hours conducting stock audits to look for ‘lost’ items that are later found at ‘other corners’ of the organization.
Dimension 1: Information System
The first fundamental problem is the choice of the information system that is used in typical supply chain environments. Not all information systems are appropriate for a given supply chain environment. In fact, most systems have strengths in particular areas and are extremely weak in some others. Therefore, an intensive evaluation of the systems and the environment need to be undertaken by each organization.
Most organizations tend to outsource this role due to a lack of competence in-house. However, that move isn’t always the best one. Most consultants evaluating software, often times, don’t understand the complexity and the entirety of the business. They don’t understand the pitfalls of excessive customization, the efforts required and the potential damage a poor implementation can cost a client. Unfortunately, therefore, in such a situation, the customer experience is less critical and his understanding of the pricing is more important.
Dimension 2: System Configuration
While the first dimension is an extremely critical one, the second dimension is an equally critical one. It is often seen that SCM systems end up with poor choices of system configurations that render them largely unusable in many circumstances. The essence lies in leveraging the systems. This is easier said than done.
Improper system configurations are often times a result of poor competence of the implementation agency, lack of understanding of the business owners and a lack of strategic ownership from a person relying on reliable / competent information. Often times, lower cost SCM systems see multiple implementations in SMEs. The fundamental reasons are due to poor system configuration.
Even in larger organizations, standard system based reports are seldom used and the end effect is that a series of unnecessary customization initiatives are undertaken. Needless to say, organizations lose a lot of money in the process.
Dimension 3: Leverage Points
One of the most confusing questions for the end-users in most organizations is that of Leverage. The basic concept of leverage is to make the owner stakeholder understand those instances when on should NOT use a particular SCM system for a functionality. In short, one needs to understand how the overall landscape would support the process rather than trying to use a system for what it isn’t supposed to.
The difficulty in this situation, is that the sales persons of the SCM IT systems oversell their system capabilities. Many times, they actually sell the functionalities of their highest product lines without actually telling the client that the system chosen by him is of a much reduced capability. And in the process, the client and the IT product company often have different understanding on what their system will delivery. This leads to excessive customization costs or a frustrated set of users at the vendor premises.
Dimension 4: The Process Challenge
Most organizations expect their IT systems to work wonders for them, WITHOUT requiring to change their processes! This is probably, the single largest factor that sabotages any implementation. IT systems are expected to change the way one does business and therefore, every process will be changed. Some processes might be replicated on an as-is basis, while most would need to adapt to an ‘as-modelled’ set of processes. This is where the challenge starts, as the IT system starts appearing inflexible.
Often times, however, if the choice of the system is properly done, one would have an IT system that is relatively flexible. In other words, either it would take your processes because they are the most optimal, or they would recommend an alternative that is also optimal (and simplistic). However, in the absence of these two, one has to go with a flexible approach to ensure that the requirements are met and the processes carry the essence of the requirements. In short, somewhere mid-way, such that the costs are controlled and the benefits aren’t lost.
Dimension 5: The Control Methodology
When a system is way different from what the earlier methods were, the control at the management level has to change. However, most managers are quite unaware of what they need to control after the system is put in place. This leads to a continuous set of change requests as the managers are unclear as to how their MANAGEMENT DECISIONS are expected to change over time. This also affects the way inventory systems are perceived and it is seen that such situations trigger new set of customization requests that are often causing a chaotic situation. Simply because the system is efficient in processing information, but the different variants that are put in place, often go against the basic principle of keeping it simple; resulting in duplicate data, redundant storage and unnecessary data tweaking.
Its important to attack these problems by understanding the supply chains, the IT systems and the processes (including the individual habits), so as to make sure that we have the right solution in place. Our team has recently helped several organizations in these problems and we could assist yours as well. Connect with us here.