The whole point of supply chain management (SCM) technology is that it enables collaboration – and in that sense it is way ahead of most of the management thinking being applied to supply chain management.
Most companies, particularly in South Africa, are using individual SCM technologies, such as warehouse management and transport management, to optimise their part of the supply chain at the expense of all the others.
This tactical approach is particularly apparent in the expectations companies have of their third party logistics service providers (LSPs), whom they treat as trucking companies rather than distribution specialists who can provide invaluable insight into planning and customer behaviour – and therefore into overall supply chain strategies.
What companies should be getting from their LSPS but either don’t know or care enough to ask for is visibility of inventory throughout the supply chain, visibility of delivery dates and delivery problems – before they happen – and shared real-time data.
Companies should also be pleased that LSPs cut the cost of warehousing and transport assets (and hence distribution/fulfillment costs) by filling vehicles with more than one principal’s products. Which, of course, implies a willingness to trust the LSP to protect product information and intellectual property. And that sort of trust can only be built with the help of intelligent SCM technologies that can integrate multiple sourcing, route planning, and inventory management while keeping each customers’ information separate and protecting the principals’s customer service.
Then there’s one of the trickiest areas of transport – secondary distribution or getting products from a supplier’s or retailer’s distribution centre (DC) to the stores or end customers. To do it properly you need close integration of both warehousing and transport people, processes and software systems. Few LSPs are great at all areas. Often, picking for shipment in a warehouse is really efficient but the goods lie waiting for trucks that are still on the road - waiting for unload at a store or customer, not infrequently because they missed their time slot.
These are not difficult problems to solve – with the right enabling technology. Yet there seems to be little will to solve them.
Part of the reason is short-sighted shareholder pressure on individual members of the supply chain to deliver immediate returns on investments. And that’s caused by a general lack of understanding among investors themselves that SCM technology has the potential to give them even better results, if only it were allowed to work as designed.
It takes an extremely mature board of directors – and I mean mature not necessarily in age but in business insight – to either keep the shareholders at bay until collaborative SCM starts to bring in real benefits or educate the shareholders in advantages of collaboration.
Lack of application of SCM best practice, with or without technology, is another major stumbling block to getting truly significant benefits from SCM. People need to think supply chain first and not local area panic. In other words, all functional areas – from procurement and production to warehousing and transport – need to work in concert to fix cross-functional problems, rather than just passing the problem somewhere else.
That means that working closely not just with your own IT department but with your SCM software vendor and implementer. Only they will know in depth what the software is capable of and how best to apply it to deliver the results you want. That in turn means working with an SCM vendor whose products are advanced and stable enough to be able to focus outwardly – on you and the needs of your business. Avoid vendors who are inwardly focussed on desperately writing software to try and grab a piece of the market or integrating a set of recently acquired packages.
Contributed by Doug Hunter, Managing Director, Doug Hunter & Associates