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
