Daily Archives: January 2, 2009

Turn to Technology, But Make Good Decisions

There’s been a plethora of articles in recent months on how you can leverage technology to thrive in a down economy. And while I generally agree that technology can improve your operations and save you some serious cash, I want to remind you that technology alone is not the answer. Remember the results of the recent McKinsey Quarterly article on managing IT in a downturn: The impact on run-rate EBIT from optimizing supply-chain processes with streamlined systems is 3 to 4 % … which is 6 to 8 times the impact on run-rate EBIT from transactional IT cost reduction which tops out at 0.5%.

So why the focus on IT? As the article points out:

  • IT can streamline processes
    The right technology can improve productivity, empower knowledge workers, and help you satisfy customers efficiently.
  • IT can enable best practices
    The right tools can make best practices available company wide and provide a foundation for their implementation.
  • IT can ensure compliance
    Compliance is not just a threat, it’s an opportunity … with the right systems, you can use your compliance to your advantage.
  • IT makes document management easily
    Never search for a contract again!
  • IT enables visibility and collaboration
    You can track the progress of each project and work with your suppliers.
  • … and so on …

And while all this is true, it’s only true if you select the right technology. In order to get maximum benefit, you have to:

  • Select the tools that enable the right processes
    This is not necessarily the process you use now, and most likely not a fixed pre-packaged process the tool comes with, but the process that will allow you to meet your needs with a minimum amount of work. This means that the tool needs to support flexible workflows to allow you to set up the process that best-fits your needs today, and revise it as you discover better ways to get the job done.
  • Make the right-decision with respect to on-premise vs. SaaS
    If a provider can manage the solution for you more effectively and more cost-efficiently, because IT just isn’t your strength, you have to seriously consider SaaS. This is doubly true if data security is an issue, because a certified SaaS provider often has better security in place in their data center than you do in yours.
  • Remember that technology is only the enabler
    You still have to do the work, and, most importantly, use your brain.

So how do you make good IT decisions when trying to improve your supply chain processes? As per this recent SCMR article on making better IT decisions, which attempts to introduce a supply chain IT governance framework, you need to:

  • Take a Holistic Point of View
    The best decision will require the input of all of the stakeholders.
  • Be Involved
    Don’t just select a system and hand the project off to IT to get it installed and integrated. It’s your processes that need to be enabled, not theirs.
  • Communicate
    Before, during, and after the implementation.
  • Think Collaboratively
    Let everyone give their input and consider all of the strengths and weaknesses associated with every decision.
  • Learn from Previous Projects
    And, most importantly, don’t repeat the same mistakes you did last time.