Daily Archives: July 10, 2009

Supply Chain Disaster Lessons

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Over on Supply Chain Digest, who recently updated their list of the top supply chain disasters of all time, you can find a short article chronicling some of their lessons from supply chain disasters. Simply put, the key lessons were as follows:

  • “Big Bang” Go-Lives are Risky Business
    Despite the fact that the risks of this approach are well documented, this approach is still taken all too often.
  • Pioneers Get Arrows in the Back
    Being the first increases your odds of failure dramatically … whether it’s a new technology, new methodology, or new market.
  • Do Not Ignore Early Warning Signs
    Just about every disaster post mortem uncovers dozens of indications of emerging problems that were ignored. These warnings are usually ignored or minimized because someone doesn’t want to fess up that things are not going as promised.
  • Avoid hard cut-offs/transitions
    Many project disasters are caused by hard deadlines. Hard deadlines, especially if the project schedule is too tight, are often the largest contributor to project failure.
  • Beware the ROI trap
    Many projects go south because they whittle away key elements for success just to make an (unrealistic) ROI expectation.

And they must be taken to heart. I’ve seen many projects, and companies, fail because they didn’t heed these lessons.

Five Great Ideas for Supply Chain Value Generation

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A recent Supply Chain Management Review article presented 10 ideas for value generation that were quite good. Here are five in particular that you should not ignore:

  • Adopt a “Follow the Sun” model for skill development
    If you’re going to have a global IT or Services support base, use it wisely. Properly globalizing your support supply chain will save you money and create value. As the article notes, it can allow you to tap into the English speaking skills in the Philippines, the tax advantages of Ireland, and the technical skills of India and deliver 24/7 support.
  • Focus on real-time updates to increase agility
    Static forecasting without dynamic updates is passe. In today’s dynamic environment, you need to dynamically adjust the plan based on real-time market signals such as point-of-sale data, purchase order activity, and competitive market factors. Although you can’t function without good forecasts, even the best laid plans will go awry, and they’ll do so before you know it if you don’t monitor against them and update them regularly.
  • Make your supply-chain, and your company, value chain-centric.
    The supply chain function in most corporations is initiated and integrated at the time of new product commercialization and continues until the product is shipped. For supply chain to truly add value, it needs to be involved at the stage of conception to help the design team select designs with sourceable components and to select those designs that use the components with the lowest cost and highest quality.
  • Shift to a product-and-services management focus.
    Product excellence and direct cost savings are great, but services (still) provide a huge untapped opportunity. Furthermore, value-added services can create “stickiness” with their channel partners.
  • Utilize on-demand processes and associated supporting technology.
    This approach will allow for the optimal usage of capital expenditures while leading to higher than average adoption rates of the process in order to derive maximum benefit. And there is a wide selection of e-Sourcing, e-Procurement, e-Logistics, and Analytics solutions to choose from.