Daily Archives: July 31, 2009

High Tech = High Value = High Performance

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A recent article in i2’s Supply Chain Leader by Kevin O’Marah of AMR on how [do] you design a supply chain organization to achieve maximum value did a great job recounting dozens of statistics that we already know about how great supply chains make great companies, but unlike many of the AMR write-ups, it included one key point that often gets overlooked.

Ownership of technology solutions really does empower the entire supply chain organization, taking it to the next level of performance.

While only 41% of overall participants saw technology enablement as a supply chain organization responsibility, 56% of the AMR Research Top 25 saw the importance of technological responsibility in the supply chain organization. Considering that this is a select group that, in 2007, delivered a total return of 17.89% compared to the Dow Jones Industrial Average of 6.43% and the Standford & Poor’s 500 Average of 3.53%, I’m glad to see that these leaders are stepping up and acknowledging the value of good supply chain technology.

What other technology can identify millions of dollars of savings? Streamline payment processing costs by 90% AND insure you are paying against contracted rates? Enable visibility across your organization? None. In your average organization, no other information technology can deliver returns that come close to the returns supply chain information technology can deliver. So if you don’t have an end-to-end supply chain information technology solution, go out and get one!

What is The New Supply Chain Normal?

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In A New Supply Chain Normal?, Dan Gilmore of the Supply Chain Digest asked if there will be a new supply chain normal coming out out of the recession as many of the financial experts are expecting a new financial normal. His answer was that there will be a new normal for quite a while because important changes in the consumer consumption, business, and government will inevitably drive new requirements and responses from the supply chain.

In an effort to identify what this new normal would be, he asked a number of leading experts to weigh in with their take. Some of the more important points were as follows:

  • A greater focus on network efficiency as fuel prices rise permanently.
    Dr. Tom Mentzer, University of Tennessee
  • There is no new norm because the pace of supply chain change is too rapid. Supply chain success will only be achieved if the supply chain has enough flexibility and modularity.
    Dr. Jim Tompkins, Tompkins Associates
  • Permanently increased volatility. Constant currency fluctuations, cautious customers, and rapid swings in the price and availability of key commodities are just a few areas where we may never see stability again.
    Bill Read, Accenture Supply Chain Practice
  • The acceleration of risk mitigation. Optimization, simulation, and plan auditability will be critical.
    Richard J. Sherman, Gold & Domas Research

And they all had a common thread. Constant, sometimes rapid, change. This means that the new normal is really the old normal, just sped up. Instead of worrying about fuel price increases, currency fluctuations, or raw material availability over years, you’re often going to be worrying about them over months. Shorter, more unpredictable, product life-cycles. An even greater need for spend analysis and optimization. And a greater need for risk visibility, management, and vigilance.

For more insights into what the experts had to say, check out The New Supply Chain Normal: Supply Chain Gurus Weigh In which dives into the views of Dr. Tom Mentzer and Dr. Jim Tompkins, and The New Supply Chain Normal: Supply Chain Gurus Weigh In, Part 2 which explores the insights of Bill Read and Richard J. Sherman.