What Is a Smarter Supply Chain?

Late this summer, while most of you were on vacation, the Supply Chain Digest asked a good question — What Is a Smarter Supply Chain?. They attempted to answer this question using the 2009 IBM Report which said that the supply chain of the future needs to be instrumented, interconnected, and intelligent, which is right, but instrumentation and interconnection alone, even enabled by AI workflow management, does not make an intelligent supply chain.

Only one thing makes an intelligent supply chain: smarter people. I’m probably the biggest fan of supply chain technology that there is — focussing primarily on the technical capabilities of the products and platforms when I cover a vendor — but even I recognize that even if you spend millions implementing end-to-end best-of-breed solutions throughout your supply chain, it will all be for nought if your people don’t have the education, experience, and EQ to use it!

Let’s face it. To take full advantage of a spend analysis tool, your sourcing analysts need to understand how to cube, slice, dice, and identify meaningful trends in PO, invoice, and T&E data to identify true savings opportunities. To take full advantage of an e-Negotiation suite, the sourcing professional needs to know when to use RFX, when to use e-Auction, and when to do a fact-based negotiation with the incumbent supplier(s). To take full advantage of optimization, you have to know how to break the cost structures down, what constraints are necessary, and what constraints are unnecessarily imposed by the business. And contract management is more than electronically filing a contract in an electronic vault, it’s ensuring the terms of the contract are adhered to — especially the pricing. I could go on through each stage of the procurement cycle and each stage of the global trade cycle and so on, but the simple fact remains that if you don’t hire smarter people, you won’t have a smarter supply chain. The days of high-school drop-outs pushing paper in the back office are long gone. Time to modernize!

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