Is your supply chain supplying?

In the wake of the dot-com shakeout, IT providers and customers are furiously reassessing how important the Internet really is. Few illustrate this ambivalence better than Paul Bender, who runs supply-chain IT supplier Synquest¡¦s consultancy business. Bender concedes that ¡§nobody knows what to do¡¨ about the Internet but adds that, ¡§without it, even the smartest people will be at a disadvantage.¡¨ Ideally, Bender continues, ¡§you have to embed all of your processes in the Internet.¡¨ That ¡§may mean reengineering, redesigning some of your processes to take advantage of the Internet.¡¨ Others are wary about re-engineering. Says Sam Brown of Manugistics: ¡§Part of the bad reputation of ERP (enterprise resource planning) was that it was all linked to business process re-engineering, and these rather grand ERP systems integrator companies would tell you ¡¥well you¡¦ve got to change your entire business in order to fit in with the software solution¡¦ ¡V rather than the other way round. And the projects would be one year plus.¡¨ i2¡¦s Jim McKay is equally convinced that business process re-engineering, followed by automation, is no longer feasible: ¡§Let¡¦s get something up and running,¡¨ he summarises. Like other providers, he sees that customers have to start from where they are. Says Brown: ¡§The first piece [of advice] I¡¦d give is for them to fully establish where they sit. What are their competencies in terms of how they are managing their supply chain? What are they good at, what aren¡¦t they good at? If they¡¦ve got to ERP, they¡¦ve got quite a lot further han a lot of companies we talk to.¡¨ In the view of Viewlocity¡¦s European business consulting manager, Graeme Robinson: ¡§The message that was sold with ERP was that it would provide ¡¥enterprise wide, real time visibility¡¦, and it just hasn¡¦t happened. ¡KBut I don¡¦t see much advantage in replacing one ERP with another ERP. Once you¡¦ve got that backbone in, irrespective of the flaws it¡¦s got, you need to maximise its use.¡¨ That may mean superimposing a system (which Viewlocity happens to have!) that will give a clear view not just of ERP data but that held in other applications that have been tacked on to fill in the ERP¡¦s holes. For Eugene Deeny of SpaceWorks, the e-commerce novice¡¦s first task is to ¡§define a clear vision as to how it sees itself engaging with the customer over next three to four years. Where does the value lie in our business? Is it our ability to service our customer with the right product at the right time in the most cost effective way? Or is our core capability the ability to manufacture a product as cost effectively as possible? ¡§My guidance would be to look at the needs of your external customers, how they want to engage with your supply chain, what information you¡¦re going to need to present to that customer. Whether it¡¦s via an e-marketplace, whether it¡¦s via your own private exchange or web-enabled on-line ordering solutions. What data you need to drive those environments and where¡¦s that data¡¦s going to come from.¡¨ And he says, once they¡¦ve formed a view about whether they are a manufacturing business or a business offering a manufacturing service, they must: define what they need to do in the next 18 to 24 months; do a gap analysis between where they are now and where they want to get to (this should be as much about process and culture change as about the IT tools they need); and break that journey into executable chunks: ¡§What can I execute in the next three months?¡¨ For Deeny and many others there¡¦s too much loose talk about e-marketplaces ƒ{ the portals big users set up for suppliers to receive orders and place schedules and other information. ¡§An organisation needs to gear up to support all its channels to market, and the e-marketplace is just another channel,¡¨ says Deeny. ¡§The most optimistic projections for B2B trading in direct, not indirect products, in Europe, are that no more than 15% of direct product will be purchased across an e-marketplace in 2004. For Robinson, the IT strategy has got to be a business strategy, which identifies how to use IT and the Internet for competitive advantage. But he warns: ¡§There¡¦s no point in trying to suddenly become an e-business company if your internal processes are a real mess.¡¨ He has an ally in Jorge Lopez, vice president for corporate development and strategic planning for Symix offshoot Frontstep. For Lopez the enemy is anything that causes a delay in the supply chain, because it leads to volatility: ¡§It¡¦s not all about software. If you don¡¦t focus on reducing things that cause delays within your business, like setup times, then really all this systems stuff is for nought.¡¨ The chief culprit is batching, as caused by ERP ¡V and by salespeople and retailers who send in orders at fixed intervals. Once the Internet makes it easier for you to see real information about orders, says Lopez, the real problem begins: ¡§Even if you have the picture, the issue is less ¡¥Let¡¦s have the picture,¡¦ than ¡¥Can I get it through the supply chain without any delays?¡¦.¡¨ Says Lopez: ¡§The Internet has been over-hyped. It overlooks the very fundamental point that, when a customer sends a supplier something, they don¡¦t want the supplier just to look at it. They want an answer.¡¨ To hear some people talk, adds Lopez, ¡§you would think that if I double click on my browser I should get a hot pizza coming out of my CD-ROM port. There is no ¡¥beam me up Scotty¡¦ in the new economy.¡¨ As Benders sums up: ¡§You have to manage simultaneously information flow and material flow. If you forget about the material flow you can have a beautiful e-business that is going to go out of business, like a lot have done simply because they were able to take orders very efficiently but they couldn¡¦t deliver them.¡¨