The Seven Deadly Sins of Supply Chain Management Systems Implementations
Rick Duris

Dear Friend & Subscriber, It's about time I came up for a little air.

After a solid two months of non-stop consulting, speaking engagements, seminars, intense travel, and software design...

I'm really glad to be back... Writing.

Now that I'm back for a while, let's talk about how to implement Supply Chain Management systems.

If there's one system in IT which represents the greatest immediate benefits to a company, yet also represents the greatest challenges to implement--- To me, it has to be Supply Chain Management.

It's also the most risky to work with. Because failure and success are sooo visible to your trading partners.

In my world, SCM has out placed even ERP in my book for being the most difficult to implement. (At least with ERP systems, one knows what they're buying in terms of an application. You can't even say that about SCM.)

So, given multiple requests over the past couple of months for some guidance and direction on supply chain initiatives, PLUS--- having witnessed the good, the bad and the ugly parts of SCM up close, I thought this week's newsletter should focus on what the specific pot holes, hurdles, obstacles and challenges are which confront people when implementing this unique application.

First though, let's get something out of the way.

If you are expecting me to delve deep into the technical innards of SCM technology, guess again. Although I can do that, and there are some technical integration oriented hurdles to overcome related to this technology, these hurdles in no way compare to the following major challenges companies face when deploying SCM systems.

These are the mistakes which you MUST avoid at all costs... In order to be successful. Caution: Do not sidestep or pretend that they don't apply to you. They do.

I can assure you, they have the ability to cripple your project--- If you are not careful.

Because EVERY project I've seen has had to wrestle with these problems. At least now you'll have the "bigger picture" awareness so that you can integrate/address them in your SCM strategic game plan.

Ready? Here they are...

SCM SIN #1 - Not Controlling Your Vendors, Service Providers and Customers

The biggest industry misperception is that SCM technology allows you to control your supply chain and vendor resources.

Nothing could be further from reality.

Let me be so bold as to offer the following opening advice:

If you don't already have some definitive level of organized control regarding your relationships, you will be sorely disappointed from the results of your SCM efforts.

When I say definitive level, examples of Walmart or Dell or McDonald's come to mind.

Now don't be disheartened, I know not every company or industry has or aspires to that type of influence, but you have to start somewhere. So if you're thinking implementing SCM technology is a good starting point... Think again.

There are other more critical prerequisites.

There's lots of other foundation laying stuff you need to do, BEFORE you start thinking about software depending upon the specific SCM application.

SCM technology works really well when/if you already have controls in place. But please don't be deluded that implementing this type of software will automatically optimize and organize your supply chain. It won't - without your ability to control your trading partners and logistics providers--- FIRST.

You see, what's great about SCM solutions is that you'll have the tools to be able to "enforce" the control of your relationships. But its only one part of the total solution. Think integration. Your company must be willing to proactively control those relationships in order to achieve the cost reductions, time compression, labor efficiencies and competitive advantages which are the fruits of the effort.

Let me point to one reality as an example: I know of lots of companies who are still unable to implement bar code compliance specifications with their suppliers.

This is the kind of control I'm talking about. Only more cooperative and process integrated.

SCM SIN #2 - The Inability to "Manage" Trading Partner Relationships

Let me put a "softer" spin on it: Maybe "control" is too strong a word. But consider the possibility that you must actively and authoritatively "manage" your supply chain relationships. But when I say manage, I'm not talk about managing the individual relationships, I'm talking about the ability to manage them collectively in mass or in groups so that you can get some leverage from the process.

That's where SCM technology makes a big difference.

SCM SIN #3 - What is SCM Anyway? You Have Thirty Three Guesses...

Another reality check is that few are able to precisely define what SCM technology really, really is. There are too many competing views and opinions. In other words, how the heck are you going to evaluate and then implement SCM solutions when you can't even define what the software solution will do for you?

Talk about playing "Pin the Tail on the Donkey"!

For instance, when people use the words "distribution", "logistics" and "warehousing" interchangeably with SCM, you just gotta know something's askew. Don't you?

As long as there is this level of confusion and lack of definition regarding the functionality, your ability to fully optimize the software to fulfill your requirements becomes increasingly more difficult.

To overcome this obstacle, its critical that you become aware of the following:

1. The specific functionality of software packages available.
2. Results and benefits you expect to be achieved from implementing the
   system
3. Your SCM system requirements.

This means you need to get educated and informed about what's real and what's vaporware. What's required by your company and what isn't.

I know it's laborious and takes time but so is cleaning up a mess after it's made.

SCM SIN #4 - Lack of Executive Appreciation

The industry's inability to dimensionalize and define SCM has one huge ramification to you--- The people in the executive suite don't understand the functionality or benefits and as a result, they don't have a full appreciation of what its true relevancy is to the organization.

You need to educate your management. What's difficult is that they don't understand quite how it all works (generally speaking, of course) to achieve the benefits which you talk about on your PowerPoint slides.

What this all means to you is that you must actively engage in an educational "public relations campaign" to give people the information in order to make the wise and intelligent decisions you need them to.

SCM SIN #5 - Not Establishing a Foundation of Trust

I've written about this several times, but I can't put too much emphasis on it: The biggest human challenge with implementing SCM is establishing and sustaining the open, trusting vendor/supplier relationships required in order to make the system successful. Especially with companies grounded in traditions and culture. Especially in a culture of vendor competition.

Access to information presents major opportunities and challenges which must be addressed. The minute that operationally vital information is withheld or worse misrepresented because of negative "political", or perceptual or financial ramifications to the trading partner--- the system is immediately compromised. And with it goes the efficiencies which you anticipated.

For instance, let's say that a vendor knows their shipment will be late and delays entering, or reports otherwise. Obviously that's a problem.

You say that won't happen?

Well then, have you ever heard of companies not respecting the definition of the word "Promise Date"?

I'll bet you have. It happens every day and the vendor won't give future visibility to such situations in a timely manner unless it is forced to.

SCM SIN #6 - Too Many Options to Choose From

The difficult part in evaluating SCM players and software products & services is that there are so darn many of them. And lots of them are brand new offerings, or their offering is unproven, or the company is financially
on the ropes.

And to complicate matters, just because you've picked a brand name system scores zero points in this application arena... The merger and acquisition landscape changes on a weekly basis. And lastly, they'll never tell you this but a vendor company's portfolio of software solutions may not quite fit together (because of a hodgepodge of solutions which have been merged together).

Then at some point you resign yourself, and plead ignorance.

Bad idea.

You have to do your homework again.

By the way, there's going to be a massive shake out of SCM applications and vendors down the road sometime. Count on it. There are way too many small marginal players, plus the economy is still taking its toll. (I'd like to say I know when but I'm still waiting for the WMS systems shake out to conclude.)

SCM SIN #7 - Anticipating Collaboration

If you're justifying your SCM endeavor because of the potential opportunity for "collaboration" with your strategic alliance partners... Don't hold your breath.

I'll give you one example: I am privy to a not uncommon situation where the customer of one company prohibited technical integration of their systems because of the potential for security breaches.

Is this a valid concern? Absolutely. But there were multiple ways of resolving it--- except that the customer's IT department was uncooperative because they didn't understand the solutions available.

This kind of technical foot dragging is common today and requires persistence, patience, excellent communication skills and a constant focus on the benefits and results which you are trying to achieve. Otherwise you'll be saddled with a half baked "solution" which doesn't achieve what you wanted in the first place.

There are other obstacles to collaboration too, none of which is technologically based.

So much for collaboration. It takes time, trust and commitment. Right now, most project managers would settle for having a little more cooperation.

Summary...

So have I put the fear of God into you? Gosh, I hope not.

Implementing SCM is an extremely worthy and ambitious endeavor, with lots of promise, possibility and potential. But it just requires that you pro-actively and deliberately deal with the "soft" issues in an intentional way. It requires ingenuity too. With a focus on these "soft" issues PLUS the technology, they have the opportunity to deliver hard results, real benefits and financial savings.

Plus--- simplify your whole SCM systems implementation.

Most companies are initially ill equipped to deal with these, but soon learn these issues are part of the SCM landscape. They're kind of in the land of "you don't know what you don't know". But trust me... Stated differently, they come with the territory.

My goal with this newsletter was to give you visibility to what you may potentially encounter executing your SCM endeavor. Hopefully, I've hit the mark. But in the case where I haven't and you need more clarity, please feel free to email me at Rick@rickdurisunplugged.com.

Best of success,
Rick Duris