Executive Briefings

Using IT to Elevate The Supply Chain Organization                

Three professors from Florida State University and North Carolina State University recently released a report on findings from focus groups with top executives at 41 companies. While many of the conclusions seem obvious, they draw attention to the changing nature of the supply chain and supply chain managers, a trend that is magnified in particular segments of the manufacturing industry.

The report begins with the premise that traditionally, supply chain managers acted as the purchasing department for a small, well-defined set of suppliers, with the primary focus on reducing cost. Although the comment doesn't hold true for many supply chain managers, we can back up their statement to some extent with results from our supply chain innovation survey (MI207169 and MI208941), where reducing cost was the first or second priority for the supply chain. And we do agree that supply chain managers are facing tremendous pressures from globalization and the resulting challenges, as we emphasized in our predictions (MI209914). Calculating transportation costs by profitable proximity; re-defining the requirements of the supplier base; learning the ins and outs of global trade, industry regulations, cultural differences, supply chain logistics, and currency fluctuations in other countries; and increasing emphasis on evaluating their company's environmental impact--are all factors raise the level of complexity supply chain managers must address in a global market.

The survey identified the skills or approaches that supply chain managers must use to adapt to new challenges created by globalization:

1. Increasing skills in understanding and applying information technology (IT), both in terms of sharing supply chain information into the company, such as inventory, cost, and date of arrival, as well as sharing information with to partners. The IT approaches identified were electronic procurement/reverse auctions (39%), followed by collaboration and integrated systems with suppliers (38%), and internal systems integration (36%).

2. Global sourcing of products and services, including materials, components, manufacturing,
transportations, and more, with skills prioritized in outsourcing services (40%), global sourcing strategies (23%), and training approaches for global environment (21%).

3. Increasing management and team building skills to take full advantage of a company's partners' skills and capabilities, not just for cost savings , but for new product development, and to support the supply chain organization's more critical role in the overall corporate infrastructure. The skill most often cited in the university research was strategic relationship management (85%), followed by cross-functional or virtual teams (43%), and customer relationship building (33%).

4. Keeping the company's "big-picture" strategy in mind, with skills in strategic cost reduction (63%), greater focus on total cost in supplier selection (46%), differentiating between strategic and tactical orientation (42%), broader general business skills (35%), and supply chain business process focus (34%).

From Manufacturing Insights' perspective, we have no doubt that IT can be the support structure that the supply chain organizations need. It goes without saying that the amount of information supply chains deal with is escalating, and spreadsheets aren't enough to manage the increasing complexity and dynamics of that information as companies operate in a globally competitive market. In the software market, we see signs that the supply chain applications from Oracle and SAP are improving to address these challenges through new integration and new functionality, and services are expanding into new capabilities for outsourcing and global reach, including IBM's new Beijing Supply Chain Innovation Center. But for companies to take advantage of these capabilities, they must acknowledge supply chain's role in transforming their businesses and give their organizations the tools and training they need.
http://www.idc.com

Three professors from Florida State University and North Carolina State University recently released a report on findings from focus groups with top executives at 41 companies. While many of the conclusions seem obvious, they draw attention to the changing nature of the supply chain and supply chain managers, a trend that is magnified in particular segments of the manufacturing industry.

The report begins with the premise that traditionally, supply chain managers acted as the purchasing department for a small, well-defined set of suppliers, with the primary focus on reducing cost. Although the comment doesn't hold true for many supply chain managers, we can back up their statement to some extent with results from our supply chain innovation survey (MI207169 and MI208941), where reducing cost was the first or second priority for the supply chain. And we do agree that supply chain managers are facing tremendous pressures from globalization and the resulting challenges, as we emphasized in our predictions (MI209914). Calculating transportation costs by profitable proximity; re-defining the requirements of the supplier base; learning the ins and outs of global trade, industry regulations, cultural differences, supply chain logistics, and currency fluctuations in other countries; and increasing emphasis on evaluating their company's environmental impact--are all factors raise the level of complexity supply chain managers must address in a global market.

The survey identified the skills or approaches that supply chain managers must use to adapt to new challenges created by globalization:

1. Increasing skills in understanding and applying information technology (IT), both in terms of sharing supply chain information into the company, such as inventory, cost, and date of arrival, as well as sharing information with to partners. The IT approaches identified were electronic procurement/reverse auctions (39%), followed by collaboration and integrated systems with suppliers (38%), and internal systems integration (36%).

2. Global sourcing of products and services, including materials, components, manufacturing,
transportations, and more, with skills prioritized in outsourcing services (40%), global sourcing strategies (23%), and training approaches for global environment (21%).

3. Increasing management and team building skills to take full advantage of a company's partners' skills and capabilities, not just for cost savings , but for new product development, and to support the supply chain organization's more critical role in the overall corporate infrastructure. The skill most often cited in the university research was strategic relationship management (85%), followed by cross-functional or virtual teams (43%), and customer relationship building (33%).

4. Keeping the company's "big-picture" strategy in mind, with skills in strategic cost reduction (63%), greater focus on total cost in supplier selection (46%), differentiating between strategic and tactical orientation (42%), broader general business skills (35%), and supply chain business process focus (34%).

From Manufacturing Insights' perspective, we have no doubt that IT can be the support structure that the supply chain organizations need. It goes without saying that the amount of information supply chains deal with is escalating, and spreadsheets aren't enough to manage the increasing complexity and dynamics of that information as companies operate in a globally competitive market. In the software market, we see signs that the supply chain applications from Oracle and SAP are improving to address these challenges through new integration and new functionality, and services are expanding into new capabilities for outsourcing and global reach, including IBM's new Beijing Supply Chain Innovation Center. But for companies to take advantage of these capabilities, they must acknowledge supply chain's role in transforming their businesses and give their organizations the tools and training they need.
http://www.idc.com