The future of SCM is not in just Appetizing the applications

Details: 02. September 2013; | Geschrieben von Roeland Vermeulen

We all do know that the fast changing world of social media capabilities and applying these new techniques in SCM applications will have effect on the way of working in the supply chain. No doubt adding these new techniques will add value to the total functionality of SCM resulting in a wider acceptance of SCM as solution for companies that would like to (..or have to..) work as partners together.

But the question is if just applying the new techniques 'at the front-end' is the solution or is there more to be done to ensure the overall acceptance of SCM applications as the backbone of a successful management tool for all acting partners in the supply chain?

Asking the question is answering it already I think. Yes there is much more to be done.

To be able to support the basic requirement for SCM e.g. being able to, no matter what kind of technique one is using, all see and work with the same information is guaranteed by the well-known adagio of ensuring all to have visibility on one 'Single Version of the Truth' (SVoT - Chainlink Research 2007). It should not matter what kind of technique is used being it Web-GUI or EDI or App by different type of users in a supply chain, the SCM application has to guarantee this. What you see is what you can trust, is of major importance for partners working together.

The second important business rule is to ensure that every link in the supply chain is acting within the SCM application according to pre-defined process rules. As an analogy to SVoT this can be labeled Single Version of Process (SVoP - Quyntess 2008). When the SCM system publishes information that requires action from one of the partners than that action must always have the same result, or perhaps better said, always trigger the same, pre-defined next step in a sequence of activities.

A simple example is the Order / Order-response process. Customers ask certain items to be delivered with a certain quantity, for a certain price and on a specific due date. The supplier can confirm all requested and that will be the simple end of the process, next step is delivery. However, it may be that the supplier is also allowed to change the quantity and/or price and/or due date under certain conditions. This change will trigger an alert for the buyer who can again only act in a pre-defined way, accept the change or reject it etc.

All in all, the example above is nothing new and is not depending on the type of techniques used for the communication in the supply chain.

The third component however is in my opinion the most important of all and I think it deserves more attention at this moment, rather than putting a lot of effort in making new Apps available for SCM applications. That third component is 'Single Version of Data' (SVoD - Quyntess 2008). The data that is exchanged between partners in the supply chain or actually with SCM applications, should be of the same format, contain the same information and must be of the same (high) quality. And there is where we still see the biggest challenge in many world-wide SCM implementations we have done so far.

When focusing on Electronic Data Exchange and talking to EDI capable supply chain partners during initial phases of an implementation, they all confirm that they are using the desired layout formats and message types, e.g. Order, Order Response, Forecast, Inventory Levels, Material Despatch, Shipment data etc. But when it comes to really processing the messages inbound from the partners to SCM and outbound from SCM to the partners, it appears that everybody has his own version of the truth. iDoc is iDoc and SHPMNT05 is SHPMNT05, but compare a few messages, even sometimes coming from the same organization, and you will find many differences between them.

Of course there are many initiatives to define structures for the data, but even within these structures it is possible for companies to implement their own specific business rules for data set-up and usage.

Although we see at one hand that the world-wide supply chain complexity is changing again by in-source initiatives in both US and Europe it is very often still the case that if one is producing or having production partners abroad for instance, then one is also tasked with managing two supply chains - one in the abroad countries and one at the 'home country'. With that extra supply chain, comes not only the worries about quality issues, correct freight forwarding, getting all products through customs and to the production docks on time. Without experienced partners to help to manage the complexity of multiple, lengthier supply chains, offshoring or outsourced production can be a daunting undertaking for many companies.

One of the many things that would really help in this situation is the need to change for a number of supply chain parties, including the third party logistics companies (3PLs) to real supply chain partners, by being able to easily interface with their real standardized data to the different SCM systems. Simply put, partners need to be more forward-thinking: they need to think more like a 'plug and play' supply chain partner.

Good Supply Chain Management depends, after all, on the relations within the business. It's all about people working together to get things done, especially when plan and execution are not in line with each other anymore. We can implement all the new technology we want, but if the SCM systems are not trusted and have no buy-in and respect of the people who have to work with it by ensuring SVoT based on SVoP and SVoD, it will never be a success.