Tyndall Says:
|
Why
do the collaboration business
cases not seem compelling
to many companies, despite
the evidence of successful
results?
What
do you say? Send
us your comments here
|
Reports
from the 2007 National Retail
Federation Conference in January
indicate that – at least
from a technology perspective
– the “academy award”
for the “Best Technology
Finally Becoming Mainstream”
would go to Optimization, with
Point-of-Sale (POS) winning
the “best supporting award.”
As most are
aware, the NRF is the largest
conference of Retail executives
and suppliers of the Year, held
annually in New York.
Nominated often,
but failing to win, are RFID
and Collaboration, due to their
lack of implementation traction
and compelling business cases.
It is rewarding that Optimization
has won this year, as it is
finally being recognized as
a productive means to determine
the best solutions to quantifiable
problems – and Retailers
are employing more cross-functional
teams and advanced tools to
find the best solutions to questions
such as: the optimal number
of stores in a trading area,
and their best locations;
and, questions of store formats,
product line mix, and the myriad
of replenishment and other supply
chain operations issues that
best fit into optimization models.
Enough has
been written and discussed about
the RFID challenge – namely,
the difficulties in developing
an ROI that is compelling, inasmuch
as the costs of large-scale
implementation still often outweigh
the perceived benefits.
This challenge will, I believe,
work its way out over the next
few years, as costs come down,
and we determine better ways
to exploit the volumes of data
collected from automatic identification
of containers, pallets, boxes,
and items, throughout the supply
chain.
What is worthy
of discussion and further debate
now, however, is the continuing
lack of progress in Collaboration.
Similar to “visibility”,
the term collaboration has been
on our minds for over a decade,
as we supply chain leaders recognize
its powerful value, if done
effectively, to improve supply
chain performance, in each and
every industry. In Retail
and Consumer Goods, the industry
initiatives for ECR, and CPFR,
identified enormous savings
potential in supply chains.
While some progress has been
made, and advanced computer-based
tools now exist; much more needs
to be done. The VICS program
continues to work toward this
goal.
Yet in other
industries, very little progress
has been made. The “continuous
process of sharing, partnering,
connecting, and aligning to
improve supply chain performance,.for
win-win benefits” –
which is what Collaboration
really is – is stalled,
at best. The challenges
have mostly been cited:
trust; cultural differences;
organizational barriers; unsustained
executive commitment and involvement;
technology differences; and
others.
In addition,
the “why, with whom, for
what, when, and where”
questions persist. Moreover,
performance metrics, and terms
and conditions, stifle many
attempts even when an initiative
gets started.
In assisting
and advising many clients in
getting collaborative initiatives
going over the years, I have
learned and faced these challenges
and barriers first hand. Yes,
these are not easily overcome;
it takes hard work and sustained
commitments. But, it is
really all about people, leadership,
commitment, and methods.
If these critical three are
enabled, then Collaboration
can be built, continued, improved,
and yield win-win benefits.
Company leaders
have to decide to do it; people
in their companies have to want
to do it, and be rewarded for
doing it right; all parties
have to stay committed for a
long time; and, the right methods
have to be employed to enable
it to succeed. Too much
to ask? Why?
Why are the
business cases not compelling?
There continues to be excessive
inventories in every supply
chain pipeline. Companies
still produce more than they
can sell, or the wrong products
at the wrong place at the wrong
time. Demand forecasts
continue to be wrong most often.
Returns continue to grow.
Transportation continues to
include unnecessary routes or
loads. The list goes on.
Why can’t we get the business
cases right?
Companies invest
$billions in supply chain visibility,
yet wonder what to do with the
real-time information.
They have spent funds and years
to develop “optimal supply
chain plans”, only to
see them obsolete because trading
partners had different plans.
Now, they invest in supply chain
execution, only to see problems
of synchronization because trading
partners are not aligned well
enough.
It is not only
a problem among trading partners.
Internal gaps still exist in
the Sales and Operations Planning
(S&OP) process. Again,
while we know that Sales and
Operations should collaborate
on what to produce, where, and
when, the process is rarely
streamlined and effective. Why?
Just as with trading partners,
it is people, leadership, commitments,
and methods that are constraining
and limiting success.
Perhaps the
Japanese business models include
the ultimate answers.
Interlocking Boards can also
translate into common goals
and objectives. But, Toyota
and Honda have proven that close-knit
supplier networks can be adapted
to North American companies
to manage costs, improve quality,
develop innovative new products
and processes faster than competitors,
and achieve win-win continuous
improvements. Why can’t
others?
Effective Collaboration
can be planned, tested, and
implemented. There are
positive examples in effect.
When the leaders, people, and
commitments are in place and
in agreement, and the right
methods are employed, powerful
value is created in the supply
chain. We just need to
get it right, not give up on
it, and fix it when it goes
off course.
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