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Slaying the IT dragon

What does an operations manager need to know?

By Bob Trebilcock Editor at Large -- Modern Materials Handling, 4/1/2003

For most operations managers, keeping up with the fast-changing world of IT can feel like a dragon is breathing down your neck.

Just learning the acronyms can induce ITSS-that stands for information technology stress syndrome, a new acronym we just coined.

And yet, since managing information as well as inventory is so much a part of the job description these days, no operations manager can afford to ignore IT. 'If you're not up to speed, you risk getting passed by the competition,' warns John M. Hill, a principal with ESYNC (831-722-9806).

What then does an operations guy or gal absolutely, positively have to know about IT to do the job?

We posed that question to a group of knowledgeable consultants with experience in both IT and the realities of order fulfillment.

Their answers cover the gamut of what you need to know to work with others in your company to choose an IT solution; to work with that solution day to day; and to position your company's operations to meet tomorrow's demands.

1. It's all about business

Sure, technology is cool! But the next time your IT manager pitches a gee whiz solution, remember that at the end of the day, it's about the business problem the technology is supposed to solve.

'Before you implement any solution, you need to identify your key business objectives,' says Mary Haigis, chief marketing officer, Clarkston Consulting (800-652-4274).

That means knowing first where your business is going; what your customers expect of you; and what issues you have today in terms of order fulfillment.

Haigis also advises that users find out what their competitors are doing to improve their IT systems by reading trade articles, attending seminars, and talking to customers they share in common.

'Once you've defined your business and process goals, you can leverage your existing systems by adding enabling technologies that will take you to the next step,' says Haigis.

2. Metrics count

Given all of the information collected today, IT systems can be a great management tool, if operations managers take the time to learn about their capabilities.

'To get the most out of your system, you need to first define the metrics you want the system to track and re-port,' says John Spain, senior partner, Tompkins Associates, (919-876-3667).'Unfortunately, too many warehouse managers accept the information given to them without understanding what their systems are capable of measuring and how to get that information out of the system so they can do their jobs.'

3. Early adopters bleed

Being the first on your block to own a new gadget may score points at home, but it can be a disaster at work.

That's because early adopters often bleed while the vendor works out the bugs in the system.

'Too often IT guys think that if they're not on the newest technology, they're on obsolete technology,' says Thomas K. Ryan, principal, Thomas Ryan Consulting (630-876-0607). 'But there's something to be said for not being the first guy out of the gate on a new system. Old technology that meets a business requirement is still effective technology.'

For instance, companies that have to provide electronic information to their customers may be tempted to rip out their old EDI systems to implement XML or Web services. 'In today's environment, it's not an either or situation,' says Ryan. 'The choice should be made according to the standards adopted by your customers and suppliers. If EDI still works, there's no reason to get rid of it.'

4. Beware the mod squad

Most operations managers would rather have the IT department modify a software solution than change their business processes.

Down the road that approach costs money.

'Too many people are sitting on heavily modified systems that are difficult to support and very expensive to upgrade if their requirements change,' says Jeff Woods, senior analyst, Gartner (203-964-0096).

Woods advises operations managers to be realistic about the true cost of a modification by comparing the cost of changing the business process against the total cost of a modification to the system, including upgrades and maintenance.

5. IT is everyone's job

Although the IT department implements a system, the buck doesn't stop there.

Operations managers have responsibility too, says Ryan.

First, peripherals like bar code printers, scanners, wireless units, and other terminals need to be maintained, just like a conveyor and a fork lift. That is operations' responsibility.

Beyond that, operations managers need to know how to configure the business applications that manage their departments. That doesn't mean learning how to write code. But it does mean understanding how to set up the business rules and configure the system to put product away, coordinate picking, and group shipments to optimize shipping.

'I can't tell you how many times managers have told me their existing system wouldn't do X, Y or Z because they didn't understand how it works,' says Ryan. 'If you just throw up your hands, that hurts your effectiveness.'

6. No system is an island

A poet once wrote that no man is an island. The same can be said about today's supply chain information systems.

To get the most out of warehouse, transportation, and yard management systems, they need to be integrated and share information.

'If you treat your systems as a technology project, you'll end up with islands of automation,' warns John A. White, vice president, supply chain management at Cap Gemini Ernst & Young (917-934-8000). 'If you approach it as an integrated process, you'll create a more efficient operation and reduce your overall costs.'

The key, says White, is linking those systems together. For instance, your operations will be much more efficient handling receipts on the dock if your yard management system is integrated with a warehouse system that understands what inventory is needed now, and a transportation management system that schedules outbound shipments.

7. Boil water, not the ocean

Supply chain technology in the late 1990's was often about trying to achieve a vision of end-to-end supply chain management.

The concept sounded good in the PowerPoint presentations. But trying to implement those visions was like trying to boil the ocean.

'Instead of solving the world's problems with software, the approach today is to solve a specific problem with a specific module and use the savings to fund the next project,' says Gerald McNerney, senior analyst, AMR Research (617-542-6600).

Operations managers should analyze their strengths, identify their weaknesses, and then look for applications that can fill the gaps. 'You're building a business solution one piece at a time,' says McNerney.

8. Murphy's Law rules

We all know the old saying about the best laid plans. That's why Hill urges operations managers to work with the IT and finance departments on the functional specifications of any new order fulfillment system before going live.

The idea is to identify everything that could go wrong with the new system; how an IT breakdown could impact operations; and then to develop a cost-effective operational back up plan for when the inevitable occurs.

'One of the first projects I ever worked on as a consultant was with a Canadian company,' Hill recalls. 'The CFO assigned a cost analyst to help us come up with a list of everything that could go haywire, and what it would cost to fix it. By the time we were finished, we had an action plan for everything from what to do if the power goes out to how to manage an interface.'

9. Prepare for tomorrow

Continuous process improvement is the responsibility of an operations manager. When it comes to IT, that means preparing today for technologies that will be important tomorrow.

The most prominent emerging technology today is radio frequency identification, or RFID, as a replacement or complement to traditional auto-identification technologies.

'We're still early in the cycle for RFID,' says Chris Riemann, managing consultant, IBM Business Consulting Services (800-426-4968). 'But the big retail and automotive players are doing their field tests now. In two or three years, you're going to need to know what it is.'

Riemann's advice: Do your homework, consider implementing an RFID solution in a small part of your business, and have a strategy in place before your large retail customers mandate one later.




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