Four steps to successful supply chain management

-- Modern Materials Handling, 8/1/2003

Art Mesher has observed what works and what doesn't work in supply chain management, first as an analyst with Gartner and now as chief logistics officer for Descartes Systems Group (519-746-6114), a provider of transportation network management and visibility solutions.
Mesher believes the best supply chain strategies are characterized by four important points.

* Avoid the big bang: When it comes to supply chain management systems, too many companies think they can find one solution that will solve their problems and last forever.  That approach doesn't work over the long run because your business needs change. "No single solution will solve all of your problems," says Mesher. “But most of the failures I see are the result of big bang thinking."

* Understand incremental investment: If the big bang approach doesn't work, what does? Mesher says that successful supply chain management comes about from implementing applications targeted at specific solutions, and then continually improving on those over time. "Excellence in the supply chain involves constant and continual investment in new products," Mesher says. The reason is that over time you will need new practices and processes to man-age your business. Your supply chain systems will have to keep pace with those changes. For that reason, many supply chain systems will be obsolete in three to five years. That's why it's important to choose applications and solutions with a measurable return on investment (ROI).

* Educate your senior management in supply chain best practices.  Everyone talks about the importance of executive buy-in with any new system. Mesher believes that's only half the answer. "What you really need is an educated senior management team that understands the cause and effect of the supply chain on your business," says Mesher. He once participated in a survey that asked CEOs what was the most important goal of the supply chain. First on the list of responses was to deploy inventory effectively. Last on the list was the ability to exchange information with trading partners. "What they didn't understand is that to deploy inventory effectively, you have to be able to exchange information," says Mesher.

* Develop defined and measurable supply chain goals. "When we ask customers why they want a TMS system, the most common answer is: We want to improve customer service," Mesher says. "My question is: what exactly does that mean? How will you know whether you've improved customer service." The solution is to define your goals and then quantify success with a number that can be measured.