Image by Andrew Becraft, CC license.

Business people complain their IT team is understaffed, uncooperative, slow, and deploys lousy systems. IT claims business people are disorganized, unwilling to learn, bossy and never available.

Such is the just-under-the-surface functional rivalry that regularly plays out every day in many organizations, a tiff that delays and sometimes stops a company’s technology evolution.

Where does the animosity come from?

Mars and Venus. Business and IT do come from different planets. IT is methodical, structured, detailed, and logical. Business functions are impatient, practical, and focused on quick solutions that work. The language, terminology, and methods of one are incomprehensible to the other. Right from the start, there is an inherent lack of understanding.

Turf and different agendas. Your CIO insists on controlling every aspect of technology in the workplace, but your Manufacturing VP asserts the right to acquire any information system that best meets the need. One side explores solutions and comes up with its favorite; the other side isn’t even consulted. People become locked into a viewpoint, start a campaign for their side, and nothing gets done.

Unrealistic expectations. The business side expects new stuff – innovation – from IT. But only 10-20% of a typical IT budget is slotted for innovation – the rest is consumed by keeping the lights on, a hard budget reality for most companies. The result: an unfair perception in the business that IT never delivers anything new.

Proximity. If a company occupies three floors of a building, where does IT usually sit? In the basement, first floor, or an annex somewhere (and sometimes halfway around the world). This telegraphs that IT is not important, and the physical separation creates gaps in relationships and communication. IT people want to be thought of as part of the team and having a seat at the table.

Misunderstanding of roles. Business and IT teams are often thrown together on a project without clear definition of who is going to do what. The business side expects much more from IT than IT expects to do, and vice versa. IT people also resent having to lead a project while the business side remains dis-engaged and absent.

Bring back some harmony with these practical moves:

Recruit the crossover people – those who understand and speak the language of both Mars (business) and Venus (IT) – to bridge the two sides. Put them in engagement roles with “the other side.” There aren’t enough of these people today because most companies still cling to ancient uni-functional career paths, but you know who they are, or could be, in your organization.

Establish together how IT solutions will be acquired. Business people are much more agreeable if they know there is at least a process where IT requests can be considered, prioritized, and acted on.  Agree that any exploration of solutions will be done together, that objective, score-based criteria will be used to evaluate system alternatives, and set a joint annual budget for IT investments.

Put people together: Co-locating IT people with their functional business counterparts is a big plus: 1) the business side feels valued because IT is paired with them; 2) IT people feel valued because they are “on the field” with business teams; and 3) communication and understanding have a better chance of emerging.

Negotiate roles upfront like you would any team effort. For a large project, what people resources are needed from business and IT, for how long? Who determines what each team member is expected to deliver? How self-sufficient is the business expected to be, in terms of learning and testing the new application? Write these down, publish them, and get signatures if you have to. Think of it as a team charter.

A final thought: is it time to re-think the traditional functional roles and the career paths that go with them, where IT is IT and sales is sales and supply chain is supply chain?

Processing orders in Chicago, 1937; image by gallimafry.blogspot.com, CC license

In the most recent annual Deloitte supply chain study only 38% of executives felt they had the right skills in their organizations.

Why? Theories range from supply chain not being cool for new grads, to the predominance of men in the function (scan the room at a supply chain conference and you mostly see ….middle-aged men).

But another reason is that most supply chain jobs are tedious and boring. Ship stuff in. Ship stuff out. Key data into a PC, transfer it from one system to another. Look up stuff in tables. Compare what’s in the system to paper documents. Fix problems in failed transactions, summarize inventory figures, change or fix purchase orders, and create another report using pivot tables. Yawn.

Despite the hype about technology revolutionizing the supply chain, organizations simply haven’t adopted in a widespread way the automation needed to eliminate repetitive functions, because most large enterprises are risk-averse, slow to change, and don’t bother to make the business case.

Companies that have adopted expensive ERP systems still need people to shepherd transactions in and out of different applications. Companies that for years have had extensive EDI networks — which were supposed to automate basic commerce between businesses —  still touch every customer order.

The next generation of supply chain leaders is not drawn to jobs involving  banal tasks performed in 15 year old systems. You can see for yourself in many organizations – bright college graduates with supply chain or business degrees, bewildered at the dumb things they have to do in outmoded systems.

Companies staying on non-automated platforms guarantee that a certain percentage of their work force will never perform at their highest potential, despite the many commitments by nearly every employer to “developing talent.”

Consider logistics claims processing. A company making 75,000 deliveries each year will have to manage anywhere from 7,500 to 15,000 claims, maybe more – these are refusals to pay all or a portion of the invoice because of damage, unsatisfactory service, faulty products, incorrect pricing, late deliveries, etc (there are a million reasons).

In a non-automated environment, firms will staff people to collect paperwork, look up data in systems, copy delivery and invoice documents, investigate claims with warehouse and transportation providers, and assign a status to the claim for future credit (or not) to the customer.

Substitute PCs for typewriters and you have a work environment not unlike the one pictured above, from 1937.

In an automated environment, documents are scanned without human touch, sorted, filtered through business rules, and categorized into a database from which humans glean valuable information, such as which customers have a pattern of making claims for the same reason month after month.

In a non-automated environment, human talent is used to process claims; in an automated setting it’s used to reduce claims. Which role would a young supply chain professional find more interesting?

There are many solutions on the market today for automating these transactions but the best ones go a step further by not only automating but managing processes for you – removing completely from your enterprise the most burdensome non-value added work, yet delivering to you the valuable data needed for management decisions.

Some companies acquire and manage automation software – a viable option but less valuable than outsourcing. Software you acquire has to be configured, integrated with your systems, and maintained via license agreement and user support.

In the end, however, how you automate is much less important than whether you do so. With automation services priced where they are today, an attractive payback is not difficult.

You’ve heard the complaints: your systems are too clunky, slow, have too many steps, and they take too long to execute everyday transactions.

The dialogue plays out probably hundreds of times a day in offices throughout the world: users complain about to-hard-to-use systems and their IT departments tell them they just don’t know the right way to use them.

This can be a big problem, but costs and other impacts are not easy to measure. A rough estimate can be had by extrapolating the lost time per user across the enterprise.  A 15% hit to people’s productivity because the systems they use slow down their work actually means you need 1.176 people to do the work of one person.

Extrapolating this, if you have a 500-person organization, an equivalent of 88 of those people are needed only because you have sub-optimal systems.  As convincing as this seems, it’s hard to get the money to improve systems based on this argument. With perfectly-efficient systems, you wouldn’t actually need 88 fewer people because the sum of wasted time is across all 500 people.

What do you do? Two relatively low-cost options are user interface (UI – what you see when you look at the screen) tools and mobile applications.

UI Tools: There is an active market for these, which are intended to be used with widely-deployed ERP systems like SAP and Oracle. These solutions modify or enhance the system’s UI for simplified navigation and a more intuitive feel, and may combine several steps in a transaction or query into one, like an Excel macro.

One company marketing UI solutions (Winshuttle) claims to “turn everyday SAP users into heroes who transform the way their companies work.”

Solutions like this are only relevant for those companies that have full control over their systems environments – companies that own their own “instance” of the ERP system, versus those who use a SaaS ERP or one that is shared across many different business units. This is because you’ll need access “under the hood” to configure these tools.

Mobile: A shortcut (sometimes) to simplified ERP transactions is via mobile applications. A mobile application, out of necessity, must have minimal steps involving minimal data entry. No one wants a Windows version of the ERP system on their 5-inch smartphone screen.

This forces the software to consolidate steps in the transaction and pre-populate fields with user data and settings. If a given ERP transaction involves 5 or 6 steps on a desktop it will likely require only 2 or 3 steps on a mobile device.

Several of the large ERP vendors already have mobile versions of the most frequently used transactions, such as purchase orders and purchase order approvals.

You can always design your own mobile applications (there’s no shortage of people creating new smartphone apps), and doing so can lead to some very creative results that have a huge impact on user morale.

One easy way to improve supply chain efficiency is to automate customer claims processing. In my experience, a company making 75,000 deliveries each year will have to manage about 15,000 – 20,000 claims over that time. And while there could be a million reasons for refusing to pay all or a portion of the invoice – these are often because of damage, unsatisfactory service, faulty products or incorrect pricing.

In a non-automated environment, claims processing works like this:  

• Collect paperwork
• Look up data in systems
• Copy delivery and invoice documents
• Investigate claims that matter
• Assign a status to the claims for future credit (or not) to the customer.

Apart from investigating the root causes, the only value that a human adds here is to make sure that data is where it’s supposed to be.

On the other hand, in an automated environment, all relevant documents are: 

• Scanned
• Analysed
• Sorted
• Filtered through business rules
• Categorised into a database.

All of this happens without human touch. However, once this data is in a database or system, that’s when humans can glean valuable, actionable information, such as which customers have a pattern of making claims for the same reason month after month.

This is when your supply chain team adds the real value – critical thinking, analysis, and creative problem-solving. The result is actually a reduction in the cost of claims.

In a non-automated environment: human added value = processing claims.

In an automated environment: human added value = reducing claims!

In automated environments, it really is possible to redeploy staff to more profitable work, and these roles are bound to be more satisfactory because of the added challenges and greater opportunities for creative thinking. And that can make all the difference in attracting the supply chain leaders of the future (because talent management could actually give your supply chain a competitive edge).

How do you make the shift from non-automated to automated environments?

In 1992, the Harvard Business Review published the influential and now famous article: Staple Yourself to an Order, a piece about how organizations can eliminate inefficiency and bad customer service by following each step an order takes across the supply chain.

This is what you need to do when it comes to order and claims processing…read more

Image: Al Drago/CQ Roll Call Via AP/Associated Press

The FDA has appeared at one of your plants and would like to see your records showing how much of which products were manufactured using a particular lot of raw material, where those products were shipped, and to which customers they were sold.

(Hint: you’re supposed to be able to do this, in about two hours, preferably faster).

Many companies can’t produce what the FDA is asking for, in a complete and accurate form, and in the time the FDA expects.

Supply chain executives assume their warehouse management system (WMS) will provide the traceability they need, but many WMS applications in use today are either limited in scope or not integrated to the rest of the upstream and downstream supply chain.

The average WMS inside a plant, for example, is good for tracing lot codes of raw materials coming in and following them into batches of finished goods and out the door to customers.

But many consumer goods companies use third party logistics services and sell to multiple channels where manufacturing lots are further and further subdivided until product reaches the retail customer and the consumer. All of these handoffs occur outside the scope of your enterprise systems, including your WMS.

The trail is easily lost because downstream from the plant the product may take on several different identities – without retaining lot information — as it passes from one player in the supply chain to another.

Without all the data in one place, companies rifle through purchasing receipts, production records, and bills of lading, send urgent requests for reports from trading partners, and assemble something resembling a lot code bridge in an Excel worksheet. This might take days.

The ideal track and trace system is an information repository into which data is automatically dumped as your product travels through the supply chain – the chronicling of all the places your product went after you produced it. And for that you need connectivity to all the downstream events through which your product travels, and a place to put all the data.

Companies without the full picture are betting on dodging the bullet somehow. While the odds of a recall of your product may be low, the odds of an FDA visit are much higher. And the FDA does send warning letters for an inability to demonstrate full traceability – letters that wind up online in a very public way.

Nearly every discussion about the evolution of the modern supply chain is about technology – big data, the internet of things (IoT), analytic platforms, and the tools used to reach digital channels. But little is said about the supply chain talent shortage.

In fact, in a recent study only 38% of supply chain executives felt confident they had the right skills in their organizations.

Why does the supply chain skills shortage exist?

Theories include:

• A negative perception about supply chain work (young people think it’s not cool)
• The fact that there’s a lack of women in supply chain roles
• The exiting of baby boomers from the workforce.

These seem to ring true. When I’ve attended supply chain conferences and scanned the crowd there, what did I see? Middle-aged men.

I have another theory: most supply chain jobs are boring. Ship stuff in. Ship stuff out. Type data into a computer. Transfer data from one system to another. Scan documents and send them somewhere. Look up stuff in tables. Fix problems in failed transactions. Yawn!

Tedious and repetitive tasks are still the norm

Despite the hype about how technology is revolutionising the supply chain, software and other tools that are used to eliminate the numerous tedious and repetitive jobs have not yet been widely adopted. Why? Because most large enterprises are risk-averse and slow to change (a topic for another blog).

The problem with supply chain processes

Two areas that suffer from energy-sapping tedium are order processing and logistics claims processing. These tasks, problems, and processes are the same day-in and day-out.

But while some companies have hundreds of people processing orders and claims, the irony is that these same companies have adopted technologies such as an ERP system and EDI – but they still need people to shepherd transactions in and out of systems. I know of companies who have used EDI for years and still have a human being checking every single EDI transaction for accuracy! (As an aside, just imagine what would happen to your orders if your customer service representatives disappeared!)

Why is all this important?

Read the rest of the blog here to find out why

There’s a debate going on in B2B commerce about “touchless” sales order processing. Touchless order processing just means you don’t need a human to watch, review, check, or do anything else to an order when it’s received from the customer, like making sure product codes and pricing are correct. On the one side you have touchless believers (in part because that’s what they already do), and on the other, advocates of automated checks plus a quick review by human eyes, called “click and go.”

Many companies have already achieved touchless orders on a very high percentage of their order volume, and you need to look no further than Amazon for a very simple example of completely automated order processing. On any given Saturday morning, you, along with thousands of others, made a one-click purchase on Amazon. That order made its way to a fulfilment center uninterrupted by human scanning because of interconnected software.

Getting there is not hard

Touchless order processing is best achieved with the right combination of data capture tools and algorithmic checks based on your company’s business rules and customer master data.

The key element of a touchless order is the format, quality and consistency of the message. In other words, it’s all about readability – regardless of whether it is a structured, typed form (such as a spreadsheet), a fax, or an electronic form filled out via an internet/web portal, or the standard EDI purchase order. Algorithmic checks can be written for just about anything – if customer order date is X, then send order to Y. Many companies, realising they need these kinds of checks, start building them in their ERP systems using inflexible custom code.

But before long these DIY firms end up with a lot of expensive software modifications as they seek to automate more and more of their inbound order steps. I know of one company whose order checks are so complex that some of their large customer orders can take up to several hours to process. As a result, their customer responsiveness declines.

But aren’t human checks better? No.

Read the rest of the blog here to find out why

Photo by Krystian Olszanski, CC license

Great!  Your second biggest customer has agreed to collaborate with you to build the business through collaboration and data sharing, and you’ll be getting access to all of their point-of-sale data through a third party company.  Now what?

Fortunately there are some very good POS analytical capabilities out there, but not all are the same. Here are some tips from my own experience:

1. Use a data provider who also has an analytical/BI environment to work in – preferably an environment with pre-built reports and analyses, and to which you can add other data sources. Otherwise, you’ll need to build and maintain a database and BI “stack” of software applications and every day you’ll be importing huge data files and spending lots of time checking for accuracy. Too much time spent on mechanics.
2. Get the data aligned and normalized with your company’s customer and product master data, so that product numbers and descriptions and brands and formats are the same whether you’re looking at the shelf data or data in your internal systems.
3. Go after the biggest returns, which will be in gauging the effectiveness of merchandising and promotion spending.  For manufacturers selling to retailers this type of spending can amount to 30% or more of revenue.  If turns on the shelf are lackluster for a given promotion, you’re wasting money and it’s time to find out why.
4. Focus on the largest customers with the largest perceived gaps, on the highest-turning items.  Look for shelf voids — out of stocks — that seem to have a pattern, like day of the week, or within a certain cluster or geography of stores.  These might be fixable with an adjustment in your customer’s store replenishment settings.
5. Concentrate on shelf issues you can actually do something about.  You probably won’t convince your company to discontinue ten slow-moving SKUs because they’re wasting shelf space – those products could be there for other, more defensive reasons.  You might, however, show your customers how adding more shelf space for some of your products will benefit them.

Related: Demand Signal Applications: The Basics

To learn more about data and analytics provider capabilities, check out Orchestro, Relational Solutions, RSI, JDA, and Mindtree.

Image by genius.com

Yes, wouldn’t it be satisfying to scrap your entire big mess of a supply chain — all the inefficiencies, dysfunction, lousy systems, and constraints that constantly annoy you and your customers — and start over fresh?  You can do that, in a figurative sense, through some creative collaboration with internal teams and outsiders as well, and the outcome can be much more than just a fun day of pretend.  This method is known as a “Merlin Exercise,” and is used by the executive coaching firm Paracomm, among others.

Imagining a shiny new supply chain escapes the incrementalism of repeatedly layering small changes on top of the existing supply chain without truly breakthrough results.  This is particularly common in applying software solutions to business challenges: the solution solves the immediate issue, but no more.

You can’t get there from here.  That is, you can’t get to your ideal supply chain from here; you must get to it by approaching it from the future.

Preferably, you have assembled the best thinkers and functional experts in your organization for this venture.  In general, the event looks like this:

Everyone is to forget about software applications and technology in general, and focus instead on outcomes: sales have doubled, costs have been cut 25%, and alternative channels are growing the business.  This could be three, five, or ten years from now.

The group must determine how your enterprise got there. What events or breakthroughs occurred just prior to the leap in business performance?  Don’t just generalize, paint a picture with details.

Continue working backward from the sublime state you’ve imagined for your supply chain, identifying the key events where capabilities (technology or otherwise) advanced your business to the next step. At each point in the timeline, ask how or why the new capability came about.

When you get to today, you’ll see the progression of events from now to the future, and the next few steps from today on won’t look as daunting or impossible as would one giant leap from today to the perfect state.

Example: Sales have grown 25% due to mobile and online purchases.  Why? Because you enabled purchases on these platforms. Why and how? Because the e-commerce pilot you ran with several suppliers demonstrated significant sales gains. Why and how? The pilot revealed that online and mobile customers are a different demographic and buying population than what you normally see for your retail and catalog customers.  This convinced management to expand the pilot.

One reason this exercise works is that the path to excellence is not so clear when standing in the present, surrounded by today’s paradigms.  But transported to the future, the mind is free of these burdens, and the path backwards is easier to see.  Used on a regular basis, this type of visioning can also transform organizational thinking, placing much more emphasis on strategy and the future of the enterprise.

Image by JDA, Inc.

Flowcasting is the estimation of future demand using data about the flow of products through your supply chain, to your customer and through their network to the shelf and checkout.  Ostensibly, flowcasting gives you a fresher picture of demand than traditional forecasting, which mostly uses historical demand patterns and demand spike estimates for upcoming marketing and promotional events.

Flowcasting requires accurate data from several points in the supply chain (yours and that of your trading partners), from the shelf backwards. The data has to be summarized in the same time sequencing as your physical supply chain in order to see cause-effect relationships, and it has to be “normalized” so that data points collected from your customer’s system have the same nomenclature as those in your systems.

As you might suspect, choreographing the successful flowcasting system is no small effort.

Nonetheless, software vendors are beginning to market “flowcasting” solutions.  This description from JDA for its product is a good summary of what flowcasting applications are at least intended to do:

“JDA Flowcasting enables channel-wide joint planning and collaboration between manufacturer and retailer based on sell-through forecast, promotions and supply chain planning parameters. This solution delivers visibility and enables analytics directly from the shelf, tying in replenishment and time-phased order collaboration with key trading partner participants. Enhanced collaborative planning drives improved profitability, productivity and control.”

In simple terms, software for flowcasting tees up all the downstream analytics from your supply chain and integrates it with your supply chain planning systems for smarter sourcing, production, and distribution decisions.

Should you invest in these applications?  I think some firms will see more benefits than others:

• Firms that have strong collaborative selling plans with their trading partners stand to benefit from the “one version of the truth” that can come from both retailer and suppliers being on the same flowcasting platform;
• Companies with fast-moving supply chains and relatively short production and delivery lead times may gain benefits from the ability to act on the near-real time consumption data.  For example, production plans and inventory settings for new products can be adjusted for items that are selling through the supply chain faster than predicted;
• Organizations that have more experience with supply chain planning applications and more expertise internally with data-driven supply chain management will have a shorter learning curve with flowcasting.
• IT departments that have full control over their ERP or other systems of record and can competently integrate supply chain planning applications will also benefit sooner and at less expense.  It is from within an enterprise’s ERP system that, among other sources of data, successful flowcasting will need to extract and use accurate inventory, on-hand order, and pricing data including scheduled promotional discounts.

Consultants Andre Martin and Mike Doherty have written a book about flowcasting.