Data processing, 1959. Image by James Vaughan, CC license

If you search “technologies for supply chain evolution” you will get 17.8 million results, many of which will mention IoT, robots, driverless vehicles, mobile technology, predictive analytics, network optimization software, and 3-D printing.

The presumption is that industry will want these solutions because of the coming added complexity and demands of the modern supply chain in the digital age.

But most supply chains still confront very basic problems and inefficiencies; they haven’t in many cases even fully deployed yesterday’s technology, so delivering product with drones doesn’t make the priority list.

So which technologies are key to the supply chain of the future? The same ones that were introduced 15 years ago that companies still haven’t adopted! This is unfortunate, because many of these technologies were designed to automate the supply chain office, and without automating the supply chain office, all of that promising talent you are committed to developing is typing away at tedium.

Just visit your customer service department, where very smart and capable humans – some with $120,000 college degrees — are reading data from pieces of paper and entering them into systems, an act which, according to supply chain technology gurus, should have disappeared years ago with the introduction of EDI, integrated systems, and OCR.

Supply chain managers are managing minutiae, not the supply chain.

Where does the minutiae come from? From the 18,000 to 30,000 phone calls or emails and the 120,000 to 350,000 manual interventions a typical ($2 billion +) company must make just to ensure proper system processing of its order-to-cash flow. And this is with all the normal ERP and associated technologies, such as EDI, that a company of that size normally uses.

Companies still have teams of people shuttling information and data all over the supply chain office, and because they are busy shuttling information they don’t have time to look at it to make sense of it and use it to improve your business.

Automating the supply chain office is one of the cheaper technology moves you could make. The EDI and OCR of the 1980s has gotten better and easier to deploy, and when strung together with complimenting technologies, can automate nearly all of your order processing, exceptions management, invoice discrepancies and customer claims work.

Automation also has the enormous benefit of – by definition – digitizing every piece of data from every transaction. If all of your shipping and invoice claims are scanned, stored, and sent to transactional systems for disposition, all that data is available to study for patterns, relationships, and other insights that can mean immediate savings. Like getting a view of the forest.

Want to evolve? Make the supply chain office run itself. For a $2 billion company selling to major retail outlets in the US, this means zero human intervention for every one of 60,000 deliveries a company of that size is likely to make. Most business rules are simple to automate: if X order received, send to Y location and reply Z back to customer.

A truly evolved supply chain office is one where all human assets are users of data, not movers of data, creators of opportunity based on a view of the forest, and customer relationship builders.

Image: Balzac Fresh Food Distribution Center, by Walmart

Few areas of the software market in the past ten years have been as hot as supply chain.

Supply chains in many industries have been trying to cut costs out of distribution networks while reducing order lead time and inventories. They want solutions for modernizing what has traditionally been a backwater: truck booking; warehouse management; pallet management; order picking; truck loading; yard management; and delivery discrepancy management.

This category also includes software for demand forecasting and optimal product deployment throughout a company’s distribution network. Demand planning software can be fraught with peril for companies lacking the discipline and attention to detail needed to master these applications. These applications can be difficult to evaluate, from a buyer’s standpoint. Proceed with caution.

Companies in the supply chain space, known as SCM, (supply chain management), include industry leaders Oracle and SAP, and firms like JDA Software, Manhattan Associates and Red Prairie (recently merged with JDA). JDA is a firm that has grown by acquiring industry-leading supply chain management applications such as i2 and Manugistics. The company claims that 6,000 firms worldwide use its SCM software.

Supply chain applications can be single-purpose or inter-connected, like an ERP system. The supply chain is like a business-within-a-business: it has at least five processes that must be interconnected in some way: 1) demand planning (what will customers order?); 2) distribution network planning (where should we store it before it is shipped to the customer?); 3) manufacturing scheduling (how much should we make, when?); 4) material requirements planning (MRP – what raw materials & supplies do we need?); and 5) warehousing, transportation, and shipping (store the product and ship it to the customer when needed).

A single-purpose application (Demand Planning, Warehouse Management, Transportation) will claim to solve your problems in one or maybe two of these areas. An inter-connected supply chain application will manage all five of these areas. Vendors that offer an inter-connected solution will present themselves as offering total SCM, or supply chain management, solutions.

It’s hard to carve up the supply chain and say one application is better in one area than another, because probably the most important thing is the integration between the five main segments of demand planning, distribution planning, manufacturing scheduling, MRP, and warehousing and shipping.

If you had to choose, the demand planning software might be most important, unless your customers place orders way in advance of shipment; on the other hand, you might have multiple manufacturing locations or warehouses and you need a solution for where to make and ship your product most efficiently.

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.