Mastering Complexity and Seeking Simplicity in Your Information Supply Chain – Part 2

Abstract: Like the old adage about not seeing the forest for the trees, companies must understand what is and what need not be complex in their data management processes. Modern Enterprise Resource Planning [ERP] Systems offer the opportunity to centralize data, provide information to the entire Integrated Supply Chain, and manage interactions with Supply Chain Partners. The challenge faced by many companies is to simply provide the needed information, without unnecessary data to distract the user.

Master Complexity
Companies interested in simplifying their complex internal environments must take a “10,000 foot” approach to the problem, rather than trying to solve it on a fragmented basis. To achieve this viewpoint, they must look at each individual department’s technology system, for example, and determine not only how to improve it, but also how to effectively integrate it with other departmental or functional systems. (1)

For example, rather than attempting to improve the finance department’s collections process, take a holistic view and examine the following processes:

• Procurement to payment
• Payment to cash

• Campaign to order (for marketing systems)

These are the processes that simplified quickly and immediately, by taking a more holistic point of view. Additionally, companies should consider processes that reverse the complexity and progressively get easier. Most firms assume the best way to fix the account legacy system is to buy a modern system. Experience now proves that by taking this approach, they’re just modernizing the fragmentation and creating a faster execution of bad processing. A better approach is through architecture or platforms that enable a company to integrate systems and arrest the fragmentation and complexity. Oracle, for example, offers a fundamental platform technology that enables all servers on the system to pool transactions into one database in a very logical manner.(2) This functionality is not limited to one software vendor. Businesses with older ERP systems should ask their current software vendor to solve this problem for them. With competition for ERP implementations on such a competitive basis, the customer should be in a good position to exert leverage.

Using these simple, integrated systems, companies need only look to a single point of truth for information, rather than searching all over the place, hoping to find what they’re looking for.

Seek Simplicity
Those firms that eliminate complex, fragmented systems are reaping significant rewards. By introducing streamlined, company-wide systems that arrest the complexity and become easier to manage as the company grows, managers can expect the following benefits:

• Reduction of waste
• Better decision making through improved business intelligence
• Higher work morale
• Improved employee empowerment
• Better access to company growth

• Ability to run the business in a more efficient manner (3)

To begin taking advantage of these and other benefits, companies should align their business objectives and mission with information technology capabilities that support those objectives. Examine those IT areas that might be handicapping the enterprise’s growth, then begin integrating as many systems as possible into a single, simplified scheme that supports the entire supply chain. (4)

The key to sharing information with all supply chain partners is having reliable information, available on a timely basis, in a form that can be utilized by those outside your company. If any of these three aspects is not addressed by a company’s current Enterprise Resource Planning [ERP] System, then the opportunity for beneficial information management within the chain will not be consistently achieved. Furthermore, ignoring the need for, or delaying the solution of, this problem will hamper the ability of the company to achieve growth and service objectives. Best practices now include the need to resolve the ability to compete in the areas connected with information flows. As time passes, it is likely it will be a mandatory requirement to the future viability of the business.

References:

(1) How to Become a Supply Chain Master, WILLIAM C. COPACINO and JONATHAN L.S. BYRNES, Supply Chain Management Review, September 1, 2001

(2) The Advantages of Partnering Well, Robert A. Rudzki, Supply Chain Management ReviewMarch 1, 2004

(3) Uncertainty and the Seamless Supply Chain, By Steve Geary, Paul Childerhouse, and Denis Towill, Supply Chain Management ReviewJuly 1, 2002

(4) Altering the course,By Gary Borislow, Supply Chain Management ReviewSeptember 30, 2001