Mastering Complexity and Seeking Simplicity in Your Information Supply Chain – Part 1

Consolidation of a company’s data in a single place is the most helpful action that a firm can take to extract maximum benefit from the data available. By creating a single, easily accessible data source, companies will be able to better ensure accuracy and validity of that information. The data can then be used in conjunction with related data (such as that of your suppliers and/or customers), thus generating a steady stream of good, reliable information that all the members of the supply chain use utilize to their advantage.

Replacing “data gaps” with accurately managed data, will not only help companies gain internal operational efficiencies, but will also advance their business partners’ processes. If someone in sales takes orders at your company, then someone else manually re-enters those orders into a warehouse management system, then it’s definitely time to consolidate business processes to ensure better data accuracy and usage. By transitioning from a combined batch-and-real-time mentality to a more consolidated data management approach in which transactions are processed and data generated in real-time, companies can reap significant savings in money and time. (1)

Generally, companies cannot employ the complex technology system that they are using when they must sustain rapid growth or high growth demands across the entire supply chain. Since the complexity inherent in most systems will bog down the product flow and make communication with supply chain partners more difficult , at higher levels of data processing requirements; what’s needed is not greater complexity but simplicity. “Keeping it simple” is a critical fundamental for companies looking to maximize their supply chains in today’s business environment. Rather than piecing together complex systems that only perform well independently, companies today should be introducing processes that reverse the complexity and progressively make things simpler. A straightforward, uncomplicated supply chain system will not only provide tangible efficiencies and reduce waste, but also boost work morale and employee empowerment at your company. (2)

Having critical information scattered among incompatible databases and PCs is of no use to anyone, yet many companies operate in this fashion. By shifting to a unified technology environment, that emphasizes integration and simplicity those same firms gain efficiencies through a system that’s both easier to manage and vastly more stable. Technology upgrades are simpler, information is easier to access and employees are more productive. (3)

Even more importantly, the company’s supply chain is simplified for business partners and customers, both of whom are exposed to any glitches and complications in your system. The way in which a firm transacts business with customers and suppliers is directly reflected in the efficiencies of the company’s internal systems. The customer whose phone call gets passed from one department to the next is a perfect example of a too-complex system. Calls are passed around because the customer service department is different from the warehouse, which is different from the finance department. These interactions often result in dissatisfied customers, and lost business. There is another problem, any increases in business can wreak havoc on those complicated systems, stressing them to the limit and producing even more disappointed customers and frustrated vendors. It’s very difficult to expand a business using the same system that you have in place today. A simple technology system that handles everything virtually ensures that those challenges will be greatly diminished and companies will be free to scale up and grow. (4)

ERP systems provide the means and opportunity to better house and access consolidated data by multiple functions in the business organization. Implementation of an ERP system, or upgrading an existing implementation, provides the opportunity to re-assess the complexity and utility of the system. In order to allow the opportunity to grow quickly and maintain good communication, information flow, and harmony with all supply chain partners, from suppliers through customers, complete, consolidated data used by simple, straight-forward information systems will achieve the best satisfaction and financial results. A wise and prudent business leader will seize the opportunity to move ERP systems toward achieving this goal.

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 Financial Advantages of the Lean Supply Chain, JAMES M. REEVE, Supply Chain Management Review, March 1, 2002

(3) The Top Ten Supply Chain Mistakes, SUMANTRA SENGUPTA, Supply Chain Management Review, July 1, 2004

(4) What’s Your Supply Chain Type?, JOSEPH L. CAVINAT, Supply Chain Management Review, May 1, 2002