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SmartAdvice: Top-Down Strategy

Business commitment, good project management, and an incremental approach can improve your chances for a successful supply-chain-management implementation, The Advisory Council says. Also, control the costs of computer hardware maintenance and avoid the pitfalls of corporate IT-abuse investigations.

Editor's Note: Welcome to SmartAdvice, a weekly column by The Advisory Council (TAC), an advisory service firm. The feature answers three questions of core interest to you, ranging from career advice to enterprise strategies to how to deal with vendors. Submit questions directly to

Question A: With the economy picking up, our manufacturing executives are talking about supply-chain management again. What are the critical success factors for a supply-chain-management project?

Our advice: Supply-chain-management implementation is complex. To be a success, comprehensive business commitment and a strong relationship with business partners are essential. As with any complex endeavor, the chances of success are improved by good project management and an incremental approach.

Business-Driven Strategy
Supply-chain management is a customer-centric business strategy that delivers an optimal flow of products and services from source to customer. This adds value for the company by developing efficiencies, reducing costs, and improving customer satisfaction.

Supply-chain management is built on business processes that are complex in and of themselves, including supply-chain planning, supply-chain execution, warehouse management, transportation management, global trade, order management, sourcing, and procurement.

Management Commitment
The critical success factor in implementing supply-chain management is top-management commitment to the concept and business strategy. Analysis of business processes can identify areas where there are gaps that must be filled.

Managing Supplier And Partner Expectations
Supply-chain management is especially complex because its processes involve businesses outside the enterprise. Supply-chain management requires changes in the way people work both in the enterprise and in your network of partners and suppliers. Only the largest and most-powerful companies can force such radical changes on their network. Most companies will have to negotiate with their suppliers to adopt and collaborate.

Managing Internal Expectations
Changing the way your employees do things may be an even tougher sell than changing your external suppliers. People are resistant to change, whether it's the way they answer phones, file papers, or fax documents. A convincing case must be presented, otherwise people will continue doing things as before in spite of the new software.

Managing The Learning Period
Like all IT applications, supply-chain-management software will only process data it's given. It cannot instantly absorb the history of the company. There may be a lag of several months before forecasters and planners start receiving beneficial data. Their expectations need to be managed, otherwise forecasters and planners will stop trusting and using the system.

  • A corporate training and education program should emphasize how the supply-chain-management software can help integrate business processes to make efficient use of time, materials, and capital.

  • An early emphasis on data quality and system management must be supported by adequate resources.

  • A continuous dialogue with the process owners and implementation teams needs to be maintained in order to avoid failure.

  • Active participation and a voice in the project by users should be encouraged.

  • Customer and partner satisfaction metrics should be published to show the benefits of supply-chain management.

Another success factor is picking the right approach for your particular situation. If your analysis of your current supply chain reveals varied and complex business processes, your approach should be to first implement realistic components, then bring together the whole supply-chain-management system over a period of time. If the processes are simple, then a comprehensive implementation may begin at once.

Supply-chain management, if properly implemented, brings enormous benefits, but they come at a significant price and risk. Before approaching a supply-chain-management implementation, the appropriate project and business risks should be studied and managed closely.

Driving Business Value
A supply-chain-management implementation can improve customer and supplier satisfaction, as well as save time and money, factors that significantly increase corporate value.

Advancing Your Career
A successful supply-chain-management implementation should enhance your value to the business and provide you with expertise in new areas that can help advance your career.

- Humayun Beg

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