Ever increasing customer
expectations, supply chain becoming more and more complex driven by
globalization, increased volatility and shrinking margins have put much higher
pressure on managing your shipping costs and time. This, when combines with
shortages of drivers, trucks, railcars, ocean slots, ports and escalating fuel
costs, becomes a nightmare for a supply chain executive.
A lot of organizations have
already embraced technology to get better visibility into their transportation
budget and operations. It has helped them in keeping the transportation costs
checked and manage consolidation & globalization of outsourcing suppliers.
But, the question I raised in one of the recent discussions at a supply chain
forum, that how far software alone can help you in this regard? Is the software
enough to take out of all operational issues or you will need to transform the
practices also in your organizations to reach the goal? Of course, there are no
prizes for guessing that both the approaches are required but what should take
precedence? Can there be strategy around this?
While, the software will promise
a lot like providing logistical processes control and visibility, optimising
planning cycles using real time data, shortening of time duration of planning
and fast adapting to changing regulations but most of the promises will hover around
your capability to exploit the software using process discipline and providing
right data set as the input to the software. For example, one of the CIOs
shared that they deployed the best available solution for transportation management
but still there was no improvement in on-time deliveries (in-fact it went down
for first 3 months) or hardly any improvement in load optimization. After lot
of drill down, they found that the sales team was not following any process for
entering orders – means they used to keep on entering orders in the ERP but lot
of these orders were not to be fulfilled ultimately. It means, there were a
large number of cancellations in reality and these were not flowing to ERP and
hence the transportation management solution was planning for those orders also
which were not to be shipped. Due to this, the logistics team had to do lot of
rework in re-planning after taking out the orders manually and the results of
load optimization were also impacted. The sales team was adamant that they will
not change their process just to meet process of the software and kept on
working the same way. Normally, the CEOs will never bother much about the
software and will always thing that it is the job of the IT Team to ensure the
software works as per business needs and this organization was no different.
Without looking at the reality, and not listening to the CIO, the CEO branded
the software solution as useless and a liability. It is at this time, that the
CIO had to escalate even beyond CEO and a consulting company was hired to
really clear the mess.
After spending 3 months and
consuming lot of organization’s resources and money, the consulting company
gave the same recommendations and sales team had to change the process in such
a way that they will cancel the orders which are actually cancelled by
customers and rest of the orders which are not fulfilled even after 2 months,
will be cancelled by ERP itself. The results after this change were humungous.
Within 4 months, the on-time deliveries were improved by 14%, they were able to
reduce number of planners by 20% and allocated them to other areas, cost per
tonne got reduced between 10 – 15% and host of other non-tangible benefits were
achieved. The software is same but a small tweak in process became a game
changer for them.
It may not be the case with all
of us but the point that came out of this story was software alone can do
nothing – it will only provide you capabilities to do certain automations and
bring visibility but ensuring that input going to the software is as good as
the software, will bring the desired change.
No comments:
Post a Comment
Your thoughts are welcome