No better time to spend

So times are bad, and managers have been told to watch spending. But experts who follow Web supply chain management implementations say these are exactly the times that call for a supply chain overhaul.
Written by John McCormick, Contributor

Here you are — the business/technology manager in charge of your company's Internet strategy. You've been told to watch spending. You look around, and see that supply chain automation effort the com pany's been planning.

Does the company really need that, you wonder. The hit is going to be big, in terms of time and dollars. Plus, a supply chain project is a huge, complex undertaking. So, you figure the smart play is to freeze that supply chain automation project.

Dopey move.

Experts who follow Web supply chain management implementations say these are exactly the times that call for a supply chain overhaul. If done properly, an SCM system can rid a company of bloated inventories and inefficient operations — while producing dramatic savings and, often, a competitive advantage.

IBM just completed an SCM implementation at PBD Worldwide Fulfill ment Services, which provides inventory management, e-commerce and customer services to the Arthritis Foundation, the PGA and others. The PGA anticipates a 100 percent return on its investment within 24 months.

Optiant, a hot new SCM vendor, worked with Eastman Kodak on a supply chain project that boosted customer service levels for the photo concern — as measured by the percentage of times the company got its product to a customer when it said it would — from 80 percent to 90 percent. And safety stock inventories decreased by 40 percent.

Yet, spending for SCM seems to be in danger. A recent survey by CIO Insight, a fellow Ziff Davis Media publication, found that SCM was one of the most likely areas to be flattened in a budget crunch.

Granted, there are many SCM hurdles. The projects are complex; the outlays in time and money significant. So, how do you minimize the risk while maximizing the return? Here are the top five tips from experts:

  • Make sure you look at the whole supply chain during the planning process, says Optiant CEO Marcus Ruark. Take everything into account. And check out your partners. If a vendor won't — or can't — buy into your supply chain initiative, it can render the rest of the chain inflexible.
  • There are multiple integration points. David Caruso, AMR Research's general manager of global industry strategies, says companies should consider a "direct connect" to their main suppliers using the Net.
  • Find the best packages. No one vendor can offer a full suite of best-of-breed products and services — not even IBM. Which is why Big Blue so willingly partners with Ariba, J.D. Edwards & Co., SAP, Siebel Systems and others, says Craig Jett, IBM's supply chain point man.
  • Get buy-in from the people who will work the supply chain. Cultural issues are as important as any piece of technology, the experts say.
  • Ruark offers one last piece of advice: "Don't delay," he says. "When the economy picks up, the company with the right procedures and policies will dominate. The best supply chain will win."

    John McCormick is Editor of Interactive Week. He can be reached at john_mccormick@ziffdavis.com.

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