News & Views

November 13, 2009 from an article written by Dan Gilmore, Editor-in-Chief of Supply Chain Digest – “Am I the only one struck by how often companies seem to have poor supply chain processes? Why is this?…”

180 View (written by Lawrence Young) – This article talks about why companies often seem to have poor supply chain processes, and the resulting effect on transactional processing costs and human capital efficiency.

Supply chain processes are those business processes that allow distributors and manufacturers to procure, receive, store, pick, pack and ship their products. These processes work in tandem with tools such as ERP software, shipping consoles from carriers such as FedEx and UPS, software-driven equipment such as packaging and labeling systems, etc.

As mentioned in the article, Michael Hammer’s and James Champy’s 1993 bestseller ‘Reengineering the Corporation’ gave dozens of examples of how a company’s existing business processes could be reengineered to drastically reduce time spent by managers and employees, while at the same time significantly reducing the number of errors that are made processing business transactions.

As a seasoned IT professional involved in the selection and implementation of new ERP software in hundreds of companies over the last 35 years, I regretfully must report that the majority of companies that invest heavily in new software and related professional services do not often invest proportionately in reengineered processes to work with the new tools. The result – these companies often land up ‘doing the wrong things better’, or as the article reports on a statement once made by Bill Gates “Automating bad processes just allows you to do the wrong things faster!”

To illustrate the importance of this phenomenon, consider the following tale – a lumberjack goes into Home Depot to buy a new axe to replace the one he broke. He tells the clerk he wants to buy the best axe they sell, one that can help him chop three trees an hour like the one he used before it broke. The clerk shows him a gas-powered saw that would let him chop 10 trees an hour, but it costs much more than the axe he was going to buy. But the lumberjack figures that the power saw would more than pay for itself if he could chop more than three times the number of trees each day.

So the lumberjack buys the power saw, but returns all frustrated and angry the following week, complaining that the power saw only let him chop four trees an hour, not 10 as promised. When the clerk powered up the saw to see what might be wrong, the startled lumberjack exclaimed “Hey, what’s that noise?”

While I admit that this tale is a bit of a stretch, you’d be as shocked as I’ve been to discover how many companies don’t ever adequately benefit from their investment in new technology because they never changed the way they process transactions and make decisions, notwithstanding that the new software they implemented could produce significant incremental improvement if only used properly.

All that is required is a commitment ‘from the top’ to reengineer the existing processes to work in tandem with the new software, plus the required expertise from the chosen software vendor and/or an internal or external resource to drive the appropriates process improvement.
Spend the time to examine your current business processes, and determine which processes should remain intact and which should change. As the article states, it starts with a decades-old management approach coined by Hewlett-Packard – Management by Wandering Around (MBWA). I assure you that the results will more than justify the cost and effort of the exercise.