Supply chain management is about vision more than electrons.



In the old, unlamented Soviet Union and other Eastern bloc nations, it was not uncommon for beleaguered citizens to endure three long lines to make an everyday purchase. Many stores were set up so that shoppers had to stand in one line to order the goods, queue up in another to pay for them, then line up once again to pick up their order. Made no sense at all, but the oppressed people had to put up with such nonsense for seven decades before the idiotic system got overturned.

Some capitalist world transactions seem almost as inane from a certain perspective. A typical supply house purchase might originate with an outside salesperson, who calls it in to an inside counterpart, who relays the order to a warehouse picker, who conveys the goods to a shipping clerk, who passes them on to a truck driver. Even more parties come into play if the order includes items not in stock. At least five and maybe more individuals have to do their jobs right in order for the customer to get what he wants in timely fashion. Even when that happens, all those handlers increase the odds of mistakes cropping up on the invoice or with inventory subtraction or some other recordkeeping. When you think of all the opportunities for supply mismanagement, it's a wonder any order gets handled without a glitch.

This has been the PHCP industry's modus operandi for more than a century. Wholesalers are beginning to understand the inefficiencies built into this process and change is coming about. But oh so slowly.

Computer technology has a big role to play in modernizing PHCP supply, but industry leaders are visibly frustrated at the snail's pace of progress. Source ASA+ has been in effect for more than three years and is still nowhere close to critical mass. ASA President Jack Hester, speaking on a panel at the AIM/R Conference in Key Largo, FL in April, said that only 42 manufacturers had responded to letters sent to some 250 companies asking for UPC codes and other data needed to electrify transactions. Wholesalers are hardly the only ones to blame for the industry's backwardness.

Cutting To The Quick

When you ask insiders why progress lags, their answers do not lend themselves to easy summation. Most simply don't know or at least fail to articulate a coherent excuse. Some blame it on their companies' outmoded computers or lack of training on how to use them. A consensus at the recent Prophet 21 Summit in Orlando was that P-21 users on average are tapping only about 35% of the capabilities offered by the system. I suspect the folks at NxTrend and Eclipse would come up with estimates in the same ballpark. Why does all that computing power go to waste? A panel discussion at the P-21 Summit found many wholesalers lamenting the fact that they hardly get past the training wheel stage before the press of everyday business puts a halt to their locomotion.

If only we could get up to speed with our hardware and software, by golly, our business is going to get well, goes their underlying thinking. Yet, while modern computer technology offers a big potential boost to supply chain efficiency, it's not a miracle cure for supply chain ailments.

It's good to remind ourselves of the old GIGO paradigm. Computers are only as good as the information fed into them. By extension, automating supply chain tasks will do you some good only if those tasks make sense. In too many cases, it's not the technology or lack thereof that's wanting, but underlying systemic problems.

Learning From Wal-Mart

Consider the success story that is Wal-Mart, now the nation's largest corporation in revenues. People who analyze the retail giant generally see them reaching the pinnacle through extensive use of technology such as bar coding, wireless scanning and EDI. These same tools have been equally available to the PHCP supply chain. Why haven't more of our industry's wholesalers adopted them? Why hasn't at least one wholesaler pulled off a category-killing breakthrough to industry leadership a la Wal-Mart?

The answers probably have to do with management vision more than electrons. Wal-Mart adopted those technological innovations in the context of broad management commitments that enabled them to maximize the benefits of technology. Wal-Mart originated the "big box" format that increased the amount and kinds of merchandise available. They committed to an everyday low pricing strategy. They cross-trained employees to work in different departments as needs arose. They used the stupendous sales data generated to train, assess and motivate employees. None of these concepts stem from technology per se, although technology was aimed to help bring them about.

Before technology can be used to modernize the PHCP supply chain, what needs fixing are antiquated ways of thinking about how goods need to be ordered, handled, tracked and distributed.