Supply Chain Management: Time to Manage This Not So Wicked Problem

As an ERP consultant, my prospects and clients often ask me about supply chain management (SCM). I like to start the conversation by asking them the question: “How do you define supply chain management?”

As you might imagine, the responses vary dramatically. One person might suggest it means “just in time” inventory management. One may suggest SCM demands that purchasing processes need to be highly tuned in order to take full advantage of supplier’s offers and bids. Another response from my clients might be SCM means maximizing inventory turns and throughput in the operation. These answers are all correct, but only to the extent that they are merely pieces to a much broader puzzle.

Here’s my broad definition of SCM. Supply chain management is managing the entire process stream from when components and ingredients are captured from the earth to when these compounds are re-introduced into the environment. The trick is to determine then optimize how far upstream and how far downstream you can reasonably influence, manage and optimize the process.

According to the Council of Supply Chain Management Professionals (CSCMP), supply chain management encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management. It also includes the crucial components of coordination and collaboration with channel partners. The partners can be your suppliers, intermediaries, third-party service providers, and your customers. In essence, supply chain management integrates supply and demand management within and across your business and other companies.

Dr. H. Christian Peterson wrote a great article titled "Transformational Supply Chains and the “Wicked Problem” of Sustainability: Aligning Knowledge, Innovation, Entrepreneurship, and Leadership." In this article, he characterizes basic supply chain performance as having two fundamental dimensions. The first “dimension is responsiveness – the ability to deliver product or service benefits of value to targeted final consumers. The other dimension is efficiency – the ability to deliver any given set of benefits at the best possible price or cost.” His article explores these supply chain management challenges as “wicked problems.”

In this article, Dr. Peterson’s focuses on supply chain management becoming a “wicked problem” when other dimensions are considered, such as sustainability. Wicked problems can’t be solved, but must be managed due to the dynamic characteristics of these elusive dimensions.  Note that he used the term “manage” rather than “solve.” You can find his article here.

Here’s my point: there are many faces of supply chain management that you can understand and better manage in your business. These do not have to be “wicked problems” for your business and are not impossible tosolve. In my experience, many businesses think SCM is impossible to manage effectively and do not invest enough resources (money, time, or attention) to fully realize what is achievable. The tools are there and today’s ERP software systems have the capabilities to solve controllable supply chain challenges. There are many contemporary approaches that can provide your business with  proven methods to embrace and optimize supply chain opportunities.

When you can do it better, faster or cheaper, you should be interested in making a change. When you actually find new ways of doing it better and faster and cheaper, then it’s a home run!

Here’s a great example of how ERP consultants like us can help with this process. I was involved in a project with a well-known manufacturer of laptops, desktops and server hardware. They recognized the obvious that if they collaborated better with their suppliers in new product development and supply chain optimization, they could reduce costs and improve margins for themselves and their suppliers. They launched and implemented a rigorous product lifecycle management automation project using an extension of ERP software that they already owned. The results spoke for themselves:

• Improved speed to market by 13%
• Reduced cycle touch points by 8/10 of a cycle
• Virtually eliminated defects
• Reduced WIP and finished goods inventory by 7%
• Improved internal margins and margins of suppliers
• Project investment recaptured in 4 months

Faster, Better, Cheaper.

Are you missing the obvious? Do you drive your upstream supply chain effort into product life cycle management? Do you drive it downstream through your distribution and logistics operations? Is continuous improvement a way of life, or are you settling for a “good enough” state?

We’ll explore this SCM topic further. My next blog posting will be feedback from an interview with a mid-size business supply chain executive. She has evaluated her company’s supply chain and has identified many “chunks” of process that can be optimized or “solved.” Stay tuned to learn more about what they are doing!

If you are reviewing your business and desire to find new ways to run things faster better cheaper. CONTACT US to start a conversation about your supply chain management challenges with one of our experienced ERP consultants. Our team has over 20 years of experience in helping our customers and would be happy to discuss your supply chain management challenges. We are very interested to learn how we can help you better manage your business and take your business to the next level!

Author: Dean Auenson - MIS Consulting & Sales, Inc.