There's no denying that technology is hugely beneficial to the supply chain industry. Getting products to consumers faster, at a lower cost and with the predictability of a Swiss watch, requires integrated information technology. But supply chain effectiveness is not won merely with incremental investment in the latest toolsets. The real cost benefits result only when all the respective players within the supply chain are committed to the nitty gritty of the business process and then have the courage, honest and tenacity to change the underlying values/ethos that drives a particular industry.
Take theFMCGindustry for example. While this industry is among the most technology driven, the greatest hindrance to effective supply chain management is the reluctance among members of the industry to execute transactions transparently. This practice results in numerous invoice queries and standard delays in payment, breaking the information flow, driving up administration cost and frustrating the efforts to collaborate to serve the consumer. Potential efficiencies that might be derived from the technology are wiped out as mutual mistrust results in increased cost to the consumer. In this instance, flaws in the business model, which relies on the power struggle for bottom-line profits and cash flow, nullify any benefits that e-Business might bring to the process.
To change this industry practice, requires a change of heart. Players need to face up to the consequences of their behaviour and practices, and muster the necessary courage and tenacity and commitment to make it happen. Not all is lost many international players have recognised how behaviour need to change and FMCG players in South Africa are starting to move towards more transparency.
The benefits of an effective approach to supply chain management can be illustrated using a standard box of breakfast cereal. Information collated at the point of sale, could be rolled on to the warehouse management system, informing it of the need to replenish the shelf, and then on to the suppliers of the product, the packaging and to the paper manufacturers. A simple act of transparency, such as this, would improve suppliers reaction times, significantly reduce inventory and allow the consumer access to the latest product innovation far quicker with most wasted effort eliminated and cost reduced. Instead, pervasive lack of trust, suspicion and a history of non co-operation between parties in the supply chain result in a withholding of information, mitigating against any great improvements that information technology could possible bring to the supply chain. Timeous information, a collaborative view on the business processes that need to be implemented together with a spirit of trust will result in the right products, at the right place at the right time. It's all about using the tools correctly and removing the guess work. The result: a huge cut in wasted costs from the supply chain.
Cobus Rossouw, Managing Director of Volition Consulting Services
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