Back to blocking and tackling

By Francis J. Quinn -- Logistics Management, 5/1/2000

It's close to becoming a business cliché, but we can't resist saying it one more time: Supply chain management has become the new source of competitive advantage. How well you manage the process of moving goods, from sourcing through point of consumption, in large part determines your success in the marketplace.

Information systems play a big part in this process. The ability to exchange data among the supply chain partners and to gain visibility over product movement is critical. Numerous supply chain software solutions available today promise to give companies this capability. And recently, a number of Internet-enabled solutions have been introduced that claim to accomplish the same end-sometimes at a considerably lower cost.

Collaboration is another key component of the supply chain management process. Increasingly, companies are looking to join in collaborative efforts with their supply chain partners-both upstream with vendors and downstream with customers. The alphabet soup of collaborative initiatives-CPFR, VMI, ECR, among others-has become part of the supply chain lexicon. All of these initiatives have the laudable goal of building closer working relationships across the supply chain for the mutual benefit of participants in that chain.

But there's a caveat that needs to be voiced here. Many companies, and the supply chain professionals within them, have become enamored of the promised benefits of the new information systems. But in all too many cases, the technology is viewed as an end unto itself. If you can just get that latest software package up and running, the thinking goes, the supply chain will almost run itself.

That same kind of naïvetéis evident in the attitude some people have toward the collaboration programs. The theory behind CPFR (Collaborative Planning, Forecasting, and Replenishment), for example, is sound: Engage buyers and sellers in a mutual effort to pinpoint actual consumer demand and then plan and build to that demand. But as any company that has embarked on CPFR will tell you, progress is slow and incremental. Success comes only after trial and error-and a lot of hard work.

The perception that the latest software package or collaboration program is a silver bullet fails to take into account a hard reality. Namely, successful supply chain management depends on the execution of multiple individual tasks. If these basic tasks are not executed flawlessly, even the best-conceived supply chain strategy will falter.

What does this mean in practical terms? It means filling orders accurately from an efficiently run warehouse or distribution center. It means delivering those orders complete and on time while communicating with the customer before, during, and after the transaction. It means handling returns in a timely and cost-efficient manner that retains-not repulses-customers.

In essence, what we're talking about is the "blocking and tackling" of logistics. Unless those day-to-day tasks are done right every time, the most advanced software solution or collaborative initiative will never realize anything close to its true potential. Companies need to spend as much time on the nitty-gritty of execution as they do on the big-picture strategies. The two are inextricably linked; one cannot succeed without the other.

Francis J. Quinn is editor of Supply Chain Management Review, published by Cahners Business Information. Visit the magazine's Web site at www.supplychainlink.com.