Thoughts on falling behind

By Jim Thomas -- Logistics Management, 6/1/1999

In the mid 1980s, I worked for a manager, Joe Hackett, who reacted to even the most severe situations by saying "You are never as far ahead or as far behind as you might think." Hackett's mantra led employees to believe he was either burnt out, stupid, or crazy. Now that I regularly cover supply chain management (SCM) issues, however, I wonder if our assessment of Hackett's character was too severe. His maxim fits a lot of supply chain situations. Here's an example:

Some of the recent headlines concerning SCM might lead supply chain executives to believe that their programs are sucking wind, particularly when it comes to e-commerce. In a recent cover story, Fortune magazine lists "Streamlining the Supply Chain" as one of nine ways to "Win on the Web." The article describes how Pitney Bowes uses the Web to link its ERP system to suppliers.

Some executives might not be too concerned that they have been left in Pitney Bowes' dust because, after all, Pitney Bowes is big ($4.2 billion in annual revenues) and big companies develop big SCM programs.

But wait. It's not just the big companies. The national accounting and management consulting firm Grant Thornton LLP has announced that more than half the midsized U.S. manufacturers use the Internet for supply chain functions. And many more of these companies, which have annual sales of $20 million to $500 million, report they will use the Internet for their supply chains in the next two years.

It is not unreasonable to assume that your SCM program is lagging if it does not include cyberspace. Fifty-eight percent of the manufacturers surveyed by Grant Thornton say they use the Internet to share information with customers and suppliers. And about one-third of the respondents use the Internet for functions such as providing price quotes, order processing, and order fulfillment.

Certainly, the percentages suggest midsized manufacturers are making great strides in e-commerce. However, the act of Web-enabling a process does not, in itself, indicate a change in supply chain performance.

For a site to improve a company's SCM efforts, it has to provide value. Does it attract repeat customers? Do the site's content and design complement marketing plans? Do orders move seamlessly from sales, to finance, to distribution, and to customer service? Is there a cost-effective distribution solution in place to account for the shift from retail purchases to centralized Web-based purchases? Do Web sales shorten cash-to-cash cycles? Can the Web data improve forecasting and planning? Can the site enhance customer service? Are there ways it can bolster vendor performance?

In summary, does the Web site provide a higher top line or a healthier bottom line? The act of Web-enabling a process does not provide that answer. So an observer certainly could conclude that Web-savvy businesses might not be SCM masters. Conversely, the Web-challenged may not have fallen as far behind the leaders as it might appear.

Unfortunately, the statement "I haven't fallen too far behind" isn't one that will inspire employees or win a company any new customers. It would be far healthier for companies to initiate e-commerce activity. For those companies already on the Web, it is essential to integrate e-commerce and existing practices into a single supply chain. In today's marketplace, "not too far behind" is a cry for help.

We were right all along--Joe Hackett was nuts.