Economically speaking, the millennium's inaugural years have been rather bumpy. But according to a recent survey, productivity wasn't one of the casualties. In fact, more than 80 percent of 300 IT executives and business managers polled by Accenture said they believe that productivity at their company has increased in the past few years; about the same number of respondents attributed those increases to better use of technology. Moreover, 60 percent also said they believe that the right amount of IT investment directly contributed to their productivity gains—more than cost-cutting measures, business process reengineering, and other major capital investments.

The research also revealed that a majority of executives believe IT expenditures are likely to increase over the next three years. Surprisingly, more than half of the surveyed executives have yet to decide which IT investments offer the greatest value. In other words, although executives recognize that technology is a productivity enhancer, they're not necessarily clear about what to invest in down the road.

In our view, one clear conclusion can be drawn from the above trends and survey results: Supply chain technology—not just technology in general—can be a critical contributor to a company's financial success. The proof can be found in widespread productivity increases, greater efficiencies, and higher service levels, which can be realized through innovations in sales and operations planning, new procurement tools, and breakthroughs in transportation and warehouse management strategies, to name but a few.

When the time comes to review future technology investments, companies may therefore want to prioritize supply chain-related tools, such as those on the following list:

Demand-Driven Supply Networks: As companies get their own houses in order, new opportunities arise for them to respond more quickly to changing market opportunities. A good example is what industry analysts AMR Research calls "Demand-Driven Supply Networks"—manufacturers reacting directly to demand input, instead of aggregating data from distribution centers or building product solely to forecast. The keys to making this strategy work are using technology to acquire demand signals directly from retail stores, channeling that demand to the optimal manufacturing source, and adapting manufacturing processes to react quickly.

Master Data Management: Leveraging technology to standardize data formats and introduce uniform naming conventions across an enterprise generally leads to significant gains in business effectiveness. Following such a move, corporations nearly always are able to identify (and subsequently eliminate) redundant inventories, improve on-contract and bulk buying across various divisions, and communicate more effectively with their suppliers and vendors in business-to-business environments.

Profit and Revenue Optimization: In addition to creating more accurate, consensus-driven forecasts, advanced supply chain planning tools now can help companies decide how best to allocate products among their customers. In effect, "customer segments" can be more easily identified and served, thus making it possible to apportion limited quantities of products to obtain the best price for each one. Such tools also help companies determine which customer-related factors influence long-term profitability and how those factors should be dictating short-term pricing decisions.

Product Lifecycle Management: Companies are under enormous pressure to develop products faster and more profitably. That means rapid scalability, increased cost-structure flexibility, and the ability to duplicate market successes without reinventing the wheel. Product lifecycle management (PLM) can help companies achieve all of these advantages.

In a PLM environment, information from every relevant constituent is brought to bear on a product's definition, design, development, manufacture, sale, movement, support, and even its retirement. Product-related information also is made available to all internal factions and external business partners, including designers, suppliers, engineers, contract manufacturers, marketers, supply chain service providers, support personnel, financial personnel, and even the customers themselves.

Telematics in Service Management: To date, most telematics solutions—wireless, two-way communication capabilities between vehicles or equipment and their external environment—have been used to track location and usage levels. However, the area with the most promise could be "advanced diagnostics and monitoring," or proactive service management. Embedded in components and subsystems, telematics applications have the ability to recognize when something is about to go wrong, transmit service alerts, order replacement parts, schedule their own maintenance, and even reroute parts needing repair. They also can feed service and customer databases that track and analyze usage and product performance.

As the results of our survey show, corporate leaders have both the funds and the willingness needed to make powerful investments in information technology. Their challenge lies in identifying and prioritizing profitable opportunities.

And as we've discussed in previous columns, the difference between "differentiating" and "disappointing" supply chain investments usually is the ability to make choices that complement your business strategy and support the right elements of your operating model.