For Supply Chain Management....IT Infrastructure Is Critical

 

You are the weakest link - goodbye.

No business is an island, and companies working in fast-moving supply chains are expected to operate in a more joined-up way than ever before. Information is increasingly their lifeblood: modern supply chains are no longer simply about transforming raw materials into finished goods, but about sending information as quickly as possible the length and breadth of the chain. This information controls the delivery of materials, the size and timing of production runs, the particular geography in which production will occur and every detail of the distribution and delivery of goods. It is increasingly used to tune the chain to customers' real-time requirements, so that they get what they want, when and where they want it.

"The pressures now placed on any business which works within a supply chain are immense," explains Gill Hawkins, Marketing Director at Star. "In particular, large multinational companies have more and more power over those who supply them with product." Such companies play an orchestrating role within their supply chains. They are investing in IT infrastructures which facilitate the flow of information up and down the chain. "As a result," Hawkins adds, "they are enforcing increasingly high levels of IT connectivity on the people who do business with them."

The Internet is key to such connectivity. It is transforming the way in which many supply chain processes, such as purchase-ordering, are carried out. Large companies are spearheading on-line procurement initiatives, setting up on-line auctions and e-marketplaces, with which they expect suppliers to connect. They use e-mail, which is fast becoming the standard method of communication among supply chain partners. They are Web-enabling their core business systems, so that their information is available 24/7 to suppliers and customers - and they expect their suppliers to do the same. The expectations which they have of their partners' connectivity are rising daily.

The goal of today's supply chain may be the seamless, end-to-end electronic transfer of information over the Internet, but it is not yet the reality. There are numerous supply chain members without the right level of connectivity between their systems and those of their partners. Most companies will have experienced the frustration of having a supplier with a slow, unreliable e-mail system which throws a spanner into the works of their own stock-ordering process or a distributor with an inefficient, off-line logistics system which is unable to inform its customers of delivery delays.

Then, there are the partners with connectivity, but a cavalier attitude to Internet security - risking compromising the integrity and confidentiality of supply-chain information and risking bringing down their customers and suppliers' systems. Since information is so critical to today's supply chains, any company which lacks commerce-enabled business processes, supported by good Internet connections, efficient IT systems and the right attitude to security, may find itself sidelined from them.

"Most companies will have experienced the frustration of having a supplier with a slow, unreliable e-mail system or a distributor with an inefficient, off-line logistics system."

"Smaller businesses are especially vulnerable," Hawkins points out. Their significant customers are unlikely to wait for the small companies' IT infrastructure to catch up. In a global market, large companies can always find new partners which have equipped themselves with the right level of connectivity to play. If companies are to survive in the Internet enabled supply chains of the twenty-first century, they require the right IT solutions. "If businesses aren't careful, they will find themselves making the wrong decisions on IT investment, excluding them from supply chain opportunities," Hawkins remarks. "Getting the right advice when setting up and maintaining IT infrastructure is a business-critical issue," Gill adds.

"Making snap decisions internally about what software, hardware and Internet services to use is a high-risk game." "You know you've got the right IT partner," says Gill, "if it asks about your business, who your customers are and what those customers expect from you, in terms of communications technology. It should understand your business aspirations before suggesting an IT solution. That's when you can tell whether it wants you as a long-term partner, rather than a short-term revenue win."

A company may fulfil all of its customers' connectivity requirements, but still be perceived as the weakest link in the chain, if it doesn't carry its suppliers with it - helping them to adopt best practice, too. The hard fact is that if a company fails to invest in the right connectivity, it loses opportunities for not only itself, but also its suppliers and customers. No company wants to be viewed as the weakest link by its business partners, because, in today's supply chain, it can mean commercial suicide.

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