It’s not necessarily in software vendors’ or technology consultants’ natures to be pragmatic about the application of IT systems to supply chain functions.
But at this year’s Gartner Supply Chain Executive Conference in Phoenix, it was hard to ignore the tone struck by the majority of speakers — Gartner’s own analysts, shippers, and vendors. All focused on being realistic about technology implementation, about starting with small projects, about setting achievable goals, and about failing fast and cheap.
Again, you don’t hear the word “fail” often in discussions at these strategic conferences, because no one wants to be associated with not meeting projected goals. But the sense I got was that technology usage in supply chains is now so mature, so utterly expected and accepted, that it’s okay to discuss things like implementations that didn’t go exactly as planned.
There was, of course, lots of discussion of how technology can rectify supply chain failures, but also plenty of sessions where people and processes were the emphasis, not just systems.
As one prominent supply chain technology provider put it to me, there’s no “fix things” button on any system. It’s how you employ technology that makes the difference.
Back to the issue of people and processes, the sessions I found most interesting were those that looked at the basics where human expertise and elbow grease are absolutely required. Like building the business case for IT investment — that takes a well-choreographed dance between science (the reasons the system is needed and the ROI it will produce) and art (the basic skill of presentation to the C-level that is often the hardest part of the entire initiative).
American Shipper research in 2014 showed that no more than two-thirds of shippers and 3PLs feel they have the funding to invest in technology across key transportation and trade compliance functions. No wonder everyone is thinking in pragmatic terms these days.
Another interesting session focused on whether new product development should come under the jurisdiction of the chief supply chain officer. First of all, the idea of a chief supply chain officer (not that this title is used at all companies) shows just how far supply chain has come in recent decades. But Gartner analyst Janet Saleski made the case that the CSCO (or whatever the relevant position is in your organization) should consider product development part of his or her responsibility.
Suleski noted that 50 percent of new product launches fail. And more worryingly, many companies don’t know how many fail or what even constitutes a successful launch. Again, another reason for pragmatism.
Suleski’s assertion is that supply chain organizations think in terms of reliability and consistency, while those typically responsible for new products launches (marketing and merchandising) focus on uniqueness. That uniqueness causes consternation for supply chains that are built around order. Supply chain organizations have a lot of value but not much uniqueness, she said. They are focused on operational excellence, but they’ve almost become commoditized in that drive for uniform excellence.
Here’s where the “fail fast, fail cheap” message that permeated a lot of discussions at the conference comes in. When supply chain organizations are willing to engage more in the uncertain world of product development, they enable companies to make the product launches that do fail less cumbersome. And some proportion of product launches will inevitably fail.
Take the experience of Brown Shoe Co., the umbrella company for a host of noted shoe brands and retail outlets like Famous Footwear, Naturalizer, and Buster Brown. Jeff Kuhn, vice president of supply chain planning and operations for Brown, said at the conference that his company has four to six “seasons” per year, with 90 percent of its products changing per season. That equates to managing 11,000 products per year, and a couple hundred thousand SKUs. Obviously, not all of those products will be successful.
But managing those products from the drawing board to sourcing, production, transportation, regulatory clearance, and final delivery makes it less costly to stomach all the shoes that aren’t successful.
As another Gartner analyst, Steve Steutermann, put it, companies are “awash in SKUs,” and need to focus intently on their cost-to-deliver or cost-to-serve.
The last words on the topic go to Dwight Klappich, yet another Gartner analyst.
“The fail cheap, fail fast mentality doesn’t mean you want to fail,” he said. “It means you’re not afraid to take risk.”
This commentary was published in the June 2015 issue of American Shipper.