I’ve been catching up on my reading this past week and noted a Supply Chain Digest article that highlighted recent research from Patrick Connaughton, the analyst at Forrester Research (subscription required) who’s primary coverage is supply chain execution systems.  In this post, I will offer readers my views on some of the important observations that were brought out.

The SC Digest article summarizes Patrick’s current take on the need for many companies to re-architect supply chain application portfolios, since supply chain operations are urgently in need of a large-scale transformation or modernization.  But, according to a recent Forrester survey, only about 11% of companies are planning any major supply chain technology upgrades in 2008, bringing innovation to a standstill. In the current recessionary and exploding commodity cost business environment, senior management obsession impulsively turns toward  reducing overall supply chain costs.

According to SC Digest- “Connaughton says he lately has seen more projects moving forward when the focus is on market differentiation and revenue generation, rather than traditional cost cutting.”  That is very encouraging, and I urge readers to influence their supply chain organizations to adopt this same perspective.  Connaughton further provides advice for helping to gain approval for specific supply chain IT projects:

Look for initiatives that can deliver a short-term ROI, and self-fund later stages of the project.   I have been long been counseling clients to do this very thing, regardless of the economic environment. A self-funding project is the easiest way to prove to senior management that the technology has value, and that mega-dollar spending is not the end result

Look beyond the immediate challenges into the big-picture, and ascertain how the pieces will really fit together to deliver total process capability.  In today’s vastly more complex world of supply chain complexity and risk, the big-picture for most companies should focus on highly refined sensing and response processes.  Manufacturers and retailers must be able to ascertain what exceptions are occurring in the supply chain at any given point in time, and couple tools with supply chain wide capabilities to rapidly respond and resolve unplanned events or exceptions.

Don’t start with newer, more risky technology investments but rather look for proven technology that has stood the test of reliability, value, and scalability.  Amen to this recommendation! I would further add that this is not a blanket condemnation of a stand alone or best-of-breed application, since there are certain best-of-breed applications that have clearly proven themselves in reliability, scalability and value. The same could be stated for certain supply chain applications offered by the major ERP players.  The test is reliability and consistency of value.

Forrester further indicates that applications that fill the criteria for laying the groundwork and quick ROI are mobile asset tracking, fleet management, global trade management, and supply chain intelligence.  I would not hesitate to add supply chain network analysis, collaboration and response management to your investment list.

 Bob Ferrari