Supply Chain Management Collaboration

When surveying the field of consumer packaged items, one finds many instances of collaboration. Two of the most obvious examples are Wal Mart and Procter & Gamble.

In the ‘80s, these two firms began collaborating during an era where this was extremely rare. But they decided to build a massive software system anyway that would connect Procter & Gamble to the distribution centers of Wal Mart. This sends a signal to Procter & Gamble whenever their products begin running low, so that they know to ship more products immediately. In some instances, the system might go all the way to specific Wal Mart outlets. This allows Procter & Gamble to monitor the process and be alerted every single time one of their products sells at a Wal Mart store.

This kind of up to date info keeps Procter & Gamble aware of when they need to ship more products, when they need to manufacture more products, and when they should display a particular product at Wal Mart. That way, they do not have to keep a bunch of products stocked up in their warehouses while they await Wal Mart’s call.

What’s more, stores can arrange it so that payments and invoices are automatically made, as well. Procter & Gamble are thus able to save time, money, and inventory and continue to give Wal Mart their “every day low prices” without risking going bankrupt.

Avoiding SCM Software Roadblocks

The first obstacle you might have to overcome when trying to install supply chain management software is the trust issue among your supply chain partners. Some members of companies are intimidated by the fact that their information will be going outside of their company’s walls. Employees are thus forced to change the way they work – as will the employees of every supplier that comprises your network.

Only large, powerful manufacturers are able to force supply chain management software upon their suppliers. The vast majority of companies, however, will have to convince their partners why supply chain management software is a wise option. This is especially the case if your goals in installing the software are even vaguely threatening to your suppliers.

If we look back at the case of the collaboration between Procter & Gamble and Wal Mart, the former company had to take on more responsibility in terms of inventory management, which in the past has been something that retailers have done themselves. This is something that Wal Mart demanded of Procter & Gamble, but it also gave Procter & Gamble more immediate access to information regarding their products’ demand at Wal Mart – this helped Procter & Gamble start manufacturing their goods in a more effective manner.

In order to attain a successful collaboration, it is vital that you take your supply chain partners’ goals in to consideration as well as your own.

Within your organization, it is possible that you will encounter a lot of resistance to the changes posed by supply chain management software. Your operations department will probably not be used to dealing with faxes, telephone calls, hunches scrawled on paper, and will probably not want to deal with these things. If you are unable to convince your colleagues that using the software is worthwhile, then they will probably find ways to work around it. After all, you can’t disconnect fax machines and phones just because supply chain software has been installed.

Using supply chain management software can be difficult at first, and you can expect that many errors will be made. Supply chain systems will always process information as they have been programmed to do, but that does not mean that the technology will automatically absorb a business’s entire history and processes immediately after it has been implemented. The system might have to be tweaked a bit until you get it perfectly right. The system is naïve at first, and your employees must be aware of this – or else they will think that it is simply useless and dismiss it altogether.

To give one example, just before one major automotive supplier installed a new application that would predict demand for a product, an automaker ordered an unusually large number of items. As a result, the system started predicting huge demand for this particular item based on a one time order that was unusually high. If you follow the technology blindly without using common sense, then you might end up ordering an inaccurate number of materials. The firm was able to catch this error after a demand forecaster came up with his own numbers. As a result, another problem was created: the demand forecasters stopped trusting the software altogether and vowed to work with their own information. As a result, the supplier had to fix the system, and then regain his employees’ confidence in the software.

Once your employees are able to understand that they can use their skills together with the system’s technology, they will be able to see how it can benefit them in innumerable ways.

Supply Chain Management Collaboration

Avoiding SCM Software Roadblocks

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