Silence surrounds SCM projects to protect innocent - or guilty

Whether a supply chain management project succeeds or fails, it seems you won't get to hear about it.

Supply chain management implementations face such high failure rates that companies suppress news of their disasters and remain remarkably coy about their involvement. At the same time, when it's a success, the implementers want to maintain commercial confidence to push their competitive edge, so you still won't hear about it. And, if it ERM (enterprise relationship management) is also involved, well, you'll never hear about it.

When researching four supply chain management implementations recently, industry analyst group IDC said it had difficulty identifying the participants.

Senior software analyst Natasha David said she believes a number of factors contributed to the reticence about both successful and failed implementations.

"My theory is that enterprises are probably using these applications as a source of competitive advantage. They are coy about discussing specific benefits and revealing what they are going ahead with," David said.

Gerard Guinane, IT manager for Carter Holt Harvey Tissue (CHH), said enterprises may be reluctant to share their supply chain story if the implementation has failed.

"Supply chain implementations are highly visible. If [the implementation] doesn't come out perfectly, [enterprises] don't want to [spread] that to the outside world," Guinane said.

"There are certainly stories out there where people have had poor implementations due to bad project management around the implementation. The implementation of supply chain software is as much about change management [practices] as it is about the product itself."

Whilst enterprise resource management means companies need to clean up their in-house processes, supply chain implementations needs effective change management with suppliers and customers as well as internal changes, Guinane said.

Guinane and David also agree that supply chain investments are hard to separate from enterprise resource management (ERM) implementations.

"The days of having planning systems divorced from supply chain systems are over," Guinane said. "By their nature, supply chains should be run as part of ERM for the best return. With supply chain and ERM linked you can get the latest information off the floor. You don't get all the advantages unless you have them both."

Also, enterprises could be wary of discussing details of SCM that may mean disclosing information about its partners, suppliers or customers, he added.

According to David, many organisations are treating ERM as supply chain solutions.

David said this is not hard to understand, as some modules within a traditional ERM package, such as materials management or procurement and sales order processing can be mistakenly seen as SCM support.

Subsequently, the lines between SCM and ERM are "rapidly blurring in end user organisation's minds".

IDC's comments follow alarming findings from a recent international study by AT Kearney. Less than a quarter of the 147 companies surveyed use supply chain management to meet revenue-based objectives, citing a lack of integration with existing procurement systems as the main reason.

The survey found a mere 8 per cent had met their objectives and garnered savings by applying e-procurement initiatives across parts of their business. Yet, even those companies had only tapped into a fraction of supply management's potential to create value, according to AT Kearney.

Companies often underestimate the change management challenges presented by the adoption of supply chain management tools, the consulting firm concluded.

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

More about IDC Australia

Show Comments