Invest in Logistics IT in a Grow Economy
Now is the time for all supply chain management professionals to come to the financial aid of their logistics IT. In the Information Age and the Internet of Things (IoT) era, the need for speed and flexibility in sharing accurate information both internally within your business units and externally with your customers, vendors, and suppliers, is paramount.
As the U.S. economy heats up, companies should review their sales growth potential and develop not just a “this year” but an ongoing investment strategy in their supply chain technology. This should be an annual budget item in any corporate CPI (continuous process improvement) program.
The technology lifecycle gets shorter with each passing year. New technology emerges, making older versions obsolete. Manufacturing is becoming more customized, and customers desire faster product delivery and more flexibility, all at cheaper prices.
These requirements put extreme pressure on the logistics sector to perform. As such, there’s a whole focus of thought on disruption logistics that not only concerns itself with logistics interruptions caused by natural disasters or lack of supply chain depth, but disruptions caused by new technology.
The Growing Need for Agile Supply Chains
In a global market, supply chain is often the battlefield. Demand-driven logistics requires fluid expansion and contraction of your supply chain, and this requires seamless collaboration and integration among often-disparate software systems.
How quickly can your supply chain respond to trends discovered on social media or new customer demands to inform your business partners, vendors, and suppliers to adjust production levels, and flex or contract logistics to timely and cost effectively meet the needs of your customer? Lack of the proper technology or the poor integration thereof will not just prevent you from thriving but surviving. Death will come quickly to the slow and uninformed.
The point is not buying the latest technology for the sake of having it. There must be a sound return on investment, and research and visioneering are required to create an IT investment strategy—one that reviews current and emerging technology and evaluates its potential for your business model as well as its sustainability in the market.
Before you can create a comprehensive logistics IT investment strategy, you must know the critical metrics and key performance indicators (KPIs ) of your business model through your entire supply chain. Whether it’s the Stone Age or the Information Age, the adage applies: You cannot manage what you cannot measure.
The nifty aspect of supply chain is that mathematically it’s a discrete function and can be broken down into a granular series of steps. Using the variables of 6M (manpower, machines, method…etc.) you can identify and define your critical metrics and KPIs for every link in your chain. As an aside, I’d suggest 8M, adding two more M’s: money (evaluate the cost to perform a task) and mission (esprit de corps value and defining the why or task validation).
Once you’ve clearly defined your performance metrics, then evaluate the capabilities of your software tools and technology to manage it and identify gaps, shortfalls, and weaknesses in your business model. In most cases your solution to drive improvement will be through implementation of new technology.
Creating an ongoing logistics/supply chain technology investment strategy is a best-practice goal within a vibrant CPI program. Capturing, storing, analyzing, and sharing data is where technology can radically advance your capabilities, efficiencies, and competitiveness. In a growing economy, it’s essential.