Managing Automation - August 2008 - (Page 14)

joshua greenbaum NOTES Here’s the problem with supply chain management (SCM) software in a nutshell: The more you spend to fix the problems with your supply chain, the more you realize how many more problems you actually have. This paradox is fueling interest in the supply chain as never before. At the core of that interest is the fact that supply chains are more complex and mission-critical than ever before. And despite the billions spent on SCM in the past decade or so, the risks associated with supply chains are growing, not diminishing. AMR Research presented data to back up that notion at its recent annual Supply Chain Executive Conference, which I had the rare privilege to attend (in the official capacity of an FOB, or friend of Bruce Richardson, AMR’s chief research officer). The basic finding of a recent AMR survey was this: Every company is trying multiple methods of reducing supply chain risk, and very few are satisfied with the results of these efforts. The problem is that risk is a moving target that increases faster than the increase in supply chain complexity, not to mention budget. In other words, the more complex your supply chain, the harder it is to manage — and afford to manage — the risk associated with that supply chain. Supply chain risk in the 21st century is everywhere. There are big-bang risks — tsunamis, earthquakes, and other natural disasters — and hidden risks — supplier insolvency, a wildcat dock strike — that are best dealt with by strong contingency planning. And then there are more common risks — parts shortages, non-compliance, counterfeit products — that can be attacked more proactively. And that’s not all. What makes supply chain risk such a complicated phenomenon in the 21st cen- Supply Chain Risk & Reward josh@eaconsult.com Supply chain management means little if it doesn’t also address risk management to forestall the effects of supply disruptions, large and small. tury is the interconnectivity of suppliers, OEMs, customers, and markets. Companies can return extraordinary value to their customers and shareholders precisely because they have mastered the art of outsourcing their entire production, lowering costs, and improving time to market like none other. Cisco is an example. But every time there’s a hiccup somewhere in this vast global supply chain, Cisco and companies like it have to worry about whether that hiccup will result in the lack of availability of a key product or supply. It all boils down to availability. When you’re running an ultra-lean operation and selling into a fastmoving market such as high tech, any delay in product or supply availability has a highly insidious network effect: Time to market is delayed; profitability is reduced; customers become dissatisfied; and the competition is emboldened — all in a matter of weeks, days, or even hours. With so much at stake, it turns out that dealing with supply chain risk can yield enormous rewards, as long as you know where to find them. And therein lies the next big wave of supply chain software — software that can deal with risk in the global supply chain, and do so in a comprehensive, extremely time-sensitive, and inexpensive way. So get ready to add supply chain risk solutions to your portfolio. You may do this for their intrinsic value or because your partners have forced your hand. Either way, you have no choice. Supply chain management is nothing without risk management, and the time to look for a solution is now before the next disaster strikes. ■ Joshua Greenbaum is principal of Enterprise Applications Consulting, based in Berkeley, CA. maonline managingautomation.com For more of Joshua Greenbaum’s views, visit: ❑ The CIO’s Waning Relevance www.managingautomation .com/notes52 ❑ Sound Familiar? www.managingautomation .com/notes51 ❑ Shades of Green www.managingautomation .com/notes50 ma 14 2008 August Photo: David Toerge http://www.managingautomation.com http://www.managingautomation.com/notes52 http://www.managingautomation.com/notes52 http://www.managingautomation.com/notes51 http://www.managingautomation.com/notes51 http://www.managingautomation.com/notes50 http://www.managingautomation.com/notes50

Table of Contents Feed for the Digital Edition of Managing Automation - August 2008

Managing Automation - August 2008 Contents Take 1 After 18 Months, the Oracle/SAP Suit Has Little Effect on Maintenance Sales At 100, Foxboro Reinvents Around Its Customers New Private Equity Firm Eyes Software A Software Suite Just for Manufacturers i2 Chief Focuses on Services Plan Notes It's Time for Action Examining U.S. Competitveness Leveling the Field An Unhealthy Situation Exploring Alternatives Math and Science: Key to the Future Product Scan Advertiser Index Next

Managing Automation - August 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.