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Home > IT investments for manufacturers managing global supply chains |
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In this podcast, Jane Barrett, research director with AMR Research Inc., discusses the most strategic areas for manufacturers to invest in IT in order to overcome the challenges -- and maximize the opportunities -- that globalization creates for supply chains. As an analyst with AMR Research Inc.'s Core Supply Chain Research and Advisory Group, Jane Barrett specializes in supply chain research for manufacturers. She covers trends and best practices in supply chain, focusing on Sales and Operations Planning, supply management, supplier relationship management, scorecards and collaborative commerce.
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SearchManufacturingERP.com: You've said previously that the supply chains of several manufacturers are in need of redesign. For a company managing a global supply chain, where are the best places for strategic IT investments? Jane Barrett: It really depends on a number of factors. First, the maturity of the company, and whether or not it is looking for internal efficiency or if it is at the net stage with an outside-in focus on growth, collaboration and joint-value creation. (This will drive different business initiatives, and therefore different IT investments.) The second factor is the industry and business model. CP tends to be more focused on downstream data whereas manufacturers of highly complex engineered solutions need to ensure an effective supply base and manufacturing capabilities. As always, business strategy must drive IT strategy and projects, and this is why the CIO needs a seat at the table along with the business leaders. IT is no longer there to support the business as a cost center. IT must enable the business and create a flexible architecture and solution portfolio that can quickly adapt to changes we live with every day. Once IT is there, it will be viewed as an enabler and investment. But in general, we see global supply chains looking for solutions to provide efficiency, communication, visibility and to leverage synergies and standardize processes. SearchManufacturingERP: Is the factor of non-standard IT infrastructures across the supply chain a serious one, or does the Internet negate that? Barrett: We see global leaders standardizing IT infrastructure where feasible, while taking advantage of the Internet. This does not necessarily mean a single instance of ERP -- many large global companies still have multiple ERP platforms, but are looking for standard IT platforms to support analytics and performance measurement, single face to the customer and supplier and where it makes sense, standardizing internal processes, which makes it easier to move people around without extensive retraining. What the Internet has enabled is easy access to systems as well as SaaS options, which are very popular in applications like CRM, HR and logistics but are taking longer to be accepted for core ERP, although today's economy is very attractive to SaaS providers. SearchManufacturingERP: What would you say is the unseen -- or most overlooked -- risk in running a global supply chain? And what impact would it have on IT? Barrett: When thinking about risk, one needs to look at the probability as well as impact of a problem. Natural disasters need business continuity, and this often takes the spotlight, but other risks creep up on companies if they are not doing a good job of risk planning. For example, the issue of workforce -- spefically, aging workforce in developed markets but inexperienced workforce in emerging markets -- and how companies can do a better job of succession planning, competency frameworks, cross-functional training and performance management.
Another risk that keeps increasing is compliance and regulatory requirements, and this is unlikely to go away anytime soon. This has a huge impact on IT and their ability to deploy and upgrade systems. The last one I will mention is demand risk. By this, I mean the ability to sense changes in demand. This capability is very top-of-mind today. How many companies could adequately sense the downturn and how many of them will be able to sense the upswing in the economy when it happens? SearchManufacturingERP: When it comes to the IT challenges of managing a global supply chain, is it fair to describe globalization as a two-edged sword? Barrett: Actually, it can be described as a three-edged sword. The need to manage internal processes as a company globalizes as well as on the customer and the supplier side becomes more complex. Internally, companies grow through mergers and acquisitions (M&A) and this expands different company cultures and regional differences. There is an ongoing need to improve efficiency through standardization of processes and leveraging synergies and in many cases IT and the implementation of global solutions (ERP, planning, etc.) can be the driver of this standardization. In terms of single face to customer, similarly we see companies looking for ways to improve customer service and satisfaction in an environment that is becoming more complex due to customer demand, product complexity and channel complexity. Finally, you have single face to supplier. This includes activity in reorganization into global sourcing organization -- supplier rationalization, spend analytics, e-sourcing P2P automation, etc. -- applications beyond ERP.
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