| QUESTION & ANSWER |
Expert: Adaptive supply chains key to success |
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By Robert Westervelt, SearchSAP.com News Writer
22 Sep 2003 | SearchSAP.com |
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Transforming static supply chains into adaptive supply networks allows companies to quickly and efficiently respond to changes in their environment, according to Navi Radjou, a principal analyst at Cambridge, Mass.-based Forrester Research.
Radjou, a member of Forrester's business applications and services team, will be a featured speaker at the SearchSAP.com conference, which runs Wednesday through Friday in Chicago.
In an interview with SearchSAP.com, Radjou explained why companies should construct adaptive supply networks in an increasingly volatile world.
Why is it important in a slumping economy for companies to focus on improving adaptive supply chain networks?
Radjou: If you look at the world today, the one thing everyone recognizes is the amount of uncertainty that companies are facing, making supply chains much more vulnerable. In addition to terrorist attacks and labor strikes, other sources of vulnerabilities include sabotage and weather-related issues.
How do many companies currently address breaks in the supply chain?
Radjou: At best, companies today have software that sends them an e-mail alert saying the shipment has been delayed. There are no contacts on it, and no guidance on how to solve the problem. We did a study in Europe recently and 56% of the companies surveyed told us that they have no software support to manage exceptions in the supply chain.
Why are so many companies unprepared for unpredictable problems?
Radjou: Most technologies, like ERP systems, act like a system of record. They serve as a place where you can go and look up what happened in the past, but they don't give you any guidance on what you can do in the future. The only software available is the so-called supply chain planning or optimization tool. The problem with this kind of software is that they're great at telling you what the demand will be in the next six months, but not good for suggesting any short-term adjustments.
So what's the answer?
Radjou: Companies need software to allow them to build upon what they already have. It should allow you to plan for the long term and help you make those tactical adjustments that are required in a time of distress to the supply chain. This is the white space being filled right now by supply chain visibility software. It allows companies to get inside when exceptions occur and provides recommended actions on how to solve problems.
Sophisticated software systems with Web interfaces are competing with larger Web-based application service providers like SAP. Which is better?
Radjou: The better solution comes down to which vendor better understands your industry and your business process. Event management software has to apply the visibility technologies to specific processes and each process is specific from industry to industry. The vendor that understands how to add functionality into the generic software platform and understands the specific business nuances per industry may be the best choice.
Why should companies spend money to prepare for events that may not take place?
Radjou: The reason these disruptions are now occupying the minds of senior executives is because more and more studies are being done that show what happens when supply chain disruptions go unheeded. These studies clearly show that when a company faces a production problem or quality problem, typically the day they announce the problem to Wall Street their stock drops on average about 10.5%.
How can a company use an adaptive supply chain to improve the bottom line?
Radjou: Companies need the ability to look at indicators and pull together resources to address any looming problems before they blow up in their face. Adaptability is about the quest for flexibility, in addition to the quest for efficiency. The way you face more vulnerability in the world is by becoming more flexible. There is a set of techniques, principales and technologies that can help you achieve flexibility without loosing your shirt.
FOR MORE INFORMATION
Check out the SearchSAP.com conference Sept. 24-26 in Chicago.
Check out how SAP is strengthening SCM analytics.
To provide your feedback on this article, contact Robert Westervelt.
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