Supply Chain Excellence: Thinking Beyond Alphabet Soup

Definition: Al·pha·bet soup: An incomprehensible or confusing language, typically containing many abbreviations or symbols.

Let's face it. We have it. In supply chain our processes are defined by alphabet soup. How so? These are three and four letter acronyms. They dominate and define the processes. In most organizations, these technologies are central to discussions.

What is the alphabet soup? Revenue management is defined by CRM (Customer Relationship Management). SCM (Supply Chain Management) defines forecasting and delivery processes. Likewise, WMS (Warehouse Management) is the basis of fulfillment and SRM (Supplier Relationship Management) is the center piece of procurement. This alphabet soup is the outcome of ERP-based thinking. Sometimes the labels are ironic. For example, there is no real relationship definition in either CRM or SRM. It is all about transactional efficiency.

As a result, the outcome of these investments are efficient, but disconnected organizational silos. The automation of these silos has built walls not bridges between the functions. Today companies more focused on themselves and less focused on the customer. The systems require such a high level of experience and discipline, that many are not used. As a result, despite expensive investments in Information Technology, major decisions are made based on the use of spreadsheets in small groups that I term Excel Work Ghettos. As a result, companies are going backwards in business results, not forward.

Figure 1. Analytics Helps to Overcome the Alphabet Soup Syndrome

If this is you, throw away the Alphabet Soup mindset and start to think about the work process from the customer back into the supply chain while providing insights on the business and the customer experience cross-functionally. In the Alphabet Soup world the focus is on reporting based on data from operational alphabet soup investments, while in the new world of analytics, data flows through clouds, streams and data pools to deliver insights through descriptive, predictive and prescriptive analytics.

To make this bridge take three actions:

1) Start with Channel Data and Customer Insights and Map the Use Cases Cross-Functionally. Break the silos.

2) Build an Analytics Team to Test and Learn and Use Data. Break the Excel Ghettos and Reporting Mindsets. Focus on business users getting and using their own data across applications.

3) Build Horizontal Processes. Invest in the building of horizontal processes for listening (customer sentiment), test & learn, Sales and Operations Planning (S&OP), new product launch, and supplier development. Connect the horizontal processes and focus on bi-directional orchestration of planning/decisions across horizontal processes.

The next time that you are engaged in an alphabet soup discussion, stop. Just stop. Pull-up the discussion and focus on the process. Figure out how to drive improvements. Realize that the ERP-centric world view of narrow applications for functions makes the silos more efficient and the supply chain less effective. In my opinion, this is a compromise that we cannot afford to make. What do you think?

I look forward to hearing your thoughts.