Supply Chain Fails

A year and a half ago I ordered a number of actual, physical paperback books to give to some friends at an event where I was speaking. The book was one I wanted to hand out related to the topic of our discussion and my time with them. A certain big book company began shipping these books in separate shipments from around their universe. However, the books kept coming and went way over the amount I ordered. I kept getting new shipment notices in email when I had already received the ones I had ordered.

This particular company is a big web based company and it is hard to actually talk to someone there. I sent emails and finally got a hold of a person and explained the problem. The first person couldn’t understand and didn’t fix the problem. I called again and got another person who did see the problem and managed to cancel what was happening. I offered to ship books back, but they said keep them and give them away.

Seven months ago I ordered some socks from another online business and got double the shipment.  Two weeks ago I ordered some running apparel and instead of three items, I got six. In both these cases, I offered to return the over shipment and they told me to just keep them.

A big company which ships a lot of books and two smaller, niche companies who are probably closer to the edge getting their order management and shipping wrong.

I don’t know if this is IT or order management or their online revenue engine, but in any case, companies big and small must get this right. You can’t stay in business long if you are getting so many shipments wrong.

I should have ordered iPads.

 

2C) Supply Chain

Screen Shot 2013-06-10 at 6.41.43 PMFor whatever your organization does, what is the supply chain?  From inputs to outputs? This is the engine that fuels the results of the organization. If you are non-profit taking care of babies, then what donations are coming from where, how is the organization processing those donations and then how are they being distributed? If you make something, then what parts and services are required to generate the output that you sell? All organizations have these processes and as a new CIO, one needs to get their arms around those processes and how IT is supporting the ‘chain’.

Related, the reverse supply chain also needs to be understood with the same questions asked and answered. The reverse supply chain is for items being returned for whatever reasons.

In some cases, the phrase Order to Cash(OTC) is used is relevant as it covers everything from orders being placed through receiving cash(or equivalent) back from your customer.

Questions that should be considered and reviewed:

  1. Prioritization of Projects: How are your business partners prioritizing what they need IT to do and how is the relationship with these partners? Does the business have a collaborative partnership with IT to get things done?
  2. Shadow IT: Is there an out of control shadow IT needed by the organization to be successful? If so, why? Are there IT components being sourced, paid for and installed by the business independent of IT? If so, why? In these cases, the IT leadership needs to work on better collaboration and partnership with the business. Typically these things are being done because either a) someone in the business wants to be in IT or b) the business is just trying to get their job done. In either case, a conversation and fresh start is needed.
  3. 3rd Party Collaboration with Suppliers and Customers: What is the strategy and what tools/processes are in place to tie your extended supply chain together? Are things like co-planning being done where customers are sharing their future needs with your organization and if so, how and what tools are involved and how healthy are they? Just as your organization might want better visibility with customers, you must do the same for suppliers. Be the customer you want your customers to be. How is IT facilitating the ease of doing business? Perhaps visit with some customer or suppliers directly. Here is a post from InformationWeek that addresses the collaborative supply chain strategy.
  4. Signaling and Metrics: Does the organization have the level of signaling and measures in place to have full and deep visibility of the supply chain? Visibility needs to range upstream in suppliers and downstream to customer warehouses. Are there dashboards in place? Are there analytics about the health of the supply chain that cover logistics, warehouse inventory levels, order status, etc.?
  5. Security of the Supply Chain: How are you securing the sharing of information between suppliers and customers? How are you securing plans, drawings, IP, etc. And don’t forget to think about the business continuity capabilities of your suppliers. Don’t assume anything.
  6. What else? Your business is unique and are you appropriately looking at those unique aspects too? For example, if you have sub-components that need very long lead times to produce, then how good is your forecasting processes and tools? Long lead times likely mean you have to order things before you might have real orders in place. Do you have those thoughts well underpinned?

Your organization is unique so don’t assume what others do or say is the right answer for you. And certainly don’t assume just because a big software vendor wants to sell you something because everyone is doing it doesn’t make it right for you. I’ve learned that lesson myself.

What else?

Enterprise Risk

The past few days I’ve reflected on enterprise risk. The recent news reports about flooding in Thailand and the resulting impact on supply chains is certainly cause for reflection. You can read more about those issues here and here and here. What is interesting about this is that companies frequently know some things(locations) about their suppliers, but they likely know almost nothing about their suppliers and then their supplier’s suppliers, etc. Even trying to find out that information and develop of dependency map of some kind quickly becomes a hugely complex problem.  It just explodes in size.

Consider the tsunami in Japan and its impact on supply chains where the same problem happened. That event affected factories, transportation and employees as well as local services around affected facilities. Auto manufactures are still struggling to catch up.

Frequently risk conversations in the enterprise is limited to just the financial risk around the financial systems and their control. Auditors like to focus on access control, segregation of duties and mitigating controls. Audits frequently zoom into huge detail in these areas to prevent and lower risk due to fraud or insider actions.

I’m now thinking the risks in other areas like securing the intellectual property of the company and assuring business continuity due to ‘black swan’ events affecting the supply chain are likely the bigger risks.  Funny thing to me today is that I wrote about this Risk in IT back in 2009. I wrote about IT Hard Problems a few times, but I didn’t include understanding the supply chain risks and mapping dependencies.

More to think about here. Would love to hear your thoughts.