CIO — Automating your supply chain is the most difficult software project you’ll ever do.
Consider this: Dayton, Ohio-based NCR spent $7 million on supply chain applications that did not produce any return at first, because many essential employees would not use them. Knoxville, Tenn.-based sign maker Plasti-Line wrapped up a supply chain project only to discover that its ERP system would not work with its new supply chain applications.
In fact, precious few companies have successfully automated their supply chains. So why bother? Because supply chain software is worth the time and money it takes to get it right. When NCR finally got its system up and running, it saved millions of dollars by shifting inventory ownership away from its warehouses and to its suppliers.
Thanks to better supply chain planning, Plasti-Line has slashed its manufacturing head count by 34 percent. Those savings are especially welcome in tough economic times, when companies struggle to become more efficient. Here, we offer five ways to get to those savings as quickly as possible.
1. Make the Sale to Suppliers
First comes the hard part. Supply chain automation is uniquely difficult because its complexity extends beyond your company’s walls. Your people will need to change the way they work and so will the people from each supplier that you add to your network.
Only the largest and most powerful manufacturers can force such radical changes down suppliers’ throats. Most companies have to sell outsiders on the system, something few CIOs have had to do before. Moreover, your goals in installing the system may be threatening to those suppliers, to say the least.
Just ask NCR, which wanted to shift some of its inventory ownership to its suppliers, according to Ken Shaw, director of global inventory management, and John Webster, director of services for supply line management. The two had to convince suppliers that taking ownership of NCR’s stuff would benefit them?a tough task. To do that, Webster met face-to-face with the CEOs and COOs of the company’s largest suppliers, pounding home the message that NCR’s new applications would be of benefit to all. "Conversations with suppliers at the highest levels was critical," says Webster.
He carried a sales pitch to those meetings: Adopt our system, and we’ll be prepared to do more business with you?as will other manufacturers looking for better supplier cooperation. Though there was resistance at first, NCR now keeps 40 percent of its inventory with suppliers.
