Is IT really a primary driver for making your supply chain ‘World-class’?
There have been numerous articles or reports written on building a ‘world-class’ or a ‘best-in-class’ supply chain that you would have surely read. Few of them definitely outclass others in terms of the focus and clarity they provide to the supply chain enthusiasts and practitioners. One such report that I would like to bring to your notice is recently published by McKinsey & Company called “The Race for Supply Chain Advantage” – an outcome of an intensive research done, with large multinational companies participating from multiple industry segments. The report provides the six key practices that would drive supply chain performance, and make companies world-class with outstanding results in some of the most critical parameters such as customer service, cost and inventory. I wouldn’t like to comment anything on the practices listed but I do feel worth mentioning an interesting finding in this report and that’s about the better performance of companies with fewer formal IT systems as compared to the ones that have invested heavily into technology.
As per the report, “IT investment is often not as useful as managers expect”. I find it contradictory to the popular belief that IT investment is not just an essential requirement but a necessary one too. What is your opinion on this?
I personally agree to the finding based on my industry and consulting experience. I have seen supply chain organizations that are fairly mature in operations and there are still these key business users who continue to use simple spreadsheets for most of their effective decision making. The business needs IT to just support the decision making and therefore, “IT as a strategic investment” may not be highlighted as amongst the primary drivers of improving supply chain performance. There are so many instances that we come across as supply chain practitioners where the decision is taken without any data and it’s purely based on experience and instinct. IT can’t capture all that and that’s one of the reasons why IT can’t be a strategic driver. Having said that, I also believe that as businesses grow and become more complex in nature, IT definitely plays a very important role in just ‘facilitating decision making’ and in reducing the level of anxiety and ambiguity in managing business.
With these thoughts shared, I would like to know your opinion on this subject matter. I would welcome your experiences on this and it will be really great to know the reasons and viewpoints in case you differ with my opinion…