Breaking down functional silos and walls has long been a major focus in logistics and supply chain management (SCM). More than a decade ago, Dr. Bud La Londe of The Ohio State University wrote, “The most challenging aspect of this whole [SCM] process is not so much building the external linkages to the partners, but rather overcoming obstacles within the organization.” That is, you need strong corporate logistics and internal integration before pursuing SCM strategies and cross-chain alignment initiatives.
So how do we break down the silos and create internal alignment? Dr. Hau Lee of Stanford University notes that there are three key dimensions of a successful initiative: information integration, coordination, and organizational linkages.
It would seem logical that technology is a natural facilitator of integration. However, the most widely used logistics tools—warehouse management systems, transportation management systems, and manufacturing execution systems—are function-specific. These execution application silos currently provide little, if any, process integration or synchronization, argues Dwight Klappich of Gartner.
Fortunately, there is growing recognition of these technology shortcomings. Multiple industry experts have begun to discuss the need for technology to bridge the functional gaps and help implode the silos. In particular, three recent publications address the issues:
- Klappich discusses the concept of supply chain execution (SCE) convergence in the current issue of Logistics Management (more on that later). This concept of convergence focuses on the need to coordinate and synchronize key logistics processes within the firm. Klappich suggests that organizations with existing SCE portfolios can start with analytical convergence, looking at layering a business intelligence application across their existing systems to aggregate and present information in a holistic manner.
Later, the focus can turn toward integrating the management of orders, transportation, and warehousing. For example, an incoming order could be evaluated in terms of inventory availability, warehouse processing time, and delivery alternatives. The information can be quickly shared with the customer for a final decision on the preferred processing/mode/cost combination.
- Adrian Gonzalez of ARC Advisory Group takes the convergence discussion outside the four walls of a single organization in a recent Logistics Viewpoints posting. He suggests that enhanced network-level visibility, business intelligence, and analytics capabilities will enable smarter collaborative decisions and leaner collaborative processes between functional groups and trading partners.
ARC refers to this convergence of several existing technologies and services (including trading partner connectivity, mobile resource management, and software-as-a-service transportation management and global trade management systems) as supply chain operating networks. The data quality provided by these networks will improve dramatically, saving supply chains billions of dollars in labor, excess inventory, expedited transportation, and other costs.
- Technology firms are keenly aware of the convergence discussion and are working to embed key capabilities into their systems. In a recent press release, the CEO of Descartes focused on this congruence as the driver of the company’s business strategy. “We believe that three existing markets are converging: mobile resource management; supply chain execution; and global trade management," said Art Mesher. "As these markets intersect, a new Resources in Motion Management Systems category emerges.” These systems focus on comprehensive management of resources in motion such as people, conveyance, assets, inventory, and documents.
Mesher says that Descartes’ goal is to design a federated network that simplifies complexities and promotes collaboration. The platform seeks to pre-unite members of a business process so implementation times can be shortened, productivity improved, cost reductions achieved, and returns on investment accelerated.
These industry experts lead me to believe that a new “C word” will dominate the supply chain discourse in the near future. When it comes to silo busting, collaboration isn’t enough. You also need a large dose of convergence.
Update: In the late April SCA Logistics blog entry, I discussed the demise of Supply Chain Management Review, Logistics Management, and other SCM publications that were discontinued with little warning. It turns out that my “obituary” was premature, and thankfully, the publications have been resurrected.
Less than a month after being jettisoned by Reed Elsevier, the publications were obtained by Peerless Media, LLC, a subsidiary of Framingham, Massachusetts–based EH Publishing. I received the print copies of both Supply Chain Management Review and Logistics Management in the mail this week. The websites are now functional, though they currently lack an extensive archive of past articles.
1 Bernard J. La Londe, Supply Chain Management Review, Winter 1999.