How much sand do you have in the gears?

Working for almost 15 years in the domain of business process optimization, and the largest part of that with a specific focus on supply chain processes that involve companies' external business partners, it remains so strange to see that companies keep overlooking the potential of a supply chain digitization project in order to improve its overall performance. The average level of digital in the supply chain of global companies is below 30%, and although everyone wants to increase, no one seems to have a clear plan of how and how fast they want to reach 80 or 90%.

It can't be the lack of value that is behind this. Improving overall performance means you apply improved efficiency over a significant part of your complete white-collar workforce, save on your total spend, reduce end-to-end lead-times, run your company with less working capital and improve customer satisfaction. From a business case perspective, you have large numbers to work with and the scale alone will give you a strong result.

Bottom-up:

We all know the expression "sand in the gears", which in some languages is translated more generically as "sand in the engine". Every company could be seen as an engine that requires input, goes through an operational process and delivers output. The overall performance depends on how smoothly the engine runs, and obviously, sand in the engine affects that. It lowers the output, wears out the mechanics and will cause parts to break down. Large companies work like big engines. They just keep going, although many inefficiencies and problems exist. Their workforce tries to locate and eliminate these grains of sand, but in an uncoordinated way. People typically work on problems they encounter in their division, in their domain, as experts in their field and with the best intentions to remove as much sand as possible, or replace a broken part to keep the engine going.

This could go one forever, and these individuals are not responsible to monitor the overall performance. They could have done an amazing job removing sand in their area, but they don't know how much sand is entering again, where it enters the machine and how to work on the root cause of their problems instead of fighting the consequences.

Bottom-up improvement plans are not likely to lead to a complete overhaul. Each time an investment is made to fix a part, it decreases the need for a bigger investment on top of that to strengthen the engine as a whole. That's why we see so many isolated "sub-optimization" projects that require limited budget and effort, but lack long-term effectiveness and do not offer sustainable value. Ad-hoc EDI-projects, sophisticated spreadsheets, document scanners, and hundreds of little tools are the examples we encounter on a daily basis. These improvements all made sense in a restricted context and problem-solving is our nature.

An end-to-end supply chain digitization project will not easily arise, because it requires alignment on prioritization and timings of improvement over different silos, like procurement, operations, finance, sales, customer support and IT, for a coordinated and gradual implementation of an integral solution that brings value to all. It really is rewarding however if you do reach that stage, although often only after several years.

Obviously, the sand is coming from outside the engine. The many grains of sand represent bad or unstructured data that is coming in from the outside world through paper, phone and fax messages, and loads of emails, to be seen as "externally induced waste".

Modern and digital supply chain management should be seen as the air & oil filter, keeping sand and dirt out of the system in order to keep your company running smoothly and economically.

Top-down:

So we need top-down initiatives. Objectives set out by the executive management to improve the business should have a much better match with companywide projects like supply chain digitization. Whether it is improved agility, profitability, competitiveness, financial performance companies are looking for, or more transformational events like a complete reorientation towards new markets, new products, and new business models, modern supply chain management will always offer a significant contribution to successfully achieving those goals. Bigger turning points should make companies take a more holistic view and reflect if the new setting does not require an updated way of working.

So, I would like to leave you with a couple of questions to fuel your thoughts.

• How much sand does your company have in the gears?
• What's your company's ideal moment to get the inevitable job done?

If you need a partner to help you make that plan, facilitate the alignment and build a business case, we would be happy to assist.