Implementing a supply chain application costs money

Roger OakdenSupply Chains & Supply NetworksLeave a Comment

Blame the software.

I was chatting with a colleague who told me some of his experiences when recently implementing an application at a client business.

The application had been installed and was working when he received a call that the inventory control module was not working. The planner had checked that a grade of cellophane required for a packing run was available in stock; however, when it was time to complete the packing order, there was insufficient cellophane available.

The first thing that operations management did was to call IT and tell them the software did not work. Does this sound familiar? Ever since applications for operations were developed, users have blamed the software first when things go wrong, rather than look at what they are doing.

My colleague asked the manager what checks had been done of actual usage against system reported usage and, of course, the response was that no checks had been done – the automatic response to the problem was that it must be a software error.

But when checks were done of cellophane usage per order for previous production runs, the usage had no consistency – there were apologies all round.

This story shows that some things do not change, no matter how quick the march of information technology.

Implementation requires sufficient budget

There is a real difference between installing an application and implementation. The former is a technical job, the latter is a people activity that takes time and costs money.

Somewhere in your organisation are people who do things, then report data and information to the system concerning what has been done. Reporting can be through keyboard entry, voice, scanning bar-codes or other methods, but in many cases, the system accepts whatever it is told.

In this story, the business did not budget sufficient expenditure for implementation, so they did not complete a systems study, identifying that when over-wrap materials were taken from the store, any remainder was not returned at the end of a production order. Instead,  if it was due to be used within a ‘reasonable’ horizon, the material was stored on a WIP rack.

Because the business experiences short term changes to its production plan, the future materials requirements often did not meet requirements. So, when the WIP rack became full, selected rolls were returned to the store, but without any data entry of an addition to stores inventory. The records were useless.

Not budgeting for the total cost of implementing a new application, which includes documenting the new process and training staff (including future staff) cost the business an export order delivered late and hurt its reputation – saving money was not a good financial decision.

But of course, the two events, application implementation and the late order will never be linked, as costs were not reconciled and therefore lessons not learnt.

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About the Author

Roger Oakden

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With my background as a practitioner, consultant and educator, I am uniquely qualified to provide practical learning in supply chains and logistics. I have co-authored a book on these subjects, published by McGraw-Hill. As the program Manager at RMIT University in Melbourne, Australia, I developed and presented the largest supply chain post-graduate program in the Asia Pacific region, with centres in Melbourne, Singapore and Hong Kong. Read More...

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