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November 12, 2001

One Quick Hit at a Time

Using portal technology can help you extract value from your supply chain one step at a time

Ram Reddy

In the past few years, the role of chief architect and the planning and architecture function have almost become extinct in many corporate IT organizations. Depending on the market conditions a company faces, it may need efficiency, agility, or a combination of both to navigate these tough economic times. But these very functions that can help an enterprise extract operational efficiencies and competitive agility in a downturn situation are unfortunately the first to go - especially in supply chain management (SCM).

In my previous column ("Chasing Windmills," Oct. 24, 2001), I discussed the technological difficulties in integrating two basic types of SCM systems - one geared toward efficiency and the other toward agility. The column recommended application architecture options to realize the benefits of integration without actually integrating these two systems at the application and data levels. If implemented correctly, portal technologies offer a set of application aggregation and integration options across the supply chain different from the options that implementing a fully integrated SCM application suite provides. These portal implementation options shift focus to solving the business problems of efficiency and agility without getting mired in the complexities of true application-to-application integration. The planning and architecture role is critical to realizing the portal technologies' benefits and delivering return on investment (ROI) from within the enterprise and across the supply chain.

MEASURING ROI OF SCM TECHNOLOGIES - THE CASE FOR PORTALS

According to a Georgia Tech study (see Resources), which some SCM vendors challenge, measuring ROI from SCM technology implementations has been difficult. Regardless of the arguments on both sides, benefits from multiyear technology implementations that affect different functions within a company and across the supply chain are inherently difficult to measure.

A solution to this problem is to leverage portal technologies to break down multi-year SCM projects into small subprojects with frequent deliverables (every 60 to 90 days). Due to the relatively short duration of each subproject, this approach not only improves the chances of successful technology implementation but also minimizes "scope and feature creep." The scope and number of features added to an IT project after development begins are directly proportional to the project's duration. Therefore, a 60 to 90 day project with lower costs is more likely to pass budgetary scrutiny in economic hard times.

The following hypothetical supply chain example illustrates how an enterprise can identify, implement, and measure ROI from quick hits. The architecture and planning function is a critical element in realizing ROI.

KEEPING THE CUSTOMER SATISFIED

Consider popular consumer electronics goods such as digital cameras. Multiple contact numbers are printed on the box or in the user manual for issues such as warranty claims, returns, service, and technical support. If consumers order cameras from a company's Web site or toll-free number, then they probably receive a different set of phone numbers to call for information such as order status or delivery dates. Is the consumer electronics company deliberately torturing its customers with multiple numbers? Obviously not, but recent consumer satisfaction surveys indicate a growing dissatisfaction when dealing with issues such as technical support, returns, and so on.

Multiple contact numbers are likely a symptom of the company's inability to integrate different transaction systems within its enterprise and across the supply chain to present a single point of contact to its customer. Examining the supply chains of these consumer electronics companies will reveal common suppliers, outsourced order fulfillment and customer support centers, custom manufacturers, and common shipping services (such as UPS and FedEx).

The typical company with multiple customer contact numbers may have data on customer turnover and returned merchandise, but not on how many customers were lost to the competition because of frustration from dealing with multiple contact points. Portal technologies that aggregate customer touchpoints can have an immediate effect on customer retention and merchandise returns. The portal technology in this instance gathers customer-specific information from all systems within the company and across the supply chain to provide a single point of contact to the customer. Through aggregation, only information relevant to the customer is retrieved from structured (SCM-type transactional systems) and unstructured (installation documents, FAQs, and so on) data sources and is presented to the customer service representative or the customer. A company is more likely to fund such a project as it measures the effect on customer retention and merchandise returns within a relatively short period of time after implementation.