The Weakest Link

Susan AndreSurvival Strategy Column

The manufacturing supply chain and the intelligent information value chain share a common pitfall: a weak link in either can be detrimental to business survival.

The intelligent information value chain is in many ways similar to the manufacturing supply chain – in that if there is a weak link, the entire process is weak, flawed and possibly detrimental to business survival. One tends to view these two flows in a completely different manner. But if you look at the flow of information in a slightly different light, the similarities become fairly obvious.

Every piece of information between a client and the organisation is a link in the intelligent information chain. If at any point there is a loss of information, the opportunity to build a relationship with the client is lessened. If one looks at the supplier and organisation relationship, the same philosophy applies.

Agility equals visibility

"Visibility of key metrics enables more agile demand planning, and more importantly, increased visibility to customers."

If an organisation wishes to track the delivery progress of an item and the supplier doesn't have the same methodology or a system that links into the chain, no information is forthcoming. The information link is missing and the chain is no more – the organisation can't report back to the client on progress and in all likelihood the sale could be lost, or at the very least the customer is un-informed.

Today's value-added supply chain strategies are focused on proactive demand management and electronic integration. By applying information and communication technology effectively, one can adequately satisfy the organisation's information and collaboration requirements.

Let's stay with the supply chain example: IT is a link in the supply chain, as it bridges the gap between organisational applications and strategic decision-making. In the same way that collaboration between trading partners is critical to supply chain profitability, collaboration within your information system architecture is critical for business viability.

Demanding speed

The traditional supply chain is designed to improve bottom line performance by moving goods in bulk, and the processes could afford to operate in a linear, production-focused fashion. With the customer-centric approach, which is driven by product customisation and more efficient delivery channels, companies are being forced to understand and respond to demand faster and more economically. A strict linear, production-focused approach becomes less desirable. This is valid regardless of which business you are conducting – if you have customers then this principle applies.

With the customer-centric approach as the driving factor, build-to-order products, increased competition and more demanding customers are causing businesses to assess how they work with information. Added to this are technology enablers such as the Internet that have certainly contributed to a less loyal customer, who can take their business elsewhere at the drop of a hat.

To keep in step with these changes, business processes have to change. Just as supply chains evolve, initially from partnerships and progressing into value chains that share and integrate information, the information value chains in many organisations are maturing to follow suit. The way clients choose to interact with us, in that they no longer accept that a physical visit is the only way they can conduct business, is a major clue as to why we have to be clever about how best we can utilise information and technology.

Smart devices, convenient online purchases and instantaneous wireless alerts are some of the new interaction modes that cover the entire information value chain, from customer to supplier, distributor and other partners.

In terms of technology, there is a move away from proprietary interfaces that limit interoperability, rigid architectures and weak external processes that may inhibit collaboration, which is essential as exponential amounts of data about the supply chain partners and transactions are produced in ever-reducing time frames.

The key to success is to plan how to collect and analyse this data. Then there is also the question of visibility across a supply chain. This includes the tracking supplier performance, and also that of your supplier's supplier. Visibility of key metrics enables more agile demand planning, and more importantly, increased visibility to customers.

So, the supply chain analogy again: Just as sharing information and collaborating ensures that manufacturers are able to make use of supply chain partner information to help fulfil demand, so can any business take advantage of the information value chain to help them be more nimble and responsive to customer requests and market changes.

But before we can claim that an information chain is going to reach the same level of added value, we must embrace the same principles advocated by supply chain management. Organisations must adopt common metrics, improve their exception management, promote communications, establish collaborative business processes and then engage in the design and construction of the information value chain. It is only then that the benefits of information integration will be felt, leading to greater profits, increased market share, a stronger competitive position and an enhanced company value. After all, being able to rapidly respond to change in an intelligent fashion is what an intelligent business is about.