Getting rid of the elephant in the room

Dear Hans K.,

Good metaphor, that topper training for year 6 you referred to in our previous email exchange! Falling back and blindly trusting your classmates. Just like ensuring that information is provided in a timely manner in a supply chain so that errors can be prevented.

From experience, I can tell you though that there is still some room for improvement in that ‘class’. Topper training has been the subject of regular scientific research and there are strong indications that the training constitutes an effective method for young people who have difficulties in interacting with others. Such a topper training would therefore also be a good idea for the business community. So many times have I come across situations in which the supply chain team is treated like a department with a door through which you can shout at will and then dump your problems. Dear people: a supply chain is not a department! A supply chain is a process in which almost the entire company is active: from design, production, sales, marketing, planning and finance to HR. The better this interaction, the better the result: high degrees of customer satisfaction, a good financial and operational performance and an environment in which people are happy to work. Looking for examples, I had to think of the Push Pull Point, the indication of how far upstream in a chain a customer order penetrates into the production or distribution process of a supplier of a product or service. There are several Push Pull Points that are located elsewhere in the chain. The argument I am trying to make here is that the best results can only be achieved through close cooperation between the various departments.

A supply chain is a complex process that comprises many players and is difficult to organise without IT. It should come as no surprise then that an application such as ERP (which stands for Enterprise Resource Planning) is aimed at the entire enterprise, including logistics employees. BUT… you write that ERPs are accounting-like applications; as a result of this, they fall short because they always capture reality after the fact. Logistical execution systems are good at this though, because they allow you to share current and reliable data in the chain. I think this is exciting Hans; surely you are not advocating that every department should choose its own system?

Kind regards,

Hans H.

Dear Hans H.,

Not every department should have its own system, but every process does however warrant a suitable application. In the 1990s, IT technology had not yet matured. Connecting applications was not an option and communicating with external stakeholders was almost impossible. Now, approximately 25 years later, we have the Enterprise Service Bus and the internet! With an Enterprise Service Bus as digital power strip, we can easily link applications and the internet enables us to connect all chain parties to it. And in situations in which this is not possible, we can develop portals and apps to provide access to stakeholders.

The Enterprise Service Bus and the internet are underused. Companies remain stuck in the nineties, with large ERP elephants acting as ‘jacks of all trades’. Wherever vision is lacking, the accountant seizes control! Logistics is not accounting and requires real-time registration and social inclusion.

Take the banks, for example. In the past, they would also always work with one large IT system. This total system worked, but the individual functions for their customers were lacking. Innovation came from the outside, through Binck, Bitcoin, Adyen, PayPal, Crowdfinancing, Tikkie, Moneyou, etc. Bite by bite, they took over functions and/or added services.

As a company, continuing to put your ERP system central for the organisation of your supply chain is therefore truly a dead end. That elephant has to be removed from the room. You know what they always say, Hans: you get the software you deserve. I would like to rephrase that. In order to be able to keep earning at all, it truly comes down to your software choices for your future logistics. Nowadays, specific applications that make the life of the logistics operator easier are available for every task or function in your supply chain. Thanks to the Enterprise Service Bus and the internet, these separate logistics execution systems can easily be connected. Both to each other and to your ERP system, which can then continue to do what it is good at. Without getting in the way of an optimal logistics execution like an elephant.

Kind regards,

Hans K.