Ten Commandments That Build

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Ten Commandments That Build Inventory e-Collaboration Success

Collaboration is the newest development in the use and application of the Internet for managing inventory. While it has become a very broad umbrella—covering engineering, buying and selling, inventory management, and schedule synchronization—collaboration’s most promising use is in inventory management and reduction initiatives.

The potential benefits of e-collaboration (a better term considering the technology involved) are considerable. "Substituting information for inventory results in less inventory investment throughout the supply chain, which also equates to less inventory in the enterprise," Preston W. Blevins, CFPIM, CIRM, Glovia International (Belmont Shores, Calif.) emphasizes.

Traditionally, each enterprise developed its own forecast based on history or general trend information supplied by key customers. In contrast, e-collaboration requires the sharing of actual material and service requirements and anticipated requirements with the appropriate supply chain partners. "Less uncertainty results in less forecasting in a vacuum, reducing the need for excessive buffer inventory," he explained at the APICS 44th Annual International Conference (www.apics.org).

Likewise, Gregory L. Schlegel, CPIM, executive consultant, e-Business/Supply Chain Solutions Group, IBM Corporation (Flemington, N.J.) offers, "Customer relationship management (CRM) software solutions and initiatives such as CPFR (Collaborative Planning, Forecasting, and eplenishment) are changing the relationship between trading partners."

CPFR, he explains, is a business process model for supply chain partners to coordinate plans to reduce variance between supply and demand that will result in higher service levels, higher in-stock performance, and lower inventories. The key to its success, however, is e-collaboration, he emphasizes.

How to organize and conduct effective e-collaboration. With all of the discussion to date centered on the "new" technologies, there has been an absence of practical tips on how to be an effective and reliable member of the supply chain and practice e-collaboration. Blevins steps into this breach with his

"Ten Commandments" of e-collaboration:

Þ Management support. e-Collaboration in any form is a major change for most enterprises. The full commitment of senior management is the critical factor for genuine success, he insists. "I don’t know of any project that changed business processes or behaviors that crossed organization boundaries or extended to customer or suppliers that succeeded without senior management support," Blevins declares.

"By support I don’t mean just financial support in the form of budget approval," he explains. "What I mean is commitment to the change process." As an example, he cited the case where a CEO attended all steering committee meetings and often "dropped-in" to project team working sessions, always asking intelligent, informed questions. In addition, the VPs also organized multiple meetings with their direct reports to make clear their commitment to this change, the value to the enterprise, and the benefit to those in the department.

Þ Data accuracy. "Data accuracy always has been the ‘Achilles Heel’ for improving enterprise performance," he asserts. "It is the same for e-collaboration and supply chain management, as inaccurate information is transmitted quickly and wipes out the goal of exchanging inventory and lead time for information."

A supply chain partner who communicates inaccurate schedule information is often the one with inaccurate BOMs, inventory records, and routing instructions that, in combination, lead to missed deliveries against commitments.

The remedy: either increase the inventory and lead time buffers, or find a more reliable partner. "For those dedicated to successfully leveraging the potential of e-collaboration, the logical option is replacement," he advises, then adds, "with apologies to the underperforming supply chain partner."

Þ Performance measurement. "Many individuals have difficulty separating symptoms from root causes, and effective performance measurement requires measurement of root causes against target performance," Blevins notes. Despite the difficulty, for the participant in an effective e-supply chain, performance measurement is a fact of life, and it is shared.

"Your supply chain partners are as interested in your enterprise’s performance as you are, because the end result is shared," he explains.

Þ Skilled project leadership. Implementing e-collaboration is about changing critical business processes; it’s a project.

"It is absolutely critical that any project for implementing any component of e-collaboration be led by an individual with strong project management skills," Blevins argues. "The individual also must have experience dealing with complexity, understand the business objectives of the project, and commands respect within the organization."

Þ Educate and secure buy-in. e-Collaboration changes existing business processes, processes that people are comfortable with. Those who work with these processes need to learn why the new way of doing business is better, what’s required to make it work, what’s expected of them on an individual level, what’s in it for them, and how will they benefit.

"Once they understand what’s in it for them, they’ll buy-in to the change and work diligently to make it work," he assures. Otherwise, every untrained or unsupportive employee or supplier has the potential to make your company the weak link in the supply chain."

Þ Experience is important. "Anything is possible if you don’t know what you’re talking about," Blevins comments. "This is true for implementing e-collaboration."

For example, he recommends hiring a practitioner who has been involved in implementing supplier scheduling or vendor management inventory. An alternative to having an in-house expert is to retain outside expertise from a consulting firm. "The important point is not to try to implement e-collaboration without experienced and expert resources," is his message takeaway.

Þ Implement the "new" way of doing business. Resistance to change often ambushes good intentions. If you adhere "faithfully" to the "educate and secure buy-in" commandment, the resistance to change will be minimized.

"Unfortunately, there most likely still will be some individuals who’ll want to maintain the current way of doing business," he notes. "Don’t compromise!" he encourages.

Þ No shortcuts. Many who implement e-collaboration do take shortcuts. Typically they take shortcuts to get back on the implementation schedule or keep expenses within budget.

"These shortcuts never appeared threatening until later," Blevins warns. "To have business processes executed at a world-class level requires that prerequisites be fully satisfied."

Þ e-Collaboration is about discipline and management, not computing or technology. "New technologies that have promise always seem to grab our attention," he offers. The technologies that support e-collaboration are compelling and have great appeal.

"These technologies are enablers to effective e-collaboration, but by themselves can’t produce the desired results," he explains. e-collaboration only can succeed on a foundation of discipline and good management, the kind of discipline that manifests itself in accurate inventory records, BOMs, routings, and costing information.

"e-Collaboration exchanges inventory and lead time for information within a community of supply chain partners—the old buffers are gone," Blevins explains. This exchange of inventory and lead time for information implies a trust that each collaborator is reliable, and committed to honoring obligations such as maintaining schedule integrity, managing costs, and so on.

Þ e-Collaboration cannot compensate for a faulty business strategy. However, e-collaboration only can give competitive advantage to those with a genuine value proposition to offer the marketplace reinforced by discipline and reliability. Blevins concludes, "e-Collaboration isn’t a pink pill."

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