For a supply chain management project to be successful, a company must achieve certain key factors. The Advisory Council at Information Week has put together a list of those key factors:

● Business-driven strategy: The information system for managing the supply chain must focus on the customer, allowing the customer greater efficiencies in the process. The customer should find that ordering material from the vendor is now more efficient with the new system. The system is based on a complex business process model. When a vendor fulfills a customer’s order, many different business processes are at work to ensure quality products, timely deliveries, and good prices.

● Management commitment: As with any IT project, top management must be committed to supporting the project; otherwise, the project is doomed to fail.

● Supplier and partner expectation management: An SCM implementation requires a change from all parties. A company implementing an SCM project must be prepared to work closely with both vendors and customers and manage that change from all angles.

● Internal expectation management: Change management is especially important within a company. Personnel involved in a new system must be informed and trained to manage any anxiety they might experience in their job changes.

● Learning period acceptance: Companies implementing SCM must accept that it takes a long time to fully realize the benefits of the system. SCM has the further benefit of driving business value. Simply put, SCM will help your company’s bottom line by making it more efficient for customers to buy your product and for you to buy your suppliers’ products. In this way, your entire company will benefit and become more efficient. Implementing an SCM system without paying attention to the critical factors listed above will result in poor performance. In fact, a large percentage of companies that implement SCM are not satisfied. Forty-five percent of respondents to a Booz Allen Hamilton supply chain management survey report that their IT solutions are failing to meet expectations. SCM consultants often find that companies have unrealistic expectations of the technology. However, companies dealing in the service parts business (for example, Caterpillar Logistics and Ford Motor Company) are finding that SCM allows them to decrease inventory by between 10 and 30 percent, according to AMR Research Inc. Companies

must decide how their supply chains should be designed and run, and then use technology to implement those goals.

Questions:

1. Assume you were recently hired in an IT role at a large manufacturing company. Your first job is to convince the manufacturing manager that the implementation of an SCM system is feasible. Write a memo to that manager, highlighting advice on how to ensure the smooth implementation of such a system.

2. Outline the potential pitfalls that your company may encounter when implementing SCM.