Does information technology (IT) still matter? There was a time when businesses wielded technology like a weapon, using advanced systems to take out less-technologically endowed competitors. But a recent article in the Harvard Business Review has called that strategy into question. In that article ("IT Doesn't Matter," May 2003, page 41), author Nicholas Carr argues that because information technology is now affordable to all—and hence, available to all—it's basically become the infrastructure of business. In his view, it's no longer possible for a company to gain a strategic advantage simply via the use of technology.
Carr builds his argument on the premise that a company can gain a strategic edge only by having something that competitors don't have or by doing (emphasis added) something that competitors cannot. True enough. But the rest of his discussion centers mainly on the "having" and not on the "doing." And in supply chain management, at least, it's nearly always the "doing" that creates a strategic competitive advantage.
Here are some examples:
- Wal-Mart reinvented retail distribution partly by using technology that was available to anyone who came along. True, IT has been critical to Wal- Mart's success, but it was the creation of a new retail distribution model that provided the competitive advantage.
- Information technology helped Dell Computer implement its pioneering merge-in-transit model, in which computer products are literally assembled during the distribution process based on the indivi dual customer 's specifications. But again, no pixie dust was involved: Dell used technology that was widely available to anyone willing to acquire it. Dell's secret—if you can call it that—was to integrate the systems into a solid execution plan.
- Technology helped IBM Corp. save itself from the dustbin of corporate giants. Lou Gerstner's turnaround plan (which transformed Big Blue from the king of vertical integration to a company that outsourced even such critical activities as manufacturing) relied heavily on Internet-based systems for sharing info with customers and suppliers, to be sure. But the reason IBM prospered —maybe even survived—had more to do with Gerstner's vision and ability to bring change to an international global giant than with networks and routers.
In each case, a company gained a strategic competitive edge in supply chain execution not because it possessed technology that none of its competitors had, but because it had figured out how to use that technology better than anybody else.
As regular readers of this column have read—and will read again —you can't obtain a strategic advantage simply by applying advanced technology. Superior management and execution of a solid business plan are what make the difference in supply chain management. You can no longer predict tomorrow 's winners in the su pply chain world based on who possesses technology that others don't have. In fact, it's imperative that technology be shared throughout the supply chain; otherwise effective supply chain integration would simply not be possible.
As to whether IT is still "strategic" or not, I believe technology is no more or less strategic to supply chain management than it ever was. New technologies such as radio-frequency identification, voice recognition and wireless systems are already helping companies cut costs and pump up profits. And large consumer-goods manufacturers are developing technology-enabled systems that enhance collaboration with retail companies, with the goal of connecting more closely with the final arbiters of business success—their customers.
Supply chain managers clearly are using—and will continue to use—technology in a way that gives them a competitive advantage. If that's not "strategic," then what is?
