Some companies have installed supply chain software and succeeded magnificently; others fail miserably. What makes one company succeed and another fail?
Some companies have installed supply chain software and succeeded magnificently, achieving breathtaking gains in performance and profitability. Others, like Nike Corp., fail miserably, wasting hundreds of millions of dollars and actually impairing operations. What makes one company succeed and another fail? Who or what's to blame for the expensive failures?
Some point their fingers at the technology vendors. "This is what I get for our $400 million?" CEO Phil Knight of Nike Corp. asked incredulously in a published statement three years ago, after the company's supply chain software solution ran afoul of implementation problems, with unfortunate results for both operations and profitability. Experiences like Nike's produced a black eye for the vendors involved and, more importantly, for supply chain technology itself.
Technology vendors are admittedly far from perfect. But if I were a Nike shareholder, my ire would be directed not at the software vendor but at the CEO and his management team. To my way of thinking, it's their responsibility to ensure that shareholders' money is well spent, it's their responsibility to make sure that their supply chain keeps running, and it's their responsibility to satisfy customers. Applying technology to manufacturing and distribution operations may be complex and demanding, but isn't that what they're paid for?
In my experience, failures of technology initiatives can nearly always be traced to one of the following management failures:
Lack of a strategy. Particularly in the early days, when enterprise resource planning (ERP), e-procurement and supply chain management software were the hot new thing, many companies rushed to order complex systems to keep pace with the competition. What they overlooked in the frenzy was that software solutions were tools designed to help them achieve business goals, but nothing more than tools. If the company has neither a sound business strategy nor a clear-cut plan for using technology to advance that strategy, technology may do little but drain away cash reserves and disrupt operations.
Not enough management involvement. Many managers simply delegate the authority for a major tech initiative to their IT and/or business team, then walk away. Company leaders do not necessarily have to be there fiddling with code, but they must make sure that everybody at all levels understands the importance of the initiative and that the initiative has support from the very top.
Refusal to fix existing processes. Too many companies simply slap a technology fix on to existing business processes without reviewing those processes first. If they spent a little time, they'd realize that some of those business processes were inefficient and costly and added little value to their products. Automating those processes without fixing them first is a recipe for disaster.
In adequate attention to change management. New technology nearly always requires new business processes. And new business processes nearly always require an attitude adjustment: Human nature dictates that users - even managers - will resist change. A well-thought-out change management strategy can go a long way toward helping them accept their new roles.
Lack of preparation. Whether it's out of ignorance or time pressures, many management teams fall down when it comes to carrying out the "due diligence" for a technology project. But no company should allow a team to press forward with a project before it has checked out vendors, talked to references and generally educated itself on what has worked for other companies and what hasn't worked .
Supply chain executives are justified in expecting help and continued support from their technology vendors. But they must never forget that they can't "pass the buck" on technology failures. The buck stops, as it should, at their desks.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.