Information technology is all too often the elephant in the room, but retail market specialist Penelope Ody thinks it might be time to think small.
One of the penalties of being a journalist writing about information technology in the retail and distribution sectors for as long as I have been, is that one tends to assume that innovative developments covered five or ten years ago have, by now, become standard and commonplace. It thus comes as something of a surprise to discover just how much manual intervention is still involved in such activities as invoice checking, advanced shipping notices, order consolidation, range planning, store allocation …and so on. In offices across the land people are shuffling pieces of paper, staring at Excel spreadsheets, making endless telephone calls or sending e-mails in triplicate to their trading partners to check on facts and figures which should, surely, have all been exchanged accurately and electronically for years.
Surprising, too, that in today’s climate of economic uncertainty, that so many companies appear to be finally investing in the necessary IT to automate some of these various processes. In part, those investments are driven by a need to cut “costs” – aka headcount – but some are also in response to such government initiatives as GSCoP (the Grocery Supply Code of Practice) which came into effect earlier this year. Among supply chain systems providers, Inovis appears to have embraced the provision of IT to meet the GSCoP requirements with enthusiasm. The company has a raft of projects underway aimed at underpinning the necessary compliance issues. Taken at face value GSCoP seems sensible and simple enough with clauses which, for example, require that “…retailers must inform suppliers of the basis on which forecasts are produced and in certain circumstances be obliged to compensate suppliers for forecasting errors” or that “…payment for goods must be made in accordance with the relevant supply agreement, and in any case, within a reasonable time after invoice”: given such provisos there would seem little need for new IT systems.
However, according to Inovis, there is since many of these issues are still handled manually: in the past compliance to trading agreements – such as delivering on the wrong pallet sizes or refusing consignments outside agreed time windows – has been difficult to monitor, often If both sides see the same information and have shared business processes, resolution of disputes is much easier.leaving suppliers and retailers with long arguments (and lots of manual intervention) in order to recoup some of their costs.
Using a platform based on “actionable intelligence” to synchronise the trading relationship data and standardise procedures is, Inovis believes, a significant step to achieving compliance. “It takes the emotion out of disagreements,” says John Redfern, the company’s managing director, EMEA. “If both sides see the same information and have shared business processes then it makes resolution of disputes much easier.”
After years of attempts at “global data synchronisation” or “collaborative, planning, forecasting and replenishment” one might have thought that seeing “the same information” or having “shared business processes” was something which most retailers and their suppliers achieved quite routinely – but it seems not.
At the Extended Supply Chain 2010 earlier this year, Chris Carden, Asda’s head of supply chain, was at pains to point out that, collaboration was less about making another “unnecessary IT investment that is all too complex” and more about “learning the language” of the trading partner to increase understanding of their needs and so build a good working relationship. Certainly that’s an essential for any relationship, but so too is having the tools which make the information exchange accurate and efficient.
Perhaps Carden and his fellow presenter, Pepsico supply chain director Duncan Lowe, hit the nail on the head with their view that suitable IT solutions were “all too complex”. Companies selling “total solutions” or ERP systems have all too often confused us all with their jargon and hyperbole. Numerous IT tools are out there which can enhance and enable trading relationships, cut the time involved in unnecessary disputes and eliminate much of that manual checking, but implementing such applications in the past has tended to seem too difficult, too time-consuming and too expensive. In some cases the tools themselves were immature – as with all those “optimisation” functions that dominated supply chain technology a decade ago and promised much but often delivered very little.
Times change and what was innovative in IT five or ten years ago is now commonplace: commonplace for the vendors, that is, but still an exotic and mysterious tool for far too many of the potential users. More significantly what required clever IT specialists and a generous budget then, can now be achieved by renting on-demand applications or using managed services. Perhaps it is about time IT shed its mysterious “leading edge” image and accepted that it simply delivers practical business tools for solving everyday problems at minimal expense.