Logistics Industry Plugs
Into the Grid Now
The Real Meaning of
Supply Chain Management
Combine robust software with a connected
network of supply chain partners and deliver
the entire platform over the Web on a pay-as-
you-go basis and you have a model for next-
generation supply chain solutions, says Greg
Johnsen, executive vice president of GT Nexus.
GT Nexus already has
developed this type of
platform and is delivering it to its customers in global trade
and logistics.
“First-generation
on-demand or SaaS
solutions were targeted at existing business processes where
there may already
have been software
applications in place, such as customer relationship management
and sales force automation,” says Johnsen. This quickly spread to
other businesses and a third iteration occurred with companies
like GT Nexus, where applications were combined with a network. “In our business, if you have carriers, freight forwarders and
3PLs all trying to exchange information with a customer, you can
do that on one system and one platform with the software applications riding on top.”
The result is analogous to an electric power grid, he says. “In a
lot of ways what we are doing in logistics and the supply chain is
like a very big, ubiquitous utility, such as a power plant. You
would never dream of building your own power plant to power
your electric shaver -- you are going to use electricity from a utility.
We see the delivery of a platform that has partners pre-connected
to it and that provides on-demand applications as being equivalent to getting a very well connected power plant or grid that you
simply plug into and don’t have to build yourself.”
This model is particularly attractive in the current economic climate, he says, because the total cost of ownership and level of risk
is much lower. “A company can get a return on business process
automation without spending a lot of capital or taking a lot of
risks, so it is a perfect way for customers to jump in.”
To view this video interview in its entirety,
visit www.SupplyChainBrain.com.
It’s not just about logistics and purchasing. The sup-
ply chain consists of a broad network of partners
who interact at every level of their organizations,
says Douglas M. Lambert, director of the Global
Supply Chain Forum at Ohio State University.
It’s more than just a
question of semantics.
The failure to give the
term “supply chain” a
broad enough definition can cause a company to adopt a
short-sighted approach
to its operations. “In
our view,” says Lambert, “the supply chain
is a network of companies that comprises
your suppliers, their suppliers, customers of your company and their
customers, if they exist.”
Assuming that to be true, “if we want to manage [the supply
chain], we can’t do it with fewer functions than it takes to manage
one company,” Lambert says. “Logically, that makes no sense.”
Effective supply chain management will address eight cross-functional business processes: customer relationship management, supplier relationship management, demand management,
customer-service management, order fulfillment, manufacturing
flow, new-product development and commercialization, and returns
management, Lambert says.
Most of all, he says, don’t think of supply chain as a new name for
logistics or purchasing. And don’t locate responsibility for its care to
individuals too far down in the organization. The Coca-Cola Co. and
Cargill Inc., for example, have “CEO-to-CEO involvement,” when
they’re engaged in such activities as developing a new sweetener.
Suppliers and customers must be factored in at every stage of the
game. To Lambert, the supply chain looks more like “an uprooted
tree,” with the root system standing in for the supply network, and
the branches representing customer channels.
He doesn’t accept the conventional wisdom that sees business
today as a competition between supply chains. “The only way that’s
true is if I wouldn’t buy from anyone selling to a competitor, or sell to
anyone who was a competitor of an existing customer,” he says.
“That doesn’t happen in supply chains even where there are dedicated distributors.”
To view this video interview in its entirety,
visit www.SupplyChainBrain.com.
