Last week on my way to Frankfurt, I uploaded software files while over the Atlantic ocean using Lufthansa’s WI-FI service. I was able to work, and be effectively connected to my office, all the way to Europe. As I uploaded a 5 meg file to Slide Share somewhere over England, I smiled.
Similarly, tonight, as I write this blog post, country music is blaring from my iPhone. It is based on MP3 files. Over my lifetime, I have successfully transcended the music experience from records, to tapes, to digital files. The music experience today is far more portable and enjoyable than the days of vinyl. While I still hold onto my Beatles and Rolling Stones records, it is mainly for nostalgia. They are no longer played…
I also smiled this weekend as I unpacked boxes from my recent move. I held my old, well-worn Road Atlas fondly. At one time, it was very important in my life. I have the uncanny ability to get lost every time I turn. There were notes from trips twenty-years ago with my young daughter that is now thirty in the margins. I reminisced about the days when you plotted the trip with yellow markers and called ahead for a hotel room. Over my lifetime, I have moved from a paper-based Atlas, to MapQuest, to a satellite-based Garmin, and now to an iPhone. With each transition, my life got easier.
I recently attended SAPICS in South Africa. A speaker on robotics spoke on the potential impact of robotics and manless vehicles to reduce logistics costs by 40%. We see the constant evolution in the warehouse with robotics, voice and automated vehicles, so why not planning?
So, as I sat in my seat 5D and crossed the Atlantic, I asked myself the question, “Why have supply chain planning technologies not been reinvented through technology evolution in a similar manner?” By and large, companies are unhappy with the user experience of supply chain planning and feel that the system output is too difficult to use.
So, why has there not been a step change? In the words of Rick Sather, Kimberly Clark, “Why is there not an app for that?” Here is my answer:
- Incentives: The market incentives are aligned to sell traditional software. Consultants are incented to sell traditional enterprise software. Companies are risk averse and consultants want to sell the software that gives them the greatest margin. The technology evolution reduces the margin for ecosystem. This surprises many. During the week, I had a long conversation with a good friend that moved from a manufacturing role to a consulting role and has now decided to move to a supply chain role in a distribution company. She was shocked at the level and amount of kick-backs made to consulting companies to sell traditional software.
- Consolidation: As the software matured, the market consolidated. Most of the energy of the software providers was focused on platform migration and the protection of maintenance revenues. The protection of maintenance revenues is a deterrent for technology innovation. I know of no software company that has successfully migrated their product platform to new technology. In my decade of serving the industry as an analyst, each time that a company attempts to innovate on a new platform, they are pulled back by user enhancements and the need to protect license revenues.
- History. The supply chain planning space has a legacy of long and expensive sales cycles with large payouts to the enterprise sales team. The deals are carefully planned and the battles are artfully waged. Sales teams have made large sums of money. The movement to cloud computing and mobility reduces the cost of software and changes the business model. No longer are sales teams able to generate the size of deals and the commission checks of yesteryear.
- Sex and Fifty Shades of Gray. The software for supply chain planning is just not as sexy in the eyes of venture capitalists. Most of the money has poured into social and marketing technologies that are aligned to drive corporate growth. Supply chain problems require an enterprise-class solution that works. For many this is just not exciting.
So, as I write this, I am encouraged to be working with several new start-ups that want to change this picture. They are enjoying the challenge of creating cloud-based optimization solutions and new forms of visualization and analytics for mobile devices. They are poking holes in the old Advanced Planning Footprints of the 1990s and asking me to help them design it differently. They understand that the movement to the tightly integrated ERP footprint was a step back for the industry. Their interest is in building effective business networks that can sense and adapt using new techniques.
Shouldn’t it be this way? Shouldn’t technology evolution improve the experience? We shouldn’t start with process. Instead, we need to ask how the process could be improved with new forms of technology? Don’t we need to admit that the supply chain planning today is largely legacy, and that like the Atlas that I carefully packed away, that it is also needs to be shelved?
So, what can you do to change this?
1) Encourage innovation. Work with small and innovative solutions and open up the world of opportunities.
2) Push existing technology providers to also drive innovation in a meaningful way. Challenge them to think about problems differently.
I look forward to getting your thoughts and writing about these new forms of analytics as they evolve. But, tonight, as I recover from my jetlag and tap my foot to my blaring country music, I think that I will just toddle off to bed and dream about the world that could be.