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Using Supply Chain Management for ROI

by | Aug 18, 2006 | PKF Texas - The Entrepreneur's Playbook®

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If supply chain management, or SCM, has so much potential, why does it often fail to deliver a return on capital?  Recent studies have shown that return on capital is down thirty percent for 1,500 manufacturers, distributors and retailers.  Is the hype driving us all to move in a direction that we believe will help our businesses?  Or it is something else?  It is something, or a process that seems so simple, but elusive to most businesses.

There are several reasons SCM can fail but three key reasons are consistently found:
First, SCM project managers often lack access to C level executives.  C level personnel are crucial for success and must be involved in any SCM project.  The C level person must be engaged in the oversight and management of the SCM project.  If they don’t, they have shirked their responsibilities and the SCM will have to battle priorities and commitment from others.

Second, SCM project managers don’t necessarily speak the language of finance.  In order to be successful, they have to have the tools to communicate information effectively.  They don’t know the key elements of their Corporate DNA.  Corporate DNA being defined as the metrics by which you measure success beyond the software implementation.

And third, SCM cannot be done in a vacuum.  You must take into account entity wide issues.  Getting departments to work across company lines and getting input from the appropriate key people sounds easy.   But as many SCM project managers will attest to, getting this cooperation is much more difficult than one might expect.
In short, everyone has to be active and committed to an SCM project for it to be a success.

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