Supply Chain Management Key Initiative Overview

G00214546

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Summary

This overview provides a high-level description of the Supply Chain Management Key Initiative. CIOs and IT leaders can use this initiative to guide how they enhance the operational efficiency and service level of their companies' supply chains through the effective use of technology.

Analysis

Figure 1. Supply Chain Management Key Initiative Overview
Research image courtesy of Gartner, Inc.

Source: Gartner (July 2011)

Supply chain technology applications support a supply chain management (SCM) business strategy that aligns supply with demand to ensure the delivery to the right place at the right time and cost.

Gartner's demand-driven value network (DDVN) model defines the most advanced stage of SCM that can significantly reduce inventory and other costs along with supply-related risks, increase efficiency and sustainability, and accelerate the time to market. As SCM evolves to a DDVN, it can also improve customer service, helping to establish an organization as an industry leader. Organizations that develop an integrated end-to-end supply chain aligned with their business strategy maximize business value for themselves and for their customers.

Consider These Factors to Determine Your Readiness

What Supply Chain Management Means to CIOs

Too many companies approach SCM or develop their SCM strategies "one module at a time," rather than building a holistic framework that captures all the areas where SCM can provide value. Before developing a holistic framework for SCM, CIOs must consider the following factors:

  • The increasingly complex, and often virtualized, supply chains of global companies require an understanding of the characteristics of an end-to-end process that goes beyond focusing on how transactions flow between parties.

  • As SCM is a continuously evolving discipline and skill set within an organization and not a one-time initiative, organizations need to understand their stage of maturity and the next step in their journey.

  • Industry leaders design their supply chain responses from an outside-in view, understanding demand, to focus on growth, differentiate them from the competition and optimize value.

  • Achieving demand-driven excellence in SCM requires CIOs to provide a vision, market it internally, empower the team and institutionalize success.

What Supply Chain Management Means to IT Leaders

As the emphasis on standardizing processes shifts from administrative to operational processes, organizations will increasingly need to focus on shared (and integrated) operational services instead of just shared administrative services. Before developing an integrated demand-driven supply chain, IT leaders must consider the following factors:

  • Globalization of business processes and often unstable logistics environments require an enterprise architecture to support resilient supply chains.

  • Business application support for business processes enables organizations to move away from multiple, single-purpose portals.

  • Measuring the business value of SCM applications helps maintain credibility and funding to manage and optimize these applications.

  • Market understanding and a best-practice evaluation and selection process are key to selecting best-fit SCM applications and vendors that support innovative SCM processes.

  • New sourcing options, such as software as a service or managed services, can improve supply chain capabilities without the significant upfront costs of on-premises applications.

Conduct Your Supply Chain Management Initiative Using This Structured Approach

Gartner recommends that CIOs and IT leaders follow the steps below when considering SCM technologies. These phases may vary, depending on the organization, its requirements, and its SCM process and organizational maturity. These phases are:

  • Strategize and Plan: Draft a charter to gain agreement on the mandate behind the project, in alignment with business goals, particularly in end-to-end processes from the customer to suppliers. Establish resources, budget and governance systems.

  • Architect Solution: Define the architecture, technology and standards for the project. Model business requirements, and detail specifications for solution delivery. Recommend how to implement the project. Define process detail and performance metrics. Communicate the plan.

  • Select Solution: Set requirements, and issue RFPs. Analyze market intelligence. Evaluate vendor/service provider options. Look at ERP suite vendors and best-of-breed and emerging SCM vendors. Negotiate service-level agreements and contracts.

  • Deploy: Staff and manage the implementation. Coordinate solution deployment. Create the development and test environment, and run tests. Seek feedback from users. Monitor risks.

  • Operate and Evolve: Operate and manage the implementation. Revise according to feedback, risks and changing business requirements. Measure performance. Monitor use and compliance. Define best practices for users. Refine governance processes. Monitor risks, and analyze trends.

© 2011 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction and distribution of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although Gartners research may discuss legal issues related to the information technology business, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice.

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