Not sexy, but supply chain software will be worthwhile

Supply chains are hot, and although they'll never be sexy, business people are now paying attention to the ins and outs of the software.

For years, supply-chain software received no respect. In fact, most existing supply-chain systems are broken in one way or another, which is a fact the business people are in some state of denial about.

Fortunately, supply chains are hot, and although they'll never be sexy, business people are now paying attention to the ins and outs of the software.

Of course, what sparked interest in the topic is a convoluted story in which hype met reality, only to produce an unintended, but positive, result.

The hype arrived in the form of digital exchanges, which someday may reinvent the way we conduct business-to-business e-commerce. But like all new technologies and business models, exchanges will take some time to fully catch on. Although the basic idea is only a little over a year old, it has already gone through multiple incarnations.

The earliest digital exchanges saw the creation of a wave of independent startup companies funded by venture capitalists.

As independent companies, they were expected to provide a neutral arena to conduct transactions. But controlling the transaction is actually the core asset of many companies, and giving up that control would be tantamount to going out of business.

To protect themselves from this new threat, companies in a given segment chose to band together and help fund a joint venture in which all member companies have an equity interest. This approach didn't solve the core competitive problem, but it did buy time and give shareholders a sense that these companies took their new rivals and the internet seriously.

Meanwhile, back at corporate headquarters, business executives began to finally understand the value of an integrated supply chain. Prior to the advent of exchanges, most business execs considered their supply chain as something they were entitled to.

The fact that a small startup company might use technology to create a supply chain as an inherently more valuable business proposition was mostly unthinkable. Now supply-chain management applications are on the minds of everyone in the business, and most notably in the thoughts of members of the board of directors.

Truth be told, not many people in business today really understand supply-chain management and the impact it has on their company's bottom line. The understanding and accompanying skill set still belong to specialists in the company. What is important is that the board of directors is now more than ever willing to fund projects related to optimising supply chains, which makes this an important area for IT people to be involved.

Granted, this area may not have the broad appeal of a CRM (customer relationship management) application, but it will probably have more lasting value, because the way companies manage their customers is a fairly public application, and is something that can be easily copied.

Supply-chain management, on the other hand, happens away from the public eye. And more often than not, it's the secret sauce that makes one company significantly more competitive than another.

If you want to make a difference in your organisation, understanding the processes that make up your company's supply chain is the place to start. Not everyone will immediately understand what you're talking about, but once you succeed, your words will have authority.

And don't forget to thank all those noisy consultants and venture capitalists for making promises that only you could really deliver. Without them, IT would still pretty much be a dead-end job with no prospects, instead of the vital centre, with a vibrant connection to every aspect of the business that it is today.

Michael Vizard is editor in chief of InfoWorld.

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