Simple secret for supply chain success: know more, do more and spend less (page 3 of 3)

That early vision for ERP is alive and well and delivering results for a whole host of companies.

Let's look at some examples. General Dynamics used this approach to manage the $2.3 billion Bowman Programme for Britain's Ministry of Defence. This is a secure digital voice and data communication system that will be used by all Army vehicles and service personnel by 2007 and provide the infrastructure to support all digitisation applications over the next 30 years. In a project where time really was of the essence, General Dynamics was able to implement three key ERP modules in just 28 days and the key manufacturing module in just 60 days.

The UniCredito Italiano bank has been unifying its information systems as part of its strategy to expand into Eastern Europe by acquisition. Using the single data model approach, it has cut personnel administration costs by 50%, halved its paper purchasing requests, reduced the time to close financial data by 40% and cut indirect materials expenses by 20%.

Sony España has improved productivity by 15%, reduced time to market by 30%, cut its planning cycle from three days to four hours and reduced inventory levels from 40 days' stock to just 15. The Spanish white goods giant Fagor used this approach to cut its administrative costs by 60%, reduce its supply period by the same amount, cut expenses for direct materials by up to 3% and for indirect materials by 25-30%. In total, the group has saved €1.8 million in indirect materials costs.

Other companies at the cutting edge of the supply chain revolution include Kvaerner, which has reduced inventory costs by $1 million and cut order processing time by 83%; Hitachi, which has cut inventory costs by 75% and procurement costs by 70%; Timex, which has reduced human interaction by 90% and improved its order fill rates; McData, which has reduced inventory costs by 37% and increased on-time shipments by the same amount; and American Power Conversion Corporation (APC), which reduced inventory costs by 56% while moving from 13 systems to a single global instance.

The scope for making those results a reality not just for visionary adopters but for all business users is absolutely enormous. And the beauty of the opportunity is that customers have the chance to spend less, not more, to get there. Most people expect that by streamlining their operations they will see a reduction in their total supply chain cost - if not, why bother? But not everyone appreciates that they can reduce their infrastructure costs - and especially their IT costs - in the process.

A typical SCM implementation is characterised by scope creep, surprise costs, unexpected consultancy fees, on-the-fly advice and success that is often based as much on luck as on experience. However, best practice today sees implementation focused on specific objectives, on a project with a fixed price and fixed scope, using certified procedures, delivering business flows at less risk and lower cost.

Then there's the potential for savings in hardware by migrating to the Linux operating system. Linux has a number of advantages: for a start, it's free, so implementation cost drops significantly. Secondly, it runs on lower-cost, non-proprietary hardware, so you can deploy on low-cost commodity hardware. Thirdly, Intel Linux is demonstrably three times faster and five times cheaper than conventional systems. Fourthly, it's also easy to automate en masse and it's highly reliable. The growing list of companies using Linux for their e-business applications includes Dell, 7-Eleven, Paperhat, Marso, UTT Logistics and Three Rivers Pharmaceuticals. There are at least 700 others around the world, and more will follow.

Other ways for spending less in SCM implementation are to use business flow accelerators, opt for pre-configured software and outsource your software management. Business flow accelerators typically get your applications up and running in 66% less time and at 35-50% lower cost. Pre-configured e-business software will cut your cost, project complexity and risk, and implementation is usually under 30 days. And outsourcing is increasingly popular with forward-looking IT directors. Why? Well, try costs that are 50% lower, according to one independent authority. Just as important, outsourcing customers are realising 60% fewer service requests, 50% faster problem resolution, 60% fewer outages and close to 99.99% availability.

A vision for the future of SCM? More companies able to know more, and so do more, and spending less in the process. Like many visions, it sounds revolutionary. The beauty of this one is that it's very real, and it's attainable now. All you have to do is ask.