Could you go back to the Stone Age? October 5, 2007
Posted by Randal Stocker in Supply Chain Visibility.Tags: BPM, Business Continuity, Data, Fred Flintstone, Process, Tools
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Business Process Management (BPM) advocates talk a lot about the efficiencies and the “actionable intelligence” that can be achieved. They are absolutely correct and BPM systems with human and systematic event triggers can often propel a company to be much more efficient and optimized, but as they say “a fool is still a fool with a tool” Good process definitions, current data and manual backup processes are all necessary to make it work correctly and give the results you want.
I was recently talking with a small retail business owner that was having trouble keeping up with their gift shop inventory. The owner was the primary worker and had little idea what was coming in the door and what needed to be ordered since they were so busy with customers and other activities. He asked if there was a computer system that could help him out. After a few questions my response was that if he couldn’t do it with a piece of paper and pencil then a computer system would probably be little help. You need the discipline, the time and the process knowledge with either a computerized system or a manual process.
Process: At it’s most basic level, on-hand inventory equals last physical count minus the sold amount plus the ordered amount. Factor in minimum order amounts, write-offs, supplier lead delivery times, shrinkage, receiving/production variances, missed deliveries, substitute items, and returns and it can get quite complicated. Many systems will have most of this predefined but can be general purpose. Tailoring it to your specific business with someone intimately knowledgeable of all the exceptions and event triggers/key performance indicators is critical. If the shop owner didn’t know how to calculate inventory with a pencil then how could he tell the computer to do it?
Data: If you do not have the discipline or the time to capture these amounts then a computerized inventory system is useless. Information the system will use to calculate replenishment and other workflow events will be inaccurate or old. Capturing input from Point of Sale (POS), receiving and warehouse scanners/sensors can help but “Garbage in, garbage out”.
Manual process: Don’t be so dependant and reliant on a computer system that you could not do the job with pencil and paper. You now have a system and took the time (or hired someone) to document and input your processes and data. You also have established a regular routine to capture the data (or integrated to other systems that contain it) so that it is current and set the workflow for systematic triggers and human alerts to various thresholds. What if the power goes out or the internet is down? What if terrorists are successful with organized denial of service attacks on main internet computers? In 2004 much of the city of Atlanta was without internet service for 3 days when a construction crew severed a main fiber optic cable to the Federal building which housed a critical internet hub. What if electric power is lost? In 2001 Atlanta was hit with a severe ice storm that caused blackouts for 13 days. A large big box retailer based in Atlanta was so dependant on their system for placing custom orders that when it went down for two days; no one knew how to take a customer order manually.
What’s in my MP3 player today? Jinx Jones: License to twang
