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Vol 32 - No 04 - June 2006 Editorial : Editor’s Letter Once upon a time life was simple, orders came in by post, or at their most exotic, by fax or electronic data interchange (EDI); the fulfillment cycle consisted of a few phone calls to the warehouse or to suppliers; and the products arrived or were assembled and shipped out to the customer or the wholesaler. Things were simple and life was good… A supply chain, simply stated, comprises the flow of a company's products, information about them, and the money that changes hands between the company, suppliers and customers. When a company manages the processes that support these flows well, it can fulfil orders from customers quickly, yet keep its inventory to a bare minimum. When it doesn't, the supply chain breaks down. Customers place orders but hear that the products are out of stock, even when they might be available somewhere in the company. Raw materials fail to show up on loading docks and shipments to customers arrive late. Factories run below capacity because customers cancel their orders, resulting in a quick drop in sales, lost margins, and inventory write-offs. Software on its own can't fix the basic shortcomings in supply chain management; in fact, it can make things worse. The real benefit comes from repairing broken business processes, and companies that tackle them before installing the software can reduce inventory levels, predicting demand more accurately. This effort can begin to increase revenues. Add the software and the improvements are accelerated and sustained. But in reality, many companies that have installed supply-chain-management tools are unhappy with the outcome. Companies that understand how to make the software and improved processes work together to create a more efficient supply chain will see a better return on their investment. Such an urgent need to improve supply chain management can arise when product margins shrink, demand drops, customers ask vendors to manage inventory for them, or new products are introduced. Other companies face the challenge of recreating that sense of urgency, which seems essential to ensure that everyone accepts the need for change. So what’s the answer? Well read the articles in Control. More important though, if you have been successful in your business why not write an article to share with other members of the IOM. Malcolm Granger, FIOM, Editor Related Topics:
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