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Part - V

And there you have it. No warehouses, no inventory, no paper invoices, just a very nosy software program that monitors Cisco's supply chain automatically, in real-time, everywhere, simultaneously. The chain runs itself until there's a problem, in which case the system alerts some poor human to get off his duff and fix something. Supply chain software junkies call this "management by exception." You don't need to do anything unless there is something wrong.

If there's a weakness to these collaborative systems, it's that they haven't been tested in tough times-until recently. Cisco's network was designed to handle the company's huge growth. Distributed decision making is great if the decisions have mostly to do with making and selling more things. But Cisco and its network were caught completely off guard by the recent tumble in the economy. It took awhile to turn all the spigots off in its complex network when demand for its products plummeted and Cisco and its supply chain partners got stuck with a lot of excess inventory-as did most other big manufacturers in high technology. Cisco was forced to take a hard look at its supply chain planning capability. SCP software is much better at managing growth than it is at monitoring a decline and correcting it.

What are the roadblocks to installing supply chain software?

Gaining trust from your suppliers and partners.
Supply chain automation is uniquely difficult because its complexity extends beyond your company's walls. Your people will need to change the way they work and so will the people from each supplier that you add to your network. Only the largest and most powerful manufacturers can force such radical changes down suppliers' throats. Most companies have to sell outsiders on the system. Moreover, your goals in installing the system may be threatening to those suppliers, to say the least. For example, Wal-Mart's collaboration with P&G meant that P&G would assume more responsibility for inventory management, something retailers have traditionally done on their own. Wal-Mart had the clout to demand this from P&G, but it also gave P&G something in return-better information about Wal-Mart's product demand, which helped P&G manufacture its products more efficiently. To get your supply chain partners to agree to collaborate with you, you have to be willing to compromise and help them achieve their own goals.

Internal resistance to change.
If selling supply chain systems is difficult on the outside, it isn't much easier inside. Operations people are accustomed to dealing with phone calls, faxes and hunches scrawled on paper, and will most likely want to keep it that way. If you can't convince people that using the software will be worth their time, they will easily find ways to work around it. You cannot disconnect the telephones and fax machines just because you have supply chain software in place.

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Source: The Net