On paper, supply chain management is an eminently sensible idea, so sensible that one wonders why it is having its heyday only now. Even now, SCM is more a slogan than a reality at many companies, and the methods needed to make pull systems works are still very difficult to implement. Pull systems in channels are so different from push ones that it is a very challenging task to make the changeover. Internal and external barriers to implementation exist everywhere. What does a company need to build a supply chain management mentality into its marketing channels? Experience from data suggests that these elements are critical:
- Pressure: A common threat is a marvelous impetus. A huge opportunity (e.g., European economic union) can be phrased as a threat (develop pan-European logistics or be shut out of the game).
- Industry agreement on standards (preferably regional, even global) for ED!. This means agreement on coding of goods and the definition of templates (e.g., for invoices) as well as on software.
- Heavy EDI investment, or more generally, heavy IT (information technology) investment.
- Excellent cost accounting (speedy, accurate, detailed, activity based).
- Internal incentive systems that focus on system gains and reward managers for making local sacrifices (i.e., in their own functions) for system gains
- Internal culture of cross-functional integration (as opposed to functional silos). Task forces and team incentives are valuable tools here. Participative management and flattened hierarchies are also conducive to devising and implementing the dramatic changes that SCM thinking demands.
- Effective channel management, .i.e., trust, good working relations, good design, the judicious exercise of power in short, the implementation of the principles