That's my takeaway from our session last weekend.  We discussed several case studies and looked at some 3PL (third party logistics) offerings.  It was a great class, don't get me wrong, but Manoj really summed it up for me with that simple statement.

During our discussion I said that one of the potential downfalls of outsourcing your supply chain management was that you're leveling the playing field -- you no longer have the opportunity to outgun the competition in that respect.  If it's not your specialty that may be to your benefit, but echoing in my head was a rant by Tom Peters about how if everyone adheres to generalized best-practices then industries will miss out on the innovations that change the competitive landscape.  So even if your SCM is sub-optimal in the short run, it might make sense to keep it in house and improve on it because you could leapfrog the competition in the long run.  Or something like that.

As we broke, Manoj and I were going over some of the finer points of the afternoon, and he boiled it down to its essence:  supply chain management is just like information technology (IT) -- no organization can exist without IT, and it's hard to excel with just average IT.  Best-practices IT is just the baseline.

Supply-chain's dependence on IT will multiply the problem; your IT architecture has to be up-to-snuff before you can even consider significant supply chain integration.  As a result, companies will shell out hundreds of millions of dollars to all tiers of consultants, integrators, and 3PLs to create and execute initiatives which will have incredibly high failure rates (if IT projects are any predictor), all just to keep up with a baseline in their industry.  On top of that, they'll have to excel at some other aspect of their business in order to keep from being consumed or killed off.

The good news is, of course, some will excel.  And many others will maintain their comparative baseline and sustain themselves.

This all seemed very revolutionary when Manoj said it, but perhaps that was because we had just finished 20 hrs of classroom study within two days and we were feeling a little fried.  Now the premature enlightenment has worn off; businesses can't live without IT, can't live without Quality, can't live without efficient processes -- those things just have to be there, and while some industries are just starting to figure it out,  supply chain management is the same.

Tags: supply+chain, IT, pmba