Tuesday, February 18, 2014

The Disruptive Effect Of Technology & Innovation

This week’s theme on how technology and the web have affected global supply chains holds a special fascination for me. I have an undergraduate degree in computer science, augmented by courses on the applied, business side of technology, dealing with concepts such as change management, BPR, ERP, data mining, and so on. As such, I have always had a larger interest in how technology shapes the way businesses do business. That is not, however, where the impact of technology ends. At the risk of making a sweeping generalization, I believe, very few people would disagree with the notion that information technology has had a tremendous impact on not just business, but on our very environment, and the way that we interact with it. The advent of the internet, and quantum leaps in all that is digital, have catalyzed innovation in tools and technologies that affect us all in very fundamental ways – the way that we live.

Such radical structural shifts necessarily engender debate, questions and painful teething periods, where new technologies are tried and tested in a real world implementation. Cynthia Rettig’s article raises most of these by challenging the wisdom of corporations implementing enterprise-wide solutions, highlighting striking examples and costs of implementation failures.[1] She gives many a reason for failure, some of which distill down to: inadequate requirements engineering or needs assessment, lack of a modular, integrated system design, patch work legacy systems, poor data management policies resulting in bad or redundant data, and so on. What she completely ignores, is the fact that there are established best practices in software engineering, process reengineering, and change management literature that address these very issues, laying guiding principles for proper implementation. Instead of condemning the implementation process, which based on the examples given in the article, is fraught with bad project management, and little or no risk management, the blame is put on the ERP system itself, which is beyond comprehension.  

There is another side to this debate, exemplified by articles like those in The Economist, which lay to rest any doubt that technology has been great for business. It provides endless examples of businesses, ranging across the spectrum in supply chain sophistication, from proven supply chain titans such as Walmart to relative non-entities, such as the Royal Shakespeare Company, and how they have successfully leveraged technologies such as data mining, cloud computing, and services-oriented architecture, to name a few, to develop an enterprise-wide, holistic view of the organization and reap huge rewards.[2]

There is little question surrounding the impact of technology. The printing press increased the dissemination of information and knowledge by orders of magnitude; the steam engine opened up the hinterland to outside commerce. Every incremental evolution in information and communications technologies results in reconfigurations of supply chains, as new processes, tool, methodologies, and possibilities become available.

Such changes, benefits aside, can often be disruptive. Craigslist brought the entire classifieds industry to its knees. Jobs have become redundant or simply obsolete. Not more than a decade ago, warehouses teemed with workers stocking, moving, and retrieving cartons. Now companies like Kiva systems[3] have come up with solutions for an automated, autonomous warehouse staffed by robots. While old jobs may have become obsolete, new ones, descriptions of which did not exist until the recent past, have emerged. This site (http://kaplaninternational.com/blog/fun-facts-careers-that-doesnt-exist-anymore/) gives us examples of careers that don’t exist anymore. There are other resources (http://www.futuristspeaker.com/2011/11/55-jobs-of-the-future/, http://jobs.aol.com/articles/2013/09/25/high-paying-future-careers/) talking about jobs of the future that don’t even exist yet.

This disruption that new technology causes can also spill over on to supply chains. We have seen several dozen examples of supply chains benefitting. But as new technologies emerge, we still do not know enough about them to understand their impact. 3D printing has all sorts of exciting possibilities. One school of thought believes that it will completely reverse the current global supply chain configurations that we see for most companies and localize manufacturing near to a company’s customer base. [4] Maybe it will, maybe it won’t. Amazon is testing out delivering its products using drones which promise to cut delivery times down to within 30 minutes of a customer placing an order.[5] This can have a significant impact on not only Amazon’s own supply chain processes that are downstream towards the customer end, but it will also have a huge impact on the transportation and logistics sector – a very important component of the downstream supply chain. Companies like AliBaba, TradeKey, Rent-A-Coder have changed the dynamics of sourcing people or products, as sellers and buyers of anything from onions to project management skills come together in a virtual market place.

These and other changes that have the potential to challenge the existing way of doing things by fundamentally altering the way that supply chain components are structured right now, all hold great promise. Yet within them, they also carry the seeds of the disruption that they will cause as businesses and society scrambles to understand, measure, plan for and respond to their impact. And once we have understood all of that, and things have settled down into a stable equilibrium, you can be rest assured that there can be more that can be done with the technology that will bring in another wave of disruption. Here is a fascinating article about how social media can play a central role in supply chain management by facilitating people-to-people communication. That major companies are serious about this is evident from the fact that SAP now has a Global VP Enterprise Social Software to develop social media and collaborative solutions at SAP. [6]

Big data, nanotechnology, DNA computing, or something we haven’t even heard of right now - all of them have exciting new possibilities. Before those possibilities become reality, there will be disruption.

[1] [1] Retigg, Cynthia. “The Trouble With Enterprise Software.” MIT Sloan Management Review, October 1, 2007. http://sloanreview.mit.edu/article/the-trouble-with-enterprise-software/.
[2] [2] “A Different Game.” The Economist, February 25, 2010. http://www.economist.com/node/15557465.
[3] http://www.kivasystems.com/solutions/
[4] http://www.the9billion.com/2012/10/22/will-3d-printing-render-the-current-global-supply-chain-obsolete/
[5] http://www.amazon.com/b?node=8037720011
[6] http://www.supplychain247.com/article/the_social_side_of_supply_chain_management_all_pages

1 comment:

  1. nformative Post...
    It looks like you spend a large amount of time and effort in writing the blog.
    All the points are very informative and easy to undersatnd.
    Components of BPR like processes, organization & information technologies which automates business processes across the enterprise & provides an organization with a well- designed & well- managed information system.
    Thanks for sharing such a nice post on bpr in erp implementation.


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