Friday, February 10, 2006
Supply Chain Management and Software 1
My examination of the software business is based on my background in Supply Chain Management. Supply chain management relates principally to the the adoption of new insights and new technology to the age-old problem of getting products from producers to customers in an efficient and effective way.
Managing today's supply chain compared to the supply chains of the 1960's and 1970's differs in at least three key ways: a) the rise of computers in business and the ability to share real time information, b) the transformation of the manufacturing landscape owing to new quality processes such as Lean Manufacture and JIT and c) the breakdown in traditional organisational models to more organic forms.
Computers enable companies to gather information, process it and to pass it to others involved in the process at speeds unheard of by traditional paper-based methods. Real-time information does away with all the processes required to manage paper based information, and thus offers opportunities for streamlining internal business processes. It also reduces information differentials between departments in an organisation (i.e. differences in the amount of knowledge one group has compared to another). It creates opportunities for customers and suppliers to gain immediate access to important information. It enables supply chain designers to radically remodel supply networks based on near-perfect, real-time knowledge. It facilitates the efficient management of thousands of products simultaneously. The opportunites for increasing business velocity and inventory control are endless. The critical importance of IT to the whole Supply Chain movement cannot be underestimated.
Supply Chain Management has also benefitted from the revolutionary, and somewhat counter-intuitive insights that emerged from Japan in the 1970's. These insights, framed in overlapping concepts such as JIT, Lean Manufacture and TQM, trumpeted one-piece flow over economic batch manufacture, velocity enhancement as a driver for cost reduction, total product quality over component quality, and the almost fanatical elimination of waste from processes and products. From its origins on the fsctory floor, such concepts have proved useful in non-production fields, and even across the interfaces between customers and suppliers.
And how organisations have changed! The old bureaucratic Weber models of organisation where everyone had their jobs and their place have broken down, partly due to new technologies, but also as a result of social and educational changes that have reduced the gaps between management and workers, men and women, specialists and non-specialists. Approaches that favoured conflict and a small number of well defined modes of communication have given way to collaborative, multi-disciplinary, temporary, team interactions. These organisational changes have encouraged newer, more collaborative ways of working, and with this greater efficiencies have been realised. Partnership and collaboration are important words within the area of Supply Chain Management, and not without good reason.
The use of technology and new techniques have possibly found a more limited use within the arena of software development than with mainstream product manufacture: managing software development by the numbers throws up different, more intractable problems in the software industry. Techniques such as Agile development and Lean development do exist, but they have yet to gain widespread acceptance and some thinkers believe they have only limited applicability in software. Finally, in the case of software there was no organisational revolution to be had. The IT industry was at the very forefront of the new organisational changes from the very start.
So with different fundamentals, can we find any common ground between Supply Chain Management and Software development and distribution? An interesting question.
Managing today's supply chain compared to the supply chains of the 1960's and 1970's differs in at least three key ways: a) the rise of computers in business and the ability to share real time information, b) the transformation of the manufacturing landscape owing to new quality processes such as Lean Manufacture and JIT and c) the breakdown in traditional organisational models to more organic forms.
Computers enable companies to gather information, process it and to pass it to others involved in the process at speeds unheard of by traditional paper-based methods. Real-time information does away with all the processes required to manage paper based information, and thus offers opportunities for streamlining internal business processes. It also reduces information differentials between departments in an organisation (i.e. differences in the amount of knowledge one group has compared to another). It creates opportunities for customers and suppliers to gain immediate access to important information. It enables supply chain designers to radically remodel supply networks based on near-perfect, real-time knowledge. It facilitates the efficient management of thousands of products simultaneously. The opportunites for increasing business velocity and inventory control are endless. The critical importance of IT to the whole Supply Chain movement cannot be underestimated.
Supply Chain Management has also benefitted from the revolutionary, and somewhat counter-intuitive insights that emerged from Japan in the 1970's. These insights, framed in overlapping concepts such as JIT, Lean Manufacture and TQM, trumpeted one-piece flow over economic batch manufacture, velocity enhancement as a driver for cost reduction, total product quality over component quality, and the almost fanatical elimination of waste from processes and products. From its origins on the fsctory floor, such concepts have proved useful in non-production fields, and even across the interfaces between customers and suppliers.
And how organisations have changed! The old bureaucratic Weber models of organisation where everyone had their jobs and their place have broken down, partly due to new technologies, but also as a result of social and educational changes that have reduced the gaps between management and workers, men and women, specialists and non-specialists. Approaches that favoured conflict and a small number of well defined modes of communication have given way to collaborative, multi-disciplinary, temporary, team interactions. These organisational changes have encouraged newer, more collaborative ways of working, and with this greater efficiencies have been realised. Partnership and collaboration are important words within the area of Supply Chain Management, and not without good reason.
The use of technology and new techniques have possibly found a more limited use within the arena of software development than with mainstream product manufacture: managing software development by the numbers throws up different, more intractable problems in the software industry. Techniques such as Agile development and Lean development do exist, but they have yet to gain widespread acceptance and some thinkers believe they have only limited applicability in software. Finally, in the case of software there was no organisational revolution to be had. The IT industry was at the very forefront of the new organisational changes from the very start.
So with different fundamentals, can we find any common ground between Supply Chain Management and Software development and distribution? An interesting question.
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