It’s hard to go much more than a week in the supply chain business without hearing about the silos that separate everyone.
Carriers don’t talk to shippers. Inbound doesn’t talk to outbound. International doesn’t talk to domestic. Procurement doesn’t talk to finance. Sourcing doesn’t talk to transportation. Merchandising doesn’t talk to anyone.
But all this hand-wringing ignores one more crucial divide – the firewall between logistics and IT.
For the purposes of this discussion, let’s quickly define what we mean by IT: that is, the department responsible on an enterprise level for the systems and technology that underpin every facet of the business.
That means human resources, office equipment procurement, email, ERP, and everything in between.
So how does this firewall negatively manifest itself? There are a number of ways, so let’s go over some scenarios:
- A logistics director wants to invest in a freight payment system. The IT department tells him they already have an accounts payable system, or they can build a better one than the freight payment vendor is offering. Or that the IT department should conduct the vendor search, not the logistics department.
- A compliance manager wants a system for restricted party screening. The IT department tells her there is already trade compliance functionality within the company’s ERP. Or that they can build a system themselves to keep track of all the relevant changes.
- A transportation manager wants a TMS. The IT department tells him the company is undergoing a massive overhaul of its enterprise systems, and has neither the time nor the funding to invest in a niche tool.
- Any of the above managers ask for anything. The IT department says, “let us handle IT. That’s our job.”
If any of these scenarios sounds familiar, there’s a big firewall between logistics/compliance and IT at your company.
I recently heard an enlightening discussion at an Oil and Gas Supply Chain Summit in Houston in February. The chief information officer at the oil exploration and production company Apache Corp. discussed the ways he and his counterpart in the logistics department broke down barriers to ensure that logistics was getting the technology it needed, not the technology the IT department thought it needed.
To my recollection, it was the first time I’d heard a CIO speak at a pure supply chain conference. I’ve had several discussions with shippers and IT vendors in the past few months about this very topic. Everyone nodded in agreement – this is a problem.
It’s often said that an IT vendor’s biggest competitor is not another IT company, but rather the status quo. More specifically, it could be said the biggest competitor to any solution is Microsoft Excel.
But the firewall between logistics and enterprise-wide IT is a significant impediment for technology vendors. It’s often just as crucial that the vendor get the right people in front of them as it is to say the right thing. A great message to a powerless logistics director is as useful as talking to the IT department about carrier management, or use of free trade zones.
Equally, for logistics and compliance managers that have taken the time to understand their respective IT vendor landscapes, it can be beyond frustrating to be told by the IT wonks that they don’t know what they’re talking about. Or that they should persist with a substandard module from an existing system simply because the IT department is familiar with that system.
benchmark research shows that about a third of shippers cite organization resistance to change as an inhibitor to investing in technology. Much of that resistance has to come from the IT department, not just the C-level. We’ve also collected preliminary evidence to suggest a majority of shippers feel that the funding for investment in logistics and compliance technology is simply not available.
Again, some of that has to be pushback from IT departments with a plethora of people to keep happy beyond supply chain.
One of the answers to breaking down the firewall is building consensus on an integrated system. Choosing, for instance, a global trade management suite that could potentially benefit everyone from transportation to compliance to finance can help those departments build a more ironclad case against IT resistance or ignorance.
But the best course of action is to simply engage IT before the need to invest in a system arises. If the IT department is aware over a period of time that logistics understands its needs and the vendors available to fill those needs, confidence in the logistics department will grow.
Involving IT in vendor discussions can also help. A chosen IT vendor can often explain the benefits of a system in more technical detail to IT grunts than a logistics or compliance manager ever could.
The ironic thing is that technology is helping to break down existing barriers between the internal silos that have plagued supply chains for ages. Systems now unite disparate groups on cloud-based, easy-to-navigate platforms that often mimic their social networks outside of work.
Shippers are able to benchmark themselves against external organizations, and connect to data within their organization that was largely unreachable before. How unfortunate if the walls of some silos come tumbling down just as others become thicker and more impenetrable.