Scarcity mindset and commoditizing supply chains - you get what you pay for!

Many times when businesses think they can commoditise every part of the company and that's a cost-saving winner, then they end up paying much-much more for not seeing the wood for the trees.

This is especially true for supply chain in every aspect.

Nothing new here, we know these in theory.

Every leader going to any leadership seminar will hear this over and over again.

Then all those leaders go home and do the exact opposite....

They try managing their supply chains as 100% commodity/cost and nothing else.

A pain in the backside that needs to be reduced to ZERO cost and preferably the sooner the better.

Still today, I see this mentality regularly.  I already feel like being a parrot just for bringing this topic up...again.

Let's go through an example (out of the many):

Businesses want to save another 50k USD on personnel per annum (just a little less qualified will do, we surely don't need that expertise, that's why we bought this gorgeous system!…), while losing 100k USD multiple times in days just because they didn't have the right people with the right mindset and approach.

The more supply chains are supported by systems, the more we need to sharpen the human side of the business as otherwise we lose what's most important.

Perspective, purpose….and profitability.

What remains is systems and processes that aren't maintained and aren't used well…and that's the better scenario, many times systems weren't even properly implemented, but were signed off and then not maintained…that's a full disaster.

Then 5-10 years down the line, leadership is surprised that there is no quick or easy fix.

Every system process you touch, skeletons fall out of the cupboard needing more effort to fix the first process you started working on as the others aren't working as they should.

Please don't forget, we put in INTEGRATED systems for a reason. They are integrated, therefore processes are not standalone, every process has a profound impact on every other interlinked process.

In case of supply chain, all of your processes will be interlinked.

If you didn't maintain and put in the correct principles that are also maintained regularly by competent people, who understand and know the methodology and business needs AND can push for the agreements that are necessary to actually maintain these and are willing to take these decisions…then you have a very expensive typewriter.

You bought a Ferrari while you can only ride a bike and you are only willing to ride your bike. Waste of money, time, effort, resources (not only FTE or assets, but further aspects of sustainability).

You can put AI to it….it will stir around the hot mess you already created and spit further "materia" your way.

Lower paid people with less expertise and with the wrong mentality "executing only what I'm being told" will NOT solve your issues by using ChatGPT….

They will not find answers sooner as they have no idea what they are truly looking for or if what chatGPT offered is correct or not in the end in that business context.

My recommendation for every business remains the same:

1. PAY the right people with the right competencies in your supply chain. This doesn't mean more FTEs. The right ones. It will pay all the rest back multifold. People - Processes - Systems. The right order and not to be mixed up. 

2. However, DO NOT buy an expensive integrated ERP system if you don't want to manage and maintain it properly. If you don't want to allocate effort, people and expertise, save that money and buy something less complicated that you are willing to maintain.

It has never been a project that will get done once.

It is an ongoing effort.

It is not an either/or for the equation of people vs systems.

If you ask me to "repair" your system processes as you didn't bother maintaining them for long years, the question is NOT "where do I add value as an external? or "how will this improve my KPIs?"

This is hypocrisy at its best.

Gaslighting yourself into thinking you didn't drop the ball in the last 10+ years and trying to blame it on someone you asked to help you out of your misery.

The correct question is:

How much will you keep losing by keeping the expensive "Ferrari" in the garage and using your bike?

Unfortunately, most business leaders cannot even compute this equation, or they aren't willing, as it causes cognitive dissonance after paying for the "Ferrari" and the full package of "bringing it home".

Either give the "Ferrari" back, or use and maintain it!

Then you will see the business value...if every key system user in your company is doing it well, then after cleanup, you will start seeing results in 6-12 months....as the thick layer of crap on the tool you didn't maintain will have impact so far out....integrated, remember?

I bet nobody told you this, when they told you to buy this shiny "Ferrari"!...that it will cost you ongoing to take it out of the garage regularly.

Yeah, it is an expensive "hobby"...buying an integrated system that's an overkill for your company.

Even more important strategic questions:

1. What do you want and need as a business?

2. Do you even need an expensive integrated system?

3. What are you willing to maintain?

4. Why didn't you calculate the correct business case when you bought the "Ferrari"?

5. Why are you not willing to see where you truly lose money?

6. If you are "married" to your "Ferrari", why don't you want to make the most of it?

Granted, these required deep leadership & business reflections. 

Are you willing to self-reflect?