According to Deacon, technology is less of a problem than the human element in getting the supply chain to work effectively. "In my mind there are two factors that turn on CEOs: risk management and profit. Supply chain management directly affects these two areas and it does provide a value add'. "Supply professionals need to take a leaf out of the marketing profession and learn to promote the positive aspects that go with a well-managed supply chain, keeping these two points, profit and risk, up front in any conversation," says Deacon. "Until that occurs, the bulk of capital and expense budgets will continue to go to the more traditionally glamorous' areas of an organisation." He cites one example. If a tankship costs $50,000 a day to run, and it takes four days to turn around a delivery to a location, and you go there 26 times a year, then using Activity-Based Costing methodology, the cost to supply that location equates to $5.2 million. The risk if that delivery is performed within an environmentally sensitive area such as the Barrier Reef can also be estimated. If Caltex manages its supply chain requirements end to end and in so doing reduces the number of ship movements by half, Deacon says, he'd be quite happy with a 10 per cent bonus on the savings attained.
"Convert those savings into marketing language and people will start to appreciate an efficient supply chain instead of taking it for granted."
Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.