I began the last discussion by calling out the three types of benefits that can be used to justify a new initiative, or program;
- Hard benefits – these can be grouped into cost savings types of benefits that deliver cost reductions directly to the bottom line, or sales increases which will deliver additional profits.
- Soft benefits – these can be grouped into categories that provide improvements in working conditions, coordination or communication. They could provide financial benefits but they are generally so minor as to not be measurable.
- Compliance, or Legal – these can also be defined as a cost of doing business based on legal or regulatory requirements.
In this discussion I will discuss the types of soft benefits that you may be able to document as additional justification after your hard benefits for building a collaborative network to support and extend your extended supply chain. The soft benefits discussion comes across as ‘squishy’ and should be used as a type of supporting benefits list to your hard benefits and your compliance, or legal benefits. In this business environment soft benefits will not justify a project. Your soft benefits however can be used as a means to define your framework for future initiatives in developing your collaborative supply chain network.
So let’s discuss a justification strategy for your collaborative extended supply chain program. In order to gain leadership acceptance and approval you must have hard benefits to provide a quick ROI, in fact the quicker your ROI, the higher the priority your program will be given. I suggest that you define your soft benefits to support a framework of continuing improvements that will ‘seed’ the future improvements that can be achieved in your collaborative network. In other words, you should define benefits such as flexibility, extendibility, a robust architecture that can support discontinuous growth and spikes in usage. As you can see, all of these ‘benefits’ are actually supporting a framework that will support and prepare for the future of your collaborative network.
Now let’s break these down a little more to help flesh out at least the concepts. I say ‘flesh out the concepts’ because each instance of the initiative will be different than the others, just like each node in your collaborative network will be different than the others. So let’s start with flexibility; this should be viewed as providing the ability to support multiple methods of integration quickly and efficiently. The objective of a flexible architecture is to provide ability to quickly and efficiently add, modify or remove new partners and methods of communication without impacting your current environment and partners. Next we have extendibility; the objective of extendibility is quite straight forward, provide the ability to extend your network of partners and types and methods of communication quickly and efficiently without impacting your existing partners or methods. The last point is related to the robust architecture, as I stated above the objectives of the robust architecture is to support the discontinuous growth and spikes in usage in an efficient manner without impacting the flow of information or functionality.
As you can see, the soft benefits that I’ve suggested above focus on your network’s current capabilities and efficiency while implementing the framework that will support the future needs of your collaborative extended supply chain network.
In my next installment I will discuss compliance, or legal justifications that can drive the initiative on their own.
Now for the audience participation portion of this program…….
Have you identified your key suppliers from both a product perspective and the transportation services perspective?
Have you evaluated your extended supply chain from a functional cost perspective?