Despite massive improvements in analytical capabilities and applications of AI, companies still produce greater results by implementing operational productivity systems rather than management productivity ones.
We live in a world where businesses need to constantly innovate and stay ahead of their competitors in order to succeed. As many successful businesses have realised over time, focusing on the implementation of operational productivity systems is often a key component of this success.
Management productivity systems are important, and can be helpful to a business, but they tend to be short-term solutions that don't necessarily drive long-term success. Operational productivity systems, on the other hand, involve taking a longer-term approach to streamlining processes and improving efficiencies. This can lead to improved productivity and cost savings over time, as well as reduced employee turnover and improved customer relations. There is a common misconception that the implementation of management productivity systems, such as supply chain visibility, KPI management, and reporting tools, will automatically reduce losses, increase revenue, and improve customer service. These projects often promise a lot, but in reality, they have limited impact and can distract users with the need to learn yet another system.
Too often, such tools focus on the effectiveness with which managers are trying to better utilise the resources at their disposal. These include things like reviewing historical performance, setting strategic targets, developing plans, and managing the people and resources of the organisation to achieve these goals.
Business intelligence (BI) packages are highly popular management productivity tools, which in order to be used effectively require a significant amount of tailoring to the underlying data inefficiencies. While BI software can be a valuable tool for improving decision-making and business performance, it is only as effective as the people who use it. In order for these tools to be truly effective, managers and team members must be committed to using the software. If this doesn't happen, the software will not provide the benefits it is expected to.
Most importantly, however, any management productivity software is only as good as the data that is fed into it. For such systems to provide accurate and useful insights, the data they are based on must be accurate, up-to-date, and complete. If the data is incomplete or of poor quality, the insights provided by these tools will most likely be inaccurate and misleading.
Whilst management productivity tools focus on the effectiveness of management, operational productivity tools focus on the efficiency of the production or service delivery process. Dedicated operational solutions, such as ERP, demand forecasting, TMS/WMS, or transport tracking, are great examples of such systems, but they are even more expensive and difficult to implement and maintain than BI systems. Most of these solutions require substantial investments in human and financial resources and have the primary objective of delivering tight control over the operational processes and workflows, from procurement and production to order fulfilment and cash collection.
Putting aside the size of the company, every startup or business needs a well-organised and adequately managed workflow. Nowadays, supply chain management software (SCMS) is the collection of tools and methods designed to organise, streamline, and run all the processes and necessities of a business. Such systems can perfectly control and perform transactions of the supply chain, manage relationships with suppliers, and regulate other related procedures of the business. This type of software is designed to maximise the productivity of all the business processes, including management, planning, and execution of the whole supply chain.
The essential purpose of these tools is to assist corporations in automating all the events, including the growth of products or services, obtaining and utilising resources, manufacturing, and logistics. Both physical and data-related aspects of a business flow are enhanced by supply chain management software. Enhanced productivity, improved performance, and better cost-efficiency are some of the biggest benefits a business can get from operational productivity software, especially in supply chains.
The downside of operational productivity systems, however, is that they are designed and well-positioned for streamlining existing processes, rather than driving innovation or creating new opportunities.To truly drive growth and success, businesses must strike a balance between operational efficiency and management effectiveness.
What’s the Answer: Incremental Changes or Revolution?
The selection of management and operational productivity tools can often be a challenge, as the so-called "best of breed" approach can lead to excellence in one functional area at the expense of others. On the other hand, large software vendors like SAP, Oracle, Microsoft and Infor, which offer a collection of modules that are not natively compatible, can also present challenges.
Startups and young companies like Value Chain Lab have taken a fresh approach to the development of supply chain management systems (SCMS). Their user-process-centric development principle and seamless end-to-end integrated architecture offer multiple advantages, including more straightforward management of master data, true end-to-end visibility of the company's operations, and seamless integration of optimisation algorithms and AI and Machine Learning capabilities designed to streamline and automate core processes.
As companies move towards autonomous supply chains, they are steadily incorporating more advanced technologies and AI-driven automation into their operations. The benefits of autonomous supply chains are numerous, enabling businesses to quickly identify and respond to any issues that may arise. The key challenge, however, is linking the interdependent functional silos, such as planning, production, and logistics, into a single information and decision-making space, enabling more effective and agile operations.
In conclusion, the implementation of an effective operational productivity system is a crucial component of any business’s success and should be a key focus for any company that wants to stay ahead of the competition and thrive in today's competitive market. Follow us here and LinkedIn as well as at Value Chain Lab and to see how we’re developing a supply chain platform which enables better decision making and collaboration across the supply chain.