Implementation Challenges

Implementation Challenges Is more always better? Is implementation staged and planned? Is implementation enough?

Implementation Challenges • Are these technologies becoming more user-friendly over time? • Yes • Is implementation of these technologies increasing over time? • Mixed evidence • Do firms implement Supply Chain Management enabling technologies in a staged, logical and progressive manner? • Idiosyncratic implementation more the norm • “Non-standard implementation of standards based technologies” • Why is this so? • Collaboration • Complexity • Value Proposition • Bounded Rationality

Some Recent Data • “Ten Years After” Project • Two Stages • Stage 1 • Two surveys conducted 2001/2 and 2011 within the membership of GS1 Australia • 60+ firms responded to both surveys – FMCG (Manufacturers / Distribution / Retail) • Stage 2 • 17 Case Studies • Case firms identified on the basis of extent to which they were pursuing supply chain integration through the use of standards based technologies • Culture / Capability / Technology Usage Survey • 310 respondents from GS1 membership • Technology Attributes – Economics of Adoption Survey • 295 respondents from GS1 membership

Is implementation of these technologies increasing over time?

Implementation Over Time Increase(25%) No change (60%) Decrease(15%)

Do firms implement Supply Chain Management enabling technologies in a staged, logical and progressive manner?

Implementation as a Staged Process - Case Evidence • Summary • More similarities between case companies than differences • Integration strategy • “Emergent” vs “Deliberate” • Idiosynchraticvs Planned • Opportunistic vs Holistic • Triumph of self-interest over supply chain efficiency(?) • SCE = WIIFM • Major point of difference is HOW they implement rather than EXTENT of implementation • Identification of points of leverage – maximising these only so long as they deliver an outcome • Discontinuities of all kinds common to all case firms • Hybrid mix of technologies / human sub-systems common

Implementation as a Staged Process - Case Evidence • Summary • Staged implementation over time? • Disjointed / discontinuous / idiosynchratic - typified all groups • Rational planned approach? • “Muddling through” more typical • “Standards” are not implemented in a “standardised” fashion • Management of the supply chain? • Management of the firm first • Trading partner collaboration pursued on a case by case basis • “Calculative Trust” based on business need • Collaboration highly problematic in practice • Complexity of firm operations (multiple products / trading partners / markets) mitigates holistic approach • “Bounded rationality” a significant practical issue

Why is it so?

Collaboration • Case Evidence:.......Collaboration critical to leverage technology investments............. • Mutual agreement to use...... • Yes, we see them as two separate issues at the moment, our customer base, as I said, isn’t all necessarily computer savvy, pen and paper men a lot of them. So we would have to have a consensus amongst us that this is actually going to be a benefit if we allow our existing clients to jump on our website, place an order, and do it that way. I don’t think at this particular point in time there would be too many that would actual avail themselves of that. Because a lot of them, they are halfway to a job, then ah I’ve got to go to Alvins because I need ahhh (they are not that organized) ... it would be nice if they were..... • Informal contact and problem solving...... • What we find, getting back to the difficulties of retailers, they just dictate to you, what is going to be and there’s no dialogue with them about how well or otherwise it can work, with our EDI system. With Firm X it was set up at a time where they had good people on board, you could ring up and talk to them about it, and iron out any glitches and get it working nice and smoothly, that used to just work. Very very rarely had issues, does it come in, or does it go out, payments would come in. • Mutual capability....... • Retailer X would have been the biggest retailer we did business with, so they just had their act together I think. So if you’re dealing with someone who’s got their act together you can make it work and make it work very well.

How important is Collaboration? Survey Evidence (310 respondents) GS1 Technology Usage • Order Fulfilment Lead Time (Days) • Data Quality Firm Culture • % Shipments Despatch Advice sent using EDI • Objective / Quantitative Decision Making • % Shipments Receiving Advice sent using EDI • % Invoices • all Information Correct • % SKU’s master data loaded in GS1 certified data pool • Trading Partner Integration • External Collaboration Focus • % orders transacted using EDI • % invoices transacted using EDI % Annual Growth Rate • Innovative Capability • % Pallets labelled with SSCC’s • Long Term Horizon • % Locations with Global Location Numbers • Dynamic Management Ethos Strong Positive Effect Moderate Positive Effect

The Collaboration Dilemma • Nature of the supply chain • Supply chains are systems / networks • What do managers manage? • Firms / Business Units / Departments etc. • How many managers truly “manage” a supply chain? • Do we know how to “collaborate” • Do we more naturally compete? • Collaborators Dilemma: • With whom, when, for how long, what level (process, equity, MoU.......)? • Whose objectives? Where does power reside? • How do we manage risk? • Is it feasible to share rewards?

Collaboration How much do firms collaborate with trading partners?

Collaboration Do firms collaborate more widely over time?

Collaboration – Complexity • Case Evidence: Degree of Difficulty • Opportunism • “....... the only weird thing about it is how the retailers differ in their use of the information as an example, Retailer X still need us to send an invoice with every shipment and email or fax them an invoice to their accounts payable office”. On top? “On top of the fact that we are EDI trading and they would be able to scan a label when they receive the goods which should theoretically tally the fact that the order has been received and they should pay us, which is (how) Retailer Y do it, and they launched it as being a more advanced system than every other retailer but they seem to require so much more work and paperwork so that’s weird”. Is there any rationale??? “They just say they are not ready, I think it’s because it delays the process and it means they’ve got longer to pay, but that’s me being cynical”. • Complexity • “Most of them, you know, after 24,000 independent customers, most of them, are local bottle shops that will ring you up and place their orders”. They just fax their order through or call up? “Yes, they don’t have the technology and they probably can’t afford the technology”. • “That’s true. But we’re not really ready to integrate his system with our system because I don’t have a way to integrate a thousand different retail systems with my back end”. • Power • “What we find, getting back to the difficulties of retailers, they just dictate to you, what is going to be and there’s no dialogue with them about how well or otherwise it can work....” • Cost of Compliance • “.......trying to do business with your Retailer X and your Retailer Y and Retailer Z and all the rest of them, it’s too hard, it is just too hard, the cost of compliance with their systems is too much of a burden for a company our size, it’s just a cost benefit scenario”.

Collaboration – Value Proposition What are the perceived payoffs relative to other options? Survey Evidence Collaboration with Trading Partners Weak Positive (.143) • Perceived • Strategic Value Use of Enabling Technologies Strong Positive (.334)

Bounded RationalityCase Evidence • “Definitely, and it probably should increase the accuracy of orders, but because it slows the order process down by so much, I have found that in most warehouses that I go into including ours, they find shortcuts which get around the building of accuracy, if that makes sense. So every product isn’t scanned, it should be, the system is you know, the product gets scanned, it gets put into a box, the box is full, you tell the system the box is full, it prints out a label. They don’t do that, they will pack one box to figure out how much fits in that box, do it that way, and then they’ll cheat the system to get the order through quickly......” • “They still placed their orders by fax, would you believe, but we had to send their invoices through an EDI system, so we had to sort of cobble up some software so that our Greentree accounting system could produce – it was just anASCII file”. But they don’t do that anymore, do they? Yes they still do. ......... until recently they would fax their orders through. But they don’t use a shipment notice? “No, not ASN we just produced our own invoice and it was sent to them in an ASCII file, that they had obviously dragged into their accounting system”. Was there a purchase order, sponsor acknowledgement, or anything like that .....an EDI invoice? “Well they referred to it as an EDI invoice but I didn’t really think it was....” • “......they basically set up a web portal, they were going down that track and yes I could see that was going to work better but we still had to log in and upload a file to them, we had to perform a manual process albeit electronically but we had to perform a manual process to get our invoice.”

Bounded Rationality Comparison by Position of Respondent (Small Firms Excluded - Survey Evidence (295 respondents) Favourable Senior Manager Barcodes Functional Manager Attributes of Technologies EDI XML GDSN RFID Unfavourable Unfavourable Favourable Economics of Adoption

Conclusions • Is more always better? • Targeted implementations / situational / hybrid forms • Collaboration difficulties • Bounded rationality • Is implementation staged and planned? • More typically idiosyncratic and emergent • Complexity • Ambiguous value proposition • Is implementation enough? • Collaboration implied in implementation • “X” factor and “Y” factor simultaneously

Implementation Challenges