Moneyball is one of the most celebrated baseball books of the past several years. The funny thing is, it isn’t really about baseball.
It’s true that in the book, author Michael Lewis examines the Oakland A’s of the early 2000s -- and more specifically, their general manager Billy Beane’s seemingly uncanny ability to put together competitive rosters of players despite having relatively little money to spend on payroll. But what interests Lewis is how Beane pulls this off in an extremely competitive and highly structured marketplace.
What Beane and his assistants were able to do was identify and exploit market inefficiencies in the world of baseball. They discovered that certain player skills, like getting on base frequently, were not being valued properly by other MLB teams -- despite the fact that those skills correlated highly with winning ballgames. The A’s were able to sign players with those skills on the cheap to help them win because other teams didn’t realize how valuable they really were. It just so happens that professional baseball is where this transpires, but the lessons of Moneyball can be applied to virtually any market, so supply chain leaders, batter up!
Moneyball for the Supply Chain
Business strategists are always looking for market inefficiencies to get an edge on the competition. One such area where a little edge can go a long way is in supply chain management and inventory control.
It’s strange to say this in 2019, but the majority of today’s manufactures still manage collaboration within their supply chains using antiquated methods like manually updated spreadsheets, personal email communications and even mountains of sticky notes instead of more robust and strategic software products that can dramatically reduce costly errors in the process. This pricey status quo should really be unacceptable to any organization.
In fact, businesses that haven’t updated their supply chain processes with modern collaborative systems, often have to live with inaccuracies in 50 percent or more of the invoices they receive from their direct spend suppliers. Imagine paying 20 percent more than contracted on a $1M order because of a lack of efficient communication and poor data quality between a sales rep and an administrator. Or, your organization is intentionally over-buying safety stock due to a lack of mutual visibility and collaboration on real-time procurement demand within your supply chain. For organizations that are dependent upon smoothly running supply chains to get finished products to their own customers on time, these and many other types of errors and inefficiencies are incredibly costly, both in expense and brand reputation.
But herein lies the opportunity for a home run. The inefficient way much of the competition continues to operate is an opportunity for those who implement better controls and tighter, more collaborative partnerships within their own supply chains. In fact, organizations which retool their supply chain management often see tangible, monetary returns on that investment in a quarter or less.
Immediate Returns, Long-Term Peace of Mind
By helping to reduce operating costs in the supply chain, CFOs, CIOs, Chief Procurement Officers and others can help their companies increase profits for stakeholders while also gaining a competitive edge in the market by:
Offering more attractive wages to employees
Investing more in R&D
Reducing the cost of maintaining inventory for longer than necessary
There are less quantifiable but still important benefits as well. Cloud-based supply chain management platforms offer access to broader networks of suppliers, creating a more competitive bidding environment for both parties. Better record-keeping and workflow provisions can help protect companies against legal, contractual and compliance issues that may crop up down the road. Smoother operations with mutual accountability to perform are likely to translate to increased customer satisfaction and loyalty. And companies that act now to modernize their supply chains are better prepared to evolve even further when the next stage of technological improvements come along.
A Glimpse at the Future
Automation is often seen as a double-edged sword. Outsourcing tactical tasks to machines and algorithms can free up human workers for more strategic and creative work. On the other hand, many folks are understandably wary about the dislocation that can be caused by this process.
While about half of the 3,800 global business leaders surveyed by Dell and the Institute for the Future (IFTF) for a recent report expressed concern over the disruption being caused by automation and adjacent technologies like AI and robotics, most do believe that the benefits of such emerging technologies outweigh the downsides. But to help alleviate some of the concern, it’s useful to view transformation as a process that can be smoother or bumpier depending upon how we implement it.
A majority of those polled by Dell and IFTF supported changing the way we educate and train people to better prepare them to work productively in a world where machines increasingly take over more mundane human tasks.
What’s more, business leaders actively cite supply chain and inventory management as areas where automation and other advanced technologies are most appropriate to implement. Those surveyed named inventory management, supply chain logistics, and invoicing and POs as three of the top four business areas they expected to see almost fully automated by 2030.
We all know there’s no crying in baseball. Business leaders who get on the Moneyball path to supply chain management will shed far fewer tears over inventory, invoices and orders as well.
Tom Kieley is CEO at SourceDay, a SaaS solution that automates purchase order, request for quote and accounts payable management to remove costly waste and errors from global supply chains. Tom is a veteran business owner with more than a decade of experience in product management and operations, hardware and software sales, and supply chain management.