Tom McGuffog, chairman of UK Partners for Electronic Business, argues in his publication ‘Diamond: A General Theory of Value Chain Management Data’ that too many organisations fail to achieve their objectives of providing a cost effective service to their customers through the mismanagement of data.
Value Chain Management (VCM) focuses on optimising net added value for the end user and for each of the participants in the chain, through enhancing speed, certainty, safety and security of service. Delivery of successful VCM programmes are where supply and demand within businesses are kept in an ongoing balance at an acceptably low total cost, with understood levels of risk.
For any value chain to operate there have to be ways to identify the participants and the products, to store and use data about these, and to communicate messages and data among the participants. However, for a value chain to operate with strength and sparkle, identities,
data and communications should be structured in a powerful, standard, global way so that all customers and suppliers across the world can operate effectively within a common framework.
Most organisations have gone some way towards this objective, but few have gone as far as they should in order to maximise the benefit to themselves and to their value chain partners. Most do not have the cutting edge of a genuine value chain diamond – they have flaws; they have not systematically applied global standards for communicating data within messages, for determining identities, for capturing auto identities linked to synchronised master data across all their value chain operations, enabled by e.business networks and analysed via dynamic data bases.
Too many organisations and value chains lack this sparkle, McGuffog says. For example, major consultancies and government departments continue to confuse the ‘classification’ of products with their ‘identification’ (the UNSPSC classification system is not a substitute for the EAN identification system). That is, expenditure can be analysed by category of item, but individual items cannot be effectively managed and/or tracked. Too many e.exchanges have been set up to synchronise master or catalogue data for trading partners without a proper understanding of standard identification of products and trading locations, and without effective work by each partner on ‘cleaning up’ their own master data structures.
Too many ID systems define the same item in different ways and too many organisations have a
variety of incomplete and overlapping master data files and data bases. Too often, individuals and businesses are identified in a variety of different and incompatible ways, resulting in poorer service to them and to official bodies at a high total cost.
There is also a lack of awareness of the global standards which have already been developed for value chain data, and even a lack of awareness within standards bodies of how their standards ought to fit into the entire value chain management standards jigsaw puzzle.
If the principles described in Diamond are followed, organisations will be able to achieve not only speed, certainty and low total cost across their value chains, but also greatly enhanced safety and security.
Therefore the CILT are proposing to institute a forum chaired by Tom McGuffog to examine the benefits that VCM can bring to such issues as ‘Setting sound objectives rather than unwise targets’; ‘Defining sound business process and data architectures’; and, ‘Defining and managing complex projects via integrated project and risk management’. The Forum will seek opportunities to both create and benefit from collaborative ways of working with bodies undertaking relevant work in these
areas and the wider CILT membership as a whole.
Richard Ellithorne is logistics policy manager at CILT(UK). email: firstname.lastname@example.org