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Necessary But Not Sufficient Paperback – October 1, 2000
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One such idea is that using technology to add value by increasing capacity only improves net income when overhead is cut. I have personally seen ERP value proposition spreadsheets that haphazardly combine income statement and capacity improvements to arrive at a total "value created" number for the client. Capacity improvements are a means to value creation, not an end. Technology firms that misunderstand this will have problems cost justifying their solutions to their clients. They should read this book.
Another golden idea is that technology deployment is only one part of the business improvement process. The other (perhaps more important) part of the process comes from changing the success metrics surrounding the area that deploys the technology. For example, if Tyson pays its plant managers to maximize efficiencies, it's natural that they will increase the chicken supply regardless of expected demand, burning cash in the process. Accordingly, technology driven capacity increases will drive up finished goods inventories unless firms change the way they reward their plant managers.
This book has bold implications for CPFR software users. How likely is it that plant managers at the top of the supply-chain will do what's in the best interest of the entire supply-chain if doing so makes them look like they are doing a poor job? Not many. And what if the members of a given supply-chain are different companies, with different lending ratios, stock prices, industry benchmarks, and so on? And whose customer is the end-user anyway? Thought provoking.
If anything, the book educates supply-chain students that for every action, there is an equal and opposite reaction. Sure it's fun to think theoretically about supply-chain management, but the real world is a cruel mistress. This book reminds us that if CPFR and ERP were such a great ideas, then there would be no unprofitable vertically integrated companies. Reason enough to buy the book.
All in all, read the other books. Read this one if you have time.