One woman purchases the latest version of the iPhone because a colleague recommended it and all of her friends have one. She uses it mostly to make and receive phone calls.
Another selects the same iPhone and pays the same price. But this person bought the device with the hope it would make a difference in her busy life. She studies the manual and is soon scheduling business appointments, managing work and personal email, paying bills, placing online orders, creating workout playlists, planning recipes, tracking fitness points, occupying a toddler with games in the car, and more. She is using her new technology to be more organized and to save money and time and manage both more efficiently.
While each user paid the same price for their new iPhone, it’s easy to figure out which one is getting the maximum return on her investment.
What’s more, the reasons they adopted the new iPhone technology affect the way they actually utilize it.
This analogy, on a micro-scale, describes one of the findings of the research paper, “Supply Chain Technologies: Linking Adoption, Utilization, and Performance,” published in the Journal of Supply Chain Management. The research, by Associate Professor of Supply Chain Management Adegoke Oke, and co-authors Zhongzhi Liu of Soochow University and Daniel Prajogo, of Monash University, investigates what motivates businesses to adopt certain technologies and how fully they are utilized.
“For decades now, there has been an increase in user technologies within supply chains,” Oke explains. “People always talk about adoption and implementation, but we really wanted to get down to the roots of why organizations adopt these technologies and why some don’t reap the full benefits.”
When fully utilized, supply chain technology (SCT) can drastically enhance an organization’s ability to streamline their manufacturing operations, deliver products, and ultimately improve bottom-line performance and profitability.
Secrets behind supply chain tech success
As it turns out, motivation is key: Companies that adopt SCT because they seek to improve efficiency better utilize the technology and achieve greater performance results.
Like the iPhone user who was motivated to purchase the device because others have it, companies that adopt SCT because of what the paper defines as “legitimacy” — because their competitors have it or because it’s the latest trend — tend not to fully utilize it and hence, don’t achieve the technology’s full potential or the corresponding benefits.
Likewise, the companies that adopt SCT and fully utilize it reap the greatest rewards. In the global business world, adopting SCT is a huge investment that can make or break a company depending on how it’s used.
Tech for efficiency vs. legitimacy
According to Oke, many studies have examined the adoption of supply chain technologies but they look only at adoption and performance.
“Our primary objective was to understand the motives behind adopting technologies, and whether the motivation actually had anything to do with whether the technology was successfully implemented or not,” Oke says, adding that some companies that have adopted SCT don’t see a difference.
Oke and his colleagues surveyed managers at manufacturing firms in Australia, asking why they adopted SCT and to what extent their organization had used it. They chose Australia because the supply chain context is very much like organizations in the United States.
The study confirmed that organizations that adopt SCT for efficiency reasons perform better than those that adopt it for legitimacy reasons.
Partners in technology
The researchers also investigated the link between utilization and performance, considering to what extent companies share information with their supply chain partners.
It turns out that companies that share accurate and frequent information with their supply chain partners reap better benefits than those that don’t. The reason? Because by its nature, supply chain technology is designed to link partners together.
“Information sharing is an enabler of the utilization of that technology,” Oke explains. “It’s not sufficient to just utilize the technology — although we find that even if you just use it, it does [positively] affect your performance — but if you’re engaging actively with your partners and sharing frequent and accurate information, you’re going to get more from those technologies.”
Oke uses the example of Wal-Mart Stores Inc., an organization that relies heavily on its suppliers, and one he says that has “one of the best supply chain processes in the world.”
Walmart does “cycle counting” or checking inventory on the shelves and then compares it with what is recorded in their system. If they don’t do it accurately and share this information with their suppliers, it affects the way their SCT is utilized and also can affect performance.
“It makes common sense, but we’ve been able to show that in this study,” Oke says.
This study adds to the body of research on supply chains by exploring the motivations behind adopting SCT, and how it is actually utilized.
“There are many examples of companies that have adopted SCT and the project manager gets fired or the CEO loses his or her job because, at the end of the day, they sunk the money in but didn’t achieve any benefits,” Oke says. “They spend so much on this technology, and there’s no return on the investment. I always wanted to find out why.”
Oke’s research uncovers new factors that influence supply chains that are critical to a company’s success, particularly in an environment where there is increasing demand for speedy and accurate delivery of a product. One glitch in the system can shut the operation down.
“Competition is no longer between individual firms,” Oke says. “Take, for example, Apple and Samsung. The competition is actually in the supply chain of Apple and the supply chain of Samsung. The whole supply chain concept is based on the understanding that it has to be managed as one whole entity.”
Before adopting supply chain technology
Takeaways from the research, Oke says:
- Adopt the technology for the right reasons. If the need is to improve efficiency, you will more likely achieve success.
- Carefully analyze the needs of your company in order to choose the technology that will best serve you. Many companies choose the biggest and the best, only to discover that they could achieve superior results with a smaller less expensive option.
- Coordinate and cooperate with your supply chain partners. The more you work together and share information, the better you will utilize the technology and reap the benefits from it.
- Training is crucial. When you make the decision to adopt SCT, understand that the rollout is just as important as the purchase. Make a plan to train employees and supply chain partners.