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How The IT Model Mirrors Best Practices in Supply Chain Management
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How The IT Model Mirrors Best Practices in Supply Chain Management

By Lookman Fazal, Global Head of Technology and Security

There is a parallel between business supply chain functions and IT supply chain functions that illustrates IT is just another supply chain business.

Look closely, and you’ll notice how IT and SCM business descriptions relate to each other:

Comparison of Business Descriptions: Supply Chain Management and IT

Supply Chain Management IT Terms
Warehouse Data Center
Inventories Hardware/Software
Suppliers Vendors
Parts Technologies
Fast Moving Parts Current Technologies
Slow Moving Parts Twilight Technologies
Non-Moving Parts Sunset Technologies

The ATC Information Technology team manages datacenters, analogous to the warehouses that are meticulously maintained to serve our clients. IT inventories are the hardware and software we employ. 

Just as we provide for our clients, IT inventories are sourced from our preferred suppliers through quotes, RFPs, and competitive bidding.  They are stocked according to requirements that meet current— and anticipate future—demand.  In supply chain services we provide added-value through the relationships we’ve developed with high-quality supplirs. In IT, we partner with cloud-based service providers to fulfill peak demands when there is a spike in business demand. 

Similarly, IT has parts, which we call technologies.  These technologies are fast moving, slow moving, and non-moving inventories in the warehouses.  Unnecessary inventory is costly to maintain.

Non-moving inventories or sunset technologies and slow moving or twilight technologies consume shelf space and cost money to store them.  In the past year, ATC IT has decommissioned or repurposed over seventy non-moving servers/inventories, saving over $200K last year. These savings make ATC cost- competitive, and free resources to serve our customers.

In any well-run business, management depends on metrics. Some of the key performance indicators (KPIs) we use to measure IT performance mirror those used in business units that include:

On time delivery
Measured by number of requests/tickets we resolve within our defined service level agreement (SLA) = 75% of tickets resolved (between 0 – 3 days), 10% (between 4 – 7 days), 15% - over 7 days

Returns/Defects
Measured by number of reopened requests/tickets = <1%

Escalation management
% of tickets which got escalated to upper management = <0.2%

Inventory on hand
A count of all our technologies by categories (current, twilight, sunset) = 3,000 parts

Shelf life of parts
A count of all technologies from newest, 11 new parts added in 2015, to the oldest, deployed in 2006

Supply/Demand management
Measured by number of resources vs. number of projects/requests

Order status
Measure status (open, on-hold, closed, etc.) of tickets and their sub components

Perfect order rate
Measure of delivery of business applications or request to users without defect

Carrying cost of inventory
Measure the cost of maintaining IT infrastructure, i.e. server, router, applications

Unit per transaction
Measure the type and trend of requests/tickets over a period of time to forecast and align IT resource

Back Order Rate
Measure requests/projects that cannot be fulfilled due to IT resources availability

According to the Council of Supply Chain Management Professionals (CSCMP), supply chain management encompasses the planning and management of all activities involved in sourcingprocurement, conversion, and logistics management. It also includes coordination and collaboration with channel partners, which may be suppliersintermediaries, third-party service providers, or customers. Supply chain management integrates supply and demand management within and across companies.

Based on the above CSCMP’s description of supply chain management, below is a side-by-side comparison of business and IT for each supply chain management function:

SCM Functions Business IT
Sourcing Business teams select suppliers for parts or services by identifying the suppliers, evaluating them and finally contracting with the best available suppliers. IT teams select hardware and software solutions from top tier/preferred vendors. A vendor is replaced if they fail to meet our evaluation and contracting criteria.
Procurement Business teams acquire parts or services by executing the contracts with the preferred suppliers and getting them delivered to the customers. IT teams purchase or lease hardware, software, and services from value-add resellers and preferred vendors.
Conversion Business teams repair/customize parts and equipment that meet or exceed requirements of ATC customers/partners. IT teams tune/customize hardware and software to meet ATC’s business requirements.
Logistics management Business teams manage planning, designing, ordering, storing, shipping, and installation, of parts and equipment for customers/partners across the globe. IT teams manage planning, designing, ordering, storing, shipping, and installation of hardware and software to support ATC warehouses and offices across the globe.
Coordination and collaboration with channel partners Business teams cooperate with partners to design, customize, and implement solutions that meet or exceed ATC customers' requirements. IT teams work with channel partners and cloud/web services providers to design, customize, and implement solutions that meet or exceed ATC requirements.
Integrates supply and demand management within and across companies Business teams manage available parts/equipment/services and needs from ATC customers and partners. IT teams manage hardware/software/services and meet or exceed requirements from ATC businesses/users.

As you can see, ATC IT is like another supply chain business unit when we look deeper into how it manages its supply, demand, and inventories in relation to business units’ supply chain management functions.

The success of ATC, one of New Jersey’s top-50 fastest growing businesses, starts with our core values. These values inform our business culture—it’s the way we do things. Just as our core values support a satisfied customer base, they guide the parallel path followed by ATC IT services to achieve business success.

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1 comments on article "How The IT Model Mirrors Best Practices in Supply Chain Management"

Douglas Siewert

Thank you Lookman for your insight and explanation. Interesting views of IT and SCM being parallel dimensions on supply, storage, optimization and distribution (defined as getting what is require to where, when, and how it is needed)

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