When Does New Technology Hit the Point of Diminishing Returns?

Dec. 1, 2004
Many suppliers will quietly agree that we have plenty of technology, and we're not using it all.

There is a point when you realize that the technology you were sold isn't delivering on the promise of the seller. I'm talking about the seller inside your own head. Sometimes technology's promise is hard to ignore, and we trick ourselves into making dumb mistakes like these:

  • Buying new technology to change things just for the sake of change.
  • Putting a personal stamp on processes.
  • Buying technology because my people lost focus and didn't follow through.
  • Choosing technology to guarantee job security.
  • Choosing technology to eliminate experienced employees.
  • Maintaining unrealistically high expectations for what technology can do.
  • Always looking forward, never looking back — especially where immature technology is concerned.

Many suppliers will quietly agree that we have plenty
of technology, and we're not using it all.

These mistakes will always add to technology's price tag. They're easy mistakes to make in an age when our supply chains are vulnerable to the effects of terrorism, politics, outsourcing, labor shortages and rising customer expectations. As "sacrilegious" as it might be to say in this column, buying and installing another new technology may not always be the right answer.

Don't misread me. There have been tremendous advances in warehouse management systems (WMS), supply chain software, robotic palletizers, automated picking systems, controls that range from mainframes to small Palm Pilot devices, security systems, wireless technology, RFID equipment and other technical tools. The question isn't whether they work, but whether you are taking full advantage of these technologies.

As Symbol Technologies' Gil Bautista told me in a recent interview, "Despite technology, many of the supply chain challenges and issues are still here."

That bears repeating: Despite technology, many supply chain challenges have not been solved. Which should lead to a few questions: Is technology the right answer? Are we using technology the right way?

Many suppliers will quietly agree that we have plenty of technology, and we're not using it all. And they will also advise that before adding the next new thing, it's crucial to tune your processes. Continually. Noted Dan Williams of Avery Dennison, "Real payback in warehousing and material handling can often be found in thoroughly understanding the order process in your facility, smoothing out the dips in your JIT system, or getting closer to a JIT system without installing a true JIT system."

One way to check to see if you really need new technology, or just need to smooth out a few dips, is to check for diminishing returns. When designing a system, every engineer hits a point where he examines diminishing returns. This is the point at which he studies whether the addition of one more feature or component will really result in a benefit or whether it will just add cost. Periodically, every process and system should go through such an examination to weed out excess costs.

Streamlining processes may be a better solution, and is usually a less expensive one. Then, rather than search for the next new thing, or even wait for the next technology to mature, examine what your present technology may already offer that could help or solve the problem. Most suppliers include extra features in their offerings that are not enabled during initial installation because the problem didn't call for them then. These features provide the scalability and flexibility customers demand in products, but, as the saying goes, if you don't use them, you forget that you have them. Remind yourself of what you have and return to your supplier and inquire about those hidden features.

Maybe the solution you need is already in place, just waiting to be enabled.

Leslie Langnau, contributing editor

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