“Yes, this software may work for other companies, but we’re different, we have unique requirements, we manage our processes differently.”  This is probably the most common phrase software vendors hear from prospective clients.  We’re different-from other companies in our industry, from other business groups in our company, from other geographies.  Consultants and logistics service providers (3PLs) also hear similar comments.  The reality, however, is that when you peel back the onion, supply chains (particularly within a vertical industry) aren’t that different after all.

Of course, every vertical industry has unique demand and supply profiles, business drivers and constraints, distribution models and regulatory requirements.  But I would argue that supply chains have more things in common than differences.  A common denominator, for example, is the need to exchange data and documents between systems and trading partners.  And this is one area where being different is very costly.

I’ve written before about how “standards” like EDIFACT and ANSI X12 are anything but standard in practice.  Most companies end up customizing these messages-changing the syntax, adding unique variables, reordering the transmission-thus exacerbating the integration challenges and data quality issues that plague all supply chains.  Why do companies deviate from standards?  Everyone has their reasons, which is why I think this translation problem will always exist, and why I believe companies should treat connectivity like a utility service and outsource it.  But I also think companies should ask themselves a simple question: what is the business value we’re getting from customizing these standards, and are the benefits greater than the costs they incur?  My guess is that most companies can’t quantify the benefits, and if they could, they’ll find that the costs often outweigh the benefits.

This brings up a broader question: where should companies be different and where should they standardize?  The answer usually involves a discussion of “core competencies” and how to create a “competitive advantage.”  By adopting lean manufacturing principles, for example, Toyota certainly took a different approach to building cars that ultimately transformed the entire automotive industry.  Performance-based Outsourcing may ultimately create a similar competitive advantage for logistics service providers and their customers (see “Performance-based Outsourcing in Logistics“).

So, yes, maybe your supply chain processes are different from your peers in the industry.  But are you being different where it counts, in areas that provide a competitive advantage and significant business value?  Or are you different because “that’s just the way we do things” and it’s easier to stay the course than to change the status quo?