Imagine the supply chain as strands of information flowing throughout a company, connecting to suppliers, transportation/logistics departments, and customers, and then looping back into the organization.

Today, information is carried electronically, whether it travels via electronic data interchange (EDI) or specialized software applications applied to networked systems. Satellite technology may be used for messaging, and radio-frequency technology may be coupled with computerization that allows for real-time tracking of stock in a warehouse or even at a retail cash register.

Whatever technology is employed to carry the information, the important thing is that the information be relayed quickly and accurately. Information is the life force of the supply chain. Without information relayed at the right time to the right place, there are no purchase orders, no shipment messages, and no payments. The supply chain shuts down.

Technology may carry the information, but humans are both the source of the information and the drivers of the technology. However, as Fortune magazine has pointed out, "human" supply chains are complex and not always efficient.

"Purchase orders get lost between incompatible computer systems, checks go astray, procurement officers 'guess' how much material to order because the information they have to work with is unreliable. Warehouses pile high with unused inventory while other units scramble to find parts. Someone, somewhere in the value chain doesn't get the word." (Fortune, July 7, 1997)

If these sorts of communication problems are taking place within one company, imagine what's happening globally with the increase in outsourcing, the growth of multinational operations, and the emergence of alliances between corporations. Without human skills—the ability to communicate both orally and in writing, manage information, and maintain strict quality levels—the supply chain revolution will fail.

More and more companies are becoming aware of the human skills that make up information management, all of which are part and parcel of their supply chain efforts. They recognize that information is a must-have asset and that they need to train their employees to handle information. As one software manufacturer notes, continued outsourcing "drives a demand for information systems and the re-creation of an information pipeline in a company."

Problems arise when companies turn to technology as a panacea when it's really only a tool. One multinational corporation, for example, tried to link global suppliers with EDI and found its transmissions riddled with errors and not sent on a timely basis. A computer giant experienced e-mail gridlock because it hadn't strategically assessed how to employ technology as part of a companywide communication system.

These companies have made the common error of implanting technology to improve supply chain flow without first examining the human system that underlies the technology. Despite the increasing use of advanced technologies to replace clerks and other "paper shufflers," humans still operate the supply chain. That means communication channels have to be open throughout an organization. Work styles and corporate cultures have to be taken into account. Skills have to be tested and information flow has to match the real versus hierarchical work flow that takes place in any operation. Only then will technology run smoothly and the supply chain function effectively and efficiently.

To best manage the supply chain and get the greatest bang from their technology buck, companies must set up information/communication chains to match work flow, whether regional or global. That means knowing how information truly runs through an organization—from department to department, company to supplier, and back again—rather than following preconceived notions based on a corporate chart.

Company employees need to be able to gather, sort, store, and disseminate data, information, and knowledge. That includes gathering data for a shipping notice, sorting out what notices to send at what time, storing these data, and disseminating them at a proper juncture. When these data are collected en masse it becomes information to process. The end result—a report on shipping trends culled from this information—could be called a knowledge product.

To get to the stage of segmenting data and reassembling it into information to be placed in report form, employees need to be able to analyze and break out information into useful units to be applied strategically. Analyzing means knowing how to ask the right questions. Breaking out information means knowing how to organize information and knowledge.

Surveys of major manufacturers and retailers indicate an awareness that technology is not a panacea. These companies reflect a willingness to train employees in technology use. And there is a dawning recognition that training in human skills is required to run an efficient supply chain or practice knowledge management. Leading companies from Bell Atlantic to First Brands, Colgate-Palmolive to IBM, have found that their employees need strong writing and analytical skills to function in the information age. They suggest training employees and managers in report writing, data gathering, analysis, and benchmarking. They encourage employees to use the Internet and its World Wide Web.

Leading-edge companies also are working to improve other aspects of information management. At Johnson & Johnson, Rick Weitz says his company has pretty much mastered product flow and now is working on improving information flow. Sometimes improvement in one area means adjusting in others. Efficient information flow allows for better-scheduled deliveries, for example, but that might mean special shipment preparation to achieve altered dock schedules.

"You have to keep the whole thing in balance," explains Weitz, director of continuous replenishment for Johnson & Johnson. He sees continued progress in the way changes in information flow will affect cash flow. "With the wall of information coming down, it's amazing how much progress is being made. But you've got to work on information flow, product flow, and then cash flow."

The Big Three automakers conducted a pilot program several years ago that attempted to improve the speed at which information was relayed between suppliers and OEMs. They set up e-mail and EDI between approximately 12 suppliers and found little improvement in the time it took for messages to move between these players. Only when they sat down with all parties in a room did they learn the reason why: The companies in question were competitors who didn't want to talk to each other. From that point on, communication improved because human issues, not technological issues, became the focus on the project.

This article examines the work companies must perform on the human side to gain the competitive advantage that supply chain management—coupled with advanced technologies—promises. Companies must:

1. Understand how humans are affected when technology is implanted in a supply chain.
2. Create an information/work-flow system, based on the model used in the communications world, that acts as a support or infrastructure to technology.
3. Train employees in the writing-based and analysis skills they need to maximize technology use.
4. Remember that it's humans, not technology, that drive a company and the quality efforts that are crucial to success. When humans have been trained to manage information properly, they can manage a supply chain or even practice knowledge management.

A major document-related corporation finds younger employees to be technology whizzes. But ask these same employees to describe the content they're manipulating electronically and they can't answer.

The supply chain revolution, which is so dependent on advanced technologies, is emerging at a time when many Americans have all but stopped reading, let alone writing. Managers of Fortune 500 companies concede that some members of their work force are technically illiterate and yet are being asked to run advanced equipment that is writing-based.

Problems don't stop with the blue-collar segment of the work force. Managers may not be much more skilled in communicating—let alone in writing—than their employees. And yet more and more of their communication is via e-mail, which is strictly writing-based. Older employees—meaning over the age of 30—are often computer phobic.

In one prime example, all of the order takers and planners at a major trucking concern were provided with their own computer terminals. But on any given day, less than half of these employees used the equipment. Many still relied on an earlier technology—the ball-point pen.

Then there's the issue of accuracy. Software manufacturers and transportation/logistics managers constantly complain about inaccuracy. EDI, for example, speeds transmission of information, but it doesn't guarantee that the information is accurate.

To solve these problems, manufacturers like Bell Atlantic Network Systems, Bridgestone/Firestone, Chemical Leaman Tank Lines, Colgate-Palmolive Co., DSC Communications, First Brands, IBM, Northern Telecom, Xerox Corporation, and Airborne and retailers like Sears have been polled to determine what they need to do to get more out of the technology they've already implanted.

Topping the list for manufacturers is integration, as in integrating computer systems within a company, across the supply chain, between trading partners, or with a customer base. Companies are working on integrating paper and electronic systems until the day comes when electronics can handle most of the job.

Many of these companies, for example, are deluged with information. Managers are drowning in e-mail. Misuse of this technology has created information gridlock. Some companies are taking charge of the situation. They're assessing all of the communication/information tools available within their operations—e-mail included—and are directing their usage for maximum information flow.

"It's my belief that everyone has access to technology, but that access doesn't create a competitive advantage," explains Jeff Wilson, manager of strategic pricing at Chemical Leaman Tank Lines. "It's how they use that technology to drive business success, or how intelligent they are about using it, that matters. And particularly, it's how an organization uses technology to translate data into information and knowledge to gain insight into [its] businesses that matters, whether that's to reduce costs, improve customer service, [or perform other tasks] for a competitive purpose."

Retailers are rapidly replacing legacy systems with integrated systems. They've automated their warehousing operations and can keep track of store counts and inventory in almost real time. However, they also complain of information overload. In some cases, management hasn't offered rules for judging information's importance or set up common work procedures to make information handling easier. And employees lack data-mining and analysis skills.

The more forward-thinking companies such as Sears recognize that they can more effectively manage their supply chains if management takes better charge of the information flow process and employees receive training in the skills required to manage information. "We try to involve all associates in our company as a decision-maker in the company even if they're not an owner," says Joe Smialowski, chief information officer at Sears, speaking of how to motivate employees who face new technology. "It's a long-term transition effort—not something you do in 30 days. If we solve the fundamental problem [of motivating employees] it will make Sears a compelling place to shop."

The most accessible model for information management rests in the communications world, where vast amounts of data, information, and knowledge are processed daily at high speeds and with relative accuracy. One of the most codified systems in the world for gathering, sorting, storing, and disseminating information is the one developed by the Associated Press.

Not only does the AP offer a model for information management on the micro level, but its global system provides a model for companies attempting to link offices, suppliers, or customers electronically on a worldwide basis. For example, the AP photo department handles between 8,000 and 9,000 pictures a week. All photographs have to be processed—electronically nowadays—and provided with extensive 32-field codes for transmission and archival purposes.

Flexibility is key. Those who work with the AP system learn to "roll with it," as they meet the ever-changing demands of covering ongoing events on a daily and even hourly basis. But over the years, a common system of procedures also has evolved for gathering more static information such as stock indexes and other statistics. And the AP maintains a highly evolved archival system that allows editors and writers to access archival stock—both print and photographs—quickly and efficiently.

Though corporations are not news-disseminating organizations, more and more are using advanced technologies to communicate and transmit information on an in-house, regional, or global basis. But keep in mind that communication and information processing are human activities first; technology should facilitate but not drive these activities.

Here are some organizational "tricks of the trade" that companies can learn from the AP model:

• News operations are organized hierarchically for the speedy relay of knowledge and information.
• Employees are trained in writing, editing, and formatting skills. They also learn to judge what information is useful and what is not.
• All writing takes place in a standardized style for easy comprehension and quick editing.
• A common lexicon speeds oral communication and creates a team atmosphere.
• Accuracy checks are built into the work flow.
• An information hierarchy is established so that information flows and is disseminated on a priority basis. Information also is coded so that it reaches its destination in a timely fashion.
• Archival data, information, and knowledge are stored for easy access.

Corporations are not news organizations, and supply chains cannot be run to meet deadlines for the nightly news. Companies can, however, learn a lot from the news model when they examine how to move information through their system more effectively.

Take the example, again, of the multinational corporation that decides to link its global supply base via electronic data interchange but finds the transmissions riddled with errors. Furthermore, the transmissions don't take place on a timely basis. What should its managers do?

Most importantly, they must realize that EDI cannot handle all communication needs. A human-based information-flow system needs to be developed. The first step to take is conducting an information-flow study to determine how information is moving between operations before technology is implanted. This study will be the basis of a customized communication/work-flow system.

Once a team approach has been established for processing work under this technology-based system, a common lexicon has been created, accuracy checks have been put in place, and employees have been trained, companies should move along on a trial and error basis.

At Sears, thinking is organized around the company's total performance index. "This is what drives the company, and that driving goal sets our vocabulary," explains Smialowski, who adds that a common vocabulary, in turn, promotes common work procedures.

Under company policy, he says, information is shared on a "broad-based level rather than being locked up. We want everyone in the company to know what our customers are saying about our service and what our associates are saying about our workplace. Even financial information is shared.This open sharing is working, but with 300,000 associates in our company that takes time and effort."

Information systems must operate effectively and efficiently day in and day out. Often, it's little things such as errors on a shipping notice or mistiming of an order transmission that can create major glitches.

Operating a supply chain smoothly and efficiently means knowing how to maintain information flow accurately and consistently. Once they have their daily operations running smoothly—on a regional or global basis—then companies can focus on the finer points of data mining and analysis, which then lead to the practice of knowledge management, discussed later.

First, their employees need to be able to gather, sort, store, cull, and disseminate data, information, and knowledge. To do so, these employees need the writing and analytical skills to be able to function in an information age. Leaders such as Texas Instruments suggest training employees—and managers—in communication skills. Other companies recommend training in report writing, data gathering, analysis, and benchmarking.

Some companies are finding that even with high-tech communications capabilities, people still need to talk to each other. At Nortel, John Lebowitz reports, management is trying to design ways to manage a global company on a remote basis. "This is a brand new field and it means dealing with the people side a lot," explains Lebowitz, who is director of global logistics services. "We need to figure out how to get on the same objectives, the same place and to regularly communicate progress, plans etc....with about 45 percent of our work now outside of North America."

To combat the communication gaps that technology can create, Lebowitz regularly schedules conference calls among global team members. In fact, he says he's getting "religious" about bringing Nortel employees worldwide together. "I think the actual talking is more important than the writing," he explains. "A lot is lost through electronic communications."

In addition, Nortel has set up a telecommunications course "that tries to get people from different functions to talk about all the different issues they find in remote management and develop solutions around them. This is done in a teleconference, workshop mode." Lebowitz adds that the company also maintains a "fairly extensive" travel budget. The aim is to get people communicating the old fashioned way—face to face.

The following are some of the human issues that need to be tackled for companies to practice competitive supply chain management:

• Teaching data-gathering techniques. Let's say a major transportation company has installed computer terminals in its war room for all planners and order-takers. With some training in data gathering, planners and order-takers could gather market/sales information during the order-taking process. But how do they go about it? Or in a similar vein, how does a telecommunications company that wants to extend electronic freight payments overseas gather the information that will set this process in motion?

Michael Egan, a team-building expert who specializes in writing for technology, has prepared these tips for gathering data as part of the process of better managing a supply chain. He suggests that one way to hone interviewing and data-gathering skills is to move from "open" to "closed" questioning. Imagine the following steps as a funnel channeling the flow of your research.

1. Ask lots of open-ended questions. Open-ended questions do not imply or prompt their answers. For instance, "How do you feel about the new satellite system?" is open-ended. A closed question, on the other hand, might be, "Don't you agree that the new satellite system has been a success?"
   Naturally, you'll take notes of your interviewee's replies. Forget about grammar, spelling, or other details at this point.
2. Use closed questions judiciously. Closed questions are good in the right place—after the open-ended questions are done. Here the funnel narrows, as you begin to zero in on what your interviewee actually feels. "In what ways has the new satellite system worked for you? Can you give some examples?"
3. Perform a listening check. When the open/closed session is complete and you think you've understood your interviewee, provide a series of compact summaries of what he or she has said and ask if you've got it right. Make any necessary corrections. Repeat until both you and your interviewee are satisfied.

• Establishing accuracy checks. A U.S. producer of electronic copying equipment networks its global suppliers for electronic processing and tracking of shipment data. Many inaccuracies arise, some based on timeliness issues, some on incorrect data entry, and others on missing information or shipping elements. Training to communicate for accuracy—and the actual creation of a system of accuracy checks—is plainly required.

Accuracy checks are crucial and, until the necessary software is developed, will remain a basically mechanical process. It may be necessary to train people in the system to heighten their accuracy awareness. Michael Egan says it's crucial that whoever is entering data, or even scanning it, be aware of:

1. The content: Companies will have to devise checks-and-balance systems to ensure accuracy. Possibilities include working with a checklist, appointing an "editor" to proofread, or even commissioning a computerized check with a more advanced system.
2. Timeliness: Companies need to develop deadline schedules and adhere to them to ensure timely filing of information. Checks should be instituted both in-house and at the receiving end.
3. Significant variation: Expect the unexpected. Sometimes the best ideas come from the unanticipated connection of disparate ideas or information. Here again, appropriate training is mandated.

There are companies that run more strategically competitive supply chains today because they offer the sort of training Egan recommends. Texas Instruments, for example, recognized that to improve cycle time in its silicon-wafer production it needed to work on oral and written communication skills. In a special pilot program, employees worldwide were trained for eight weeks in the vocabulary, techniques, and tools required for cycle-time reduction in the wafer area.

As a result of this intense communication effort, a select group of employees are sent out with a common goal, mission, and vocabulary, as well as e-mail addresses, says Cindy Johnson, who is director of Texas Instruments' Office of Best Practices. She continues: "Then they're brought together regularly to share techniques. ...In terms of communication, our vision is to raise everyone in our company up to the highest level of performance."

Johnson's Office of Best Practices promotes this type of sharing across Texas Instruments through a quality program called TI Best, which is based on a four-step improvement process and world-class quality criteria such as the Baldrige quality initiative. Once again, the emphasis is on communication. As Johnson explains, TI Best "provides vocabulary. We're constantly bringing together [members of] our facilitator network to help them do their job better. We work on helping them interview the source."

To summarize, human skills are key to running any business based on advanced technologies. Companies will gain competitive advantage by structuring their supply chain along real—not construed—human information-flow systems. And they will do well to offer employees training in information-management skills.

Once information flows freely within an organization and employees are trained to handle it, they can focus on the more advanced skills such as data mining and analysis. Companies can learn to extract marketing information from freight bills or extend electronic freight billing to all global offices.

Advanced information management takes skills and lots of practice. Learning to ask the right questions to elicit the right answers is the province of trend analysts. But it's these sorts of skills that are required if companies want to move into the headier field of knowledge management.

Knowledge management is the strategic application of collective company knowledge and know-how to build profits and market share. The computerized collection, storage, sharing, and linking of corporate knowledge pools makes it possible to share ideas and concepts in an unprecedented fashion. Advanced technologies make it possible to literally mine the corporate mind to create new knowledge-based products. When knowledge is applied in a wise, strategic fashion, it should breed profits.

To a certain extent, all companies practice a rudimentary form of knowledge management. In a paper-based system, knowledge is pooled or shared through memos, meetings, and ensuing projects. Knowledge is shared via personal communication, phones, and meetings. New knowledge—whether concepts or know-how—is created through these processes, and the various ideas can be linked in the form of reports and memos. New concepts and know-how are created, becoming part of the company's collective knowledge pool.

Introduce advanced technologies, and the process becomes far faster. Computers and the Internet allow for sharing and linking knowledge bases in ways that weren't possible in a paper-based information-flow system. Powerful search engines make it possible to go mining for data. Reports and company strategies can be spun from company knowledge storehouses.

Sounds great in theory, but in reality, practicing knowledge management may be beyond the ability of many managers, let alone their employees. Knowledge management requires the ability to analyze and then effectively target the right knowledge assets and apply them to business practices.

The ability to analyze correctly and then act strategically is probably the most important link between knowledge management and profits. And it's the trickiest because this factor relies, to a large extent, on human skills. After all, what underlies analysis but the ability to ask questions and come up with answers until the right answer(s) emerge?

To practice knowledge management properly means being able to practice information management. Getting those orders out on time, producing accurate shipping notices, and communicating clearly throughout the supply chain is great practice for moving on to knowledge management.