ROI from Supply Chain Technology Investments: Is It for Real?

by Ram Reddy

Phil Knight -- of Nike's oft quoted public utterance, "This is what I get for $400 million?" -- has become the poster child for highlighting the difficulty of implementing supply chain technologies. This comes hot on the heels of a study from the Georgia Institute of Technology (by Vinod Singhal and Kevin Hendricks) that found that the evidence of return on investment (ROI) from supply chain technology investments is anecdotal at best. Does this imply that investments in supply chain technologies do not make sense from a cost/benefit perspective? Far from it. According to the Georgia Tech study, measuring ROI from successful implementations of supply chain technologies is in fact difficult. However, when firms have botched their supply chain technology implementation, it has had an immediate and adverse effect on the firm's overall valuation. Clearly, botching up supply chain technology implementations affects shareholder value. What can firms and technology vendors learn from these recent developments?