How Much Technical Debt Exists in Your Supply Chain Operations?

The breakdown of Southwest Airlines’ operations last December was blamed in large part on “technical debt”– that is, on the airline “relying on older or deficient software that needs updating” to run its operations. 

How much technical debt exists in your supply chain operations?

We asked members of our Indago supply chain research community — who are all supply chain and logistics professionals from manufacturing, retail, and distribution companies — that question in January 2023. 

The level of technical debt in supply chain operations among our member respondents was equally split: 33% reported having “High” or “Very High” technical debt, 33% reported having “Moderate” technical debt, and 34% said they had “Low” or “Very Low” technical debt.

Source: Indago, January 2023 survey (n=27)

“Quite often, the pervasive use of Excel in an organization is a symptom of technical debt, whereby the existing systems and/or processes either don’t work, don’t exist, aren’t properly understood, or aren’t best suited to meet the needs of the business,” said one Indago executive. “This prolongs the use of these older, outdated systems as employees find other creative (though complex and time consuming) ways to get the results needed. It’s often not until there is a major crisis or an executive-level understanding and alignment on the situation before a change is made.”

The pandemic was one such crisis that put the spotlight on technical debt, as this executive shared:

“Our technical debt was not front and center prior to the pandemic for our senior executives. [The problem] became more apparent as we navigated through supply chain shortages and worked to improve end-to-end supply chain visibility. We have identified the areas requiring technical upgrades and they are on a priority list for improvements.”

For our Indago members, “Demand Planning” and “Supply Planning” topped the list of supply chain functions having the most technical debt (each was selected by 33% of the respondents); several respondents also listed “ERP” as needing updating.

Here are some additional comments from our Indago members:

“Most solutions take time to implement. The speed at which new solutions hit the market can instantly make a recent implementation outdated. Think about what is available today versus 20 years ago. Some solutions become sticky due to customizations [made] to work with financial systems, TMS, ERPs, etc.”

“I believe [our CEO and other senior executives] do not understand how much technical debt exists as we continually rely on legacy systems to perform [our daily] work. On top of the technical debt, we have an overreliance on Excel.”

“After the pandemic, the impact of the supply chain on business [performance] is well understood by the CEO and Board of Directors. It has become easier to invest in new [solutions] or update [existing] software by showing the value it can provide to the supply chain. The risks of not updating are very clear: the breakdown of the supply chain, which is inevitable (it is a matter of time).”

“I believe our senior leadership is coming around to the idea that our technical debt could significantly hinder our operations and have a significant impact on our business and are more willing to invest in technologies that will help us become more efficient and less open to risks.”

For the rest of the survey results, Indago members can download the report from our website.

Do you believe your CEO and other senior executives understand how much technical debt exists in your supply chain operations and the risks it presents? Is reducing technical debt in your supply chain operations a priority at your company this year? Post a comment and share your perspective!

Be Uncommon. Research with Purpose.

If you’re a supply chain or logistics practitioner from a manufacturing, retail, or distribution company — and you’re interested in learning from your peers — I encourage you to learn more about Indago and join our research community. It is confidential, there is no cost to join and the time commitment is minimal (2-4 minutes per week) — plus your participation will help support charitable causes like JDRF, American Logistics Aid Network, American Cancer Society, Feeding America, and Make-A-Wish.