How to Select a Supply Chain Planning Tool.
So you’ve finally had enough! You’ve just been chewed out by the Head of Accounts because she was forced to ship an order to a major customer two weeks late…and it’s your fault. This is not a unique conversation in your organization because your on time delivery is only about 75%… even among your A customers it’s barely 80%. And this is only one metric where you could be doing a lot better. You’re also dealing with excessive inventory for some items while facing stock outs for others. The CFO has been asking why inventory holdings keep creeping higher while customer satisfaction is dropping.
As the Vice President of Supply Chain you know things need to improve, and now you need to figure out what to do next. Does this scenario sound familiar? If so, you’re not alone. Gartner conducted a survey last fall and found that of the 1,300 supply chain professionals who responded; 89% said they planned to invest in their supply chains’ agility in the next two years. You’re in good company considering almost all supply chain professionals feel that they need to make improvements. If you believe the tools you’re using on a daily basis are a big reason why your planning isn’t working; here are 3 tips you should follow to get your project off the ground.
Here is how to select a supply chain planning tool in 3 steps.
1. Involve Key Stakeholders Early
Every major project is going to require the sign-off from several stakeholders. A major supply chain initiative involving a software implementation is no different. And it will most likely need the approval of your CFO, CIO, and VP of supply chain. It’s okay to do some preliminary research into what some of the vendors in the space offer. But it’s best to wait to begin evaluating them until you have involvement from the decision makers, and here’s why.
Stakeholders can provide expertise and identify risks early on. And since their purview is different from yours, they’ll bring perspectives that you may not have thought of early in the buying process. For example, if a solution you’re evaluating doesn’t meet the CIO’s security guidelines, she may veto the solution even if everything else looks great. This is the type of requirement that you can ask the vendor about early in the discovery process. And then rule them out without wasting a lot of time.
Stakeholders typically care more about big picture results, and will likely want to see a business case for such an investment. By discussing the desired future state of your business, you can go into the project with a clear idea of the consensus problems you want to solve and what the desired results will be. Perhaps a major source of financial pain in your supply chain is not having a digitized capacity planning solution. You can prioritize the vendors you’re evaluating based on how well you handle this requirement. All planning solutions are different, and if complex capacity planning is part of your production plan, you can easily eliminate vendors who can’t handle this requirement.
2. Assess the maturity of your supply chain organization
After you’ve involved the necessary stakeholders in your search for a planning solution, and attained their ‘buy-in’, it’s now a good idea to assess your supply chain organization’s maturity. Taking the time to go through this exercise might seem extraneous, but sometimes you have to slow down to speed up.
If you’re unsure exactly where your organization’s maturity level is, Gartner uses a five stage S&OP Maturity Scale: React, Anticipate, Integrate, Collaborate, and Orchestrate. Since you’re in the market for a digital planning solution, you’re most likely in one of the first three stages, so we’ll focus our attention there. In the React stage, you have an ERP system for data and are likely using Excel for planning; however, planning is fragmented and you have no ability to do scenario planning.
Companies in the Anticipate stage may have a point solution in place for demand or production planning. But they can’t do integrated demand and supply balancing and financial analysis. In the third stage your planning becomes integrated so that you can more effectively get ahead of supply chain disruptions by collaborating with other business units. According to Gartner’s research, nearly 70% of companies are in the react or anticipate stages. And if you’re seeking out a planning solution you probably are too. The good news is that you’re in good company!
In order to get a proper handle on where your maturity level lies; you’ll need to get feedback from both leaders and planners in your organization. You may also want to consider working with a supply chain consultant to help you.
Know where you’re heading
While it might be easy to figure out which stage you’re in, determining where you want and need to be and how to get there is not as easy to answer. While the obvious answer to the question ‘Which stage do you want to be in?’ is ‘Orchestrate’, the reality is that most organizations need significant time to get there, and it’s done in stages. You can’t just install a high-end software solution and expect to automatically jump ahead 3 steps. For example; if you feel confident that you’re in the Anticipate stage, your goal should be to find a solution that can get you to Integrate.
3. Determine your solution requirements before evaluating software
Software projects often run into roadblocks and stall because people aren’t sure exactly what they’re looking for. It can be very frustrating to be in the middle of evaluating software solutions only to have the project paused or cancelled altogether. And that just because you haven’t taken the time to outline your requirements. Now that you’ve involved the right stakeholders and gotten a handle on your supply chain organization’s current and desired maturity level; you’ll need to outline the requirements a potential solution must have versus nice to have features.
If you’ve gone through the first two steps outlined here, you should have a good idea of what your needs are to make your project a success. For example, do you have specific security requirements that the CIO or Director of Business Applications require? Do you need to use an application that can import/export data to a Business Intelligence tool your company is using? Are you required to use a vendor that’s preferred by your ERP? Do you plan to do a ‘big bang’ implementation and have full end-to-end supply chain planning implemented all at once? Or should you start with demand and production planning, then implement distribution and inventory optimization planning later? These are some questions you should keep in mind as you’re doing your due diligence.
You now know how to properly select a supply chain planning tool. Follow the tips outlined here, you’ll be much more likely to have a successful project than if you go into it without a plan. It can be very frustrating for both you, the evaluator, and the vendors to work on a mishandled project. While these tips may force you to stop and take action before you begin calling vendors; it’s a good exercise and one that will almost always save you time and headaches in the long run. Good luck with your search!