In the FAANG era (Facebook, Apple, Amazon, Netflix, Google), deciding which system to choose for the supply chain can be a factor in business success or failure.
The customer, accustomed to the electronic experience in the digital world of services, expects ever better service level, ever shorter delivery times, and ever lower costs also in the world of physical distribution.
Therefore, in order to meet the expectations of customers, many organizations are working on the effectiveness of their Supply Chain and invest in IT technologies trying to catch up with the technological giants.
But how to choose the right system for the supply chain? and not go crazy in the process?
Fulfilling the promise made to my readers, I present what to consider when looking for IT solutions supporting planning in Logistics.
I published the first version of this article in Polish. The version you are reading has been expanded. I made a few substantive corrections and supplemented the list of planning systems with new solutions.
FIRST PEOPLE, SECOND PROCESSES, THIRD SYSTEMS
If you are looking for a system for your supply chain, think about this statement first.
No system can replace a mature, experienced team that knows what it is doing and is able to cooperate with the rest of the organization. Neither system will help if the rest of the organization is not working systematically.
If there is a constant change of plans on a daily basis, if individual departments work on the basis of different assumptions, then the first step with greater “return on investment” should be implementation of the S&OP (Sales & Operations Planning) process. Later there will be time to choose the right IT solution.
In this case, I suggest starting with my previous article published by Puls Biznesu– How To Increase Profits With S&OP? However, if your organization has already reached process maturity or simply a scale that requires system support, read on.
BEFORE YOU START UNDERSTAND WHAT YOU WANT TO ACHIEVE
Begin by asking yourself a fundamental question – what do I want to achieve?
In most cases, the main goal will be to better align the Supply Chain with the needs of the rest of the business. What does this beautiful statement mean in practice?
Better order fulfillment, better product availability, lower inventory levels, a smoother process, less manpower required and faster response times, or maybe more accurate forecasts of future turnover against budget?
You can do anything, but not everything.— David Allen, author of Getting Things Done
In business as in life. You can achieve any goal you set for yourself, but not all goals at once. When analyzing the history of successful implementations, you can see a clear pattern.
In companies where implementations are smooth, Supply Chain leaders set one or two goals. They also choose no more than one metric for each of their goals and only measure success against them.
FIND A SYSTEM FOR YOUR NEEDS
Only when you know what you want to achieve, you can choose a specific system for the Supply Chain. You can make sure that the solution provider understands your goals, and that the system you implement together will support the selected goals.
It is best to select several potential partners at this stage of the project. Then check whether they offer functionalities in the scope needed by your organization and if they will be able to help in your specific case.
The choice of software on the market is really big now. It would be difficult to fit the logos of all systems on one slide.
Therefore, during the first market research, the following list of systems supporting planning in the supply chain should be helpful.
The list was based on my own experience and a review of information provided by these companies. It includes all currently major software vendors in the field of: demand planning, distribution planning, inventory optimization, as well as production planning (‘Enterprise solutions’ section).
In addition, in the second part, I mention companies that have less experience in the market of systems created for the needs of the Supply Chain (‘Small & medium solutions’ section). However, they all offer interesting solutions that are worth considering.
Often a smaller vendor may be more flexible both at the stage of implementation and subsequent maintenance of the system delivered.
In the list, however, I consciously do not include companies that are not represented in the EMEA (Europe, the Middle East, and Africa). I assume that they are not a viable alternative in geographic region where I have experience.
Note: All statements presented in the article should be treated as current at the time of publication. The software market is developing dynamically. If you believe that I have omitted the Supply Chain system provided by a significant organization. If one of the listed companies has developed competencies in an area that I have not marked. Please contact me.
ASK THE PRE-SELECTED VENDORS ABOUT…
When choosing an IT system, keep in mind that most often the first assurances of the vendor will be full of optimism. The opinions of direct users of the system who work with it on a daily basis will be more helpful.
Good vendors can boast strong relationships with their customers that they will be able to organize a reference visit or teleconference.
Therefore, it is always a good idea to ask the vendor “do your current customers face similar challenges?” or “Have you implemented what we are looking for in other companies operating in our industry?” and also explicitly “can we visit them?”.
Contrary to appearances, looking for references among companies in your industry is not pure fantasy. This is why it is worth considering software vendors operating in a wider geographic area. They can serve organizations that you will not be able to compete with in the foreseeable future.
In addition, when implementing a system for the Supply Chain, special attention should be paid to the experience of the project team. Even established, global companies may not have the appropriate qualified team available in your business area or in the required time.
Therefore, you should also listen to what the potential project manager on the vendor side is asking. Does he have experience in your market sector? Or is it just trying to adopt a system standard that “can handle anything.”
At this stage of the analysis, the previously presented list of solutions, expanded with information in which industries the indicated systems were implemented, will be helpful. The list was prepared on the basis of information provided by the above-mentioned companies.
In the second part, I also provide information about the countries in which individual companies currently have their own offices or partners.
Note: In the table, I give the names of countries using the ISO 3166-1 codes. If the vendor listed has opened an office in a country that I have not marked, please contact me.
CHECK THE PROFITABILITY OF THE INVESTMENT
When, after researching the market, you have a list of potential solutions and their valuation, it’s time to estimate the return on investment. At this stage, you need to have goals and know what change in a given dimension you need to achieve.
In many cases, at this stage of the project, Supply Chain Managers take into account the declarative values provided by the software vendor.
This is not a safe method from a project management point of view. It is better to ask the reference customers of a given vendor to share information about the results achieved. The best solution is to conduct a pilot on your data.
The best results are often held back by false constructs and untested assumptions.– Tim Ferris, author of The 4-Hour Workweek
The pilot, or test before implementation, consists in running a system based on real data, which is not fully configured but fully functional. The pilot allows for a real assessment of the potential results that a given system can deliver for the supply chain.
The most common concerns about making a pilot are additional costs and time. However, when comparing the cost of the pilot to the unsuccessful implementation, it is worth at least considering an additional step in the project.
Even leading companies make mistakes at this stage, choosing the system based on the assumptions and not the tests performed. For example is Lidl, which withdrew from implementing SAP tools after 7 years of work and EUR 500 million of expenses…
Therefore, before you go to the calculation of the rate of return on investment or discounted payback period, think about, and preferably test, the potential benefits of implementation. The costs are relatively easy to count. The real level of benefit is sometimes more difficult to grasp.
… AND LET’S GO, OR A FEW ISSUES FOR A NEW BEGINNING
If you chose a system for the supply chain, analyzed the expected costs and results of the implementation, and the “business case is tight”, it is time to start the project. However, before starting work, it is worth considering at least three more issues before implementation.
Master data, if you have not yet organized the management of master data of products, materials or customers, you should do it now. In short, the results of the selected system will only be as good as the data you feed the system with.
Technical infrastructure should be consciously chosen. The decision between investing in your own infrastructure (the so-called On Premise) and cloud computing (SaaS, or Software as a Service) should not be solely a decision of the IT department.
The design team should consist of both consultants from the software vendor and internal experts. The most difficult thing in implementing the system is managing the change. If the project group includes members of the team who will later work on the system on a daily basis, the chances of successful implementation increase significantly.
However, we are already entering the scope of planning the implementation project and not choosing the right system. This I will cover in another article – System in the Supply Chain. How to implement?
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Meanwhile, to the next entry. I post regularly on Saturday every two weeks.