Up and Running: Helping Supply Chain Technology Work
The Supply Chain Landscape
Keeping a competitive edge depends less on the product than it does on getting that product to customers efficiently and flexibly. Pressures continue to mount for companies trying to stay ahead: fierce competition, the economic downturn in the United States, and swelling customer expectations paint a complicated picture when logistics decisions can lead to either a positive or a negative impact.
As the supply chain landscape becomes more complex, so does the technology that enables it. The marketplace is flooded with products, and new technologies are emerging in niche areas like supply chain collaboration and event management. Companies need not only decide whether to implement or upgrade but which product among a dizzying array will best suit their needs.
Technology offers the promise of greater efficiency, and managers look to effective supply chain solutions to lower costs while improving service amid vigorous competition. Yet, past experience with failed implementations and poor return on investment can make them reluctant to allocate resources. Research supports this perspective: according to Forrester Research, more than 57 percent of companies cannot justify their investment, which is estimated at $75 million over a three-year period for a Global 3500 company.1
Gaining the Edge
However, a good supply chain solution can help achieve that crucial competitive advantage. When it's working well, the supply chain solution empowers the company — and the company's network of suppliers and customers — to gain some key strategic efficiencies.
Thorough planning and an overall understanding of people and processes can
help a company avoid many roadblocks
to a successful implementation. Most common pitfalls to implementation fall
under three broad categories.
Fit
Buying for the Wrong Reasons — Either buying technology in order to maintain the IT department's budget flow or buying simply to keep up with a competitors' systems.
Group Misunderstanding — One group often selects a tool for another group, but neither understands each other's needs very well.
Lack of Training — Failure to plan adequately for training on a new supply chain process or tool can render any improvements moot.
Culture Mismatch — New technology and processes can conflict with the existing corporate culture, leading to poor user acceptance.
Focus
Lack of Support — Executive sponsorship may change and hard-earned
management support wane; strategic initiatives can be neglected in the face
of day-to-day
problems.
Overlooking the Process — Using a tool to facilitate an inherently slow or error-prone process doesn't solve the problem. What's needed is a better understanding of why the process is poor.
Too Much, Too Soon — Change can be destructive when multiple projects are implemented simultaneously, or when the people who are going to have to work with the end result are left out of the loop.
Functionality
Bulk Buying — Vendors offer discounts when all modules are purchased or claim that full benefits can be achieved only with a complete package.
Collaboration — Organizational, process, and trust issues are the biggest barriers to supply chain collaboration. Since they can be difficult to overcome, they are often ignored.
Problem Integration with Other Tools — "Solutions" that can't access other vital tools, like the ERP system, can create as many problems as they solve.
Faulty Software — Implementation debacles often involve deficient software and inadequate support.
Maximizing Value
Whether your company is contemplating new technology or trying to maximize existing tools, you can navigate the decision-making process by developing a healthy supply chain solution. Keep the following guidelines in mind.
Be Clear About Goals
Know what you are trying to achieve and set numeric goals that are easily measurable. Don't lose sight of your project's goals and desired end-results; during implementation, the focus can quickly shift towards going live and away from the value proposition. Be clear about tangible benefits before you start and make sure the management team, project team, and end users know the ultimate goals of the project. Make sure project goals enhance your overall business goals.
Think Process First
Before spending on technology, take a good look at how your processes run today. Ask the people involved in the process about their biggest problems. Assess, benchmark and compare your performance numerically with your competitors. You may be surprised by what all of this data tells you. At the very least, you'll avoid installing tools that simply accelerate bad processes or that don't fit with your company's process situation.
Focus on Resources
Having the right resources with the right skills is critical to completing a high-quality implementation on time and on budget. Be sure to assign dedicated resources to the implementation, and look outside the organization for additional help. External facilitators and service providers may be better able to navigate within your organization; they also bring the necessary experience, approaches and tools that are essential to realizing the full value of the solution.
Don't Let IT Operate In A Vacuum
If the IT department has final responsibility for selecting technology, make sure operational users are involved from the beginning of the process until the end. Pairing these users — who know the processes inside and out and also know which tools will help — with the experts in IT will go a long way toward ensuring a good fit.
Prepare for Change
New or revamped technology necessitates change, and managing the transition well is an important part of gaining acceptance of the project by the end users. As soon as possible, begin to acclimate process users to the new system by keeping them informed of the decisions that have been made and by providing them with adequate training in the new technology and processes that will be implemented.
Use More Than One Vendor
It's unrealistic to expect the products of a single vendor to meet all of your needs. Focused solutions from smaller players may offer a better fit for certain functions and can be implemented quickly and cheaply. Make sure to do your homework and have your financial group complete a comprehensive evaluation of all of the vendors that are under consideration.
Do It in Steps
Success with smaller initiatives breeds success in larger ones. Adopt a long-term technology plan that can be deployed in modules, rather than undertaking a huge end-to-end system and process overhaul. If upgrading the supply chain includes implementing a new warehouse management system, supply chain planner, and customer relationship management application, treat these as separate projects. Implement and integrate them one at a time. Since technology innovation advances faster than most implementations, revisit the plan often and revise it if necessary.
Remember Your Supply Chain Partners
Considering supply chain solutions requires careful attention to more than
just technology issues. Companies must go beyond their own organization and
include their vendors, their customers and even their customers' customers.
The ongoing trend to dismantle years of vertical integration in almost every
industry means that supply chain executives today are faced with increasingly
complex supply networks. Develop and execute a detailed, documented plan for
integrating suppliers and customers across your entire supply
channel by asking some key questions:
• What partner data is needed to make the process work?
• How and when will it be transmitted?
• How and when will partners be introduced to the process and tools?
• Will partners participate in developing the new process?
• Do new process or data reporting requests violate existing contracts?
Improving Existing Technology
What if you've decided to fix it instead of replace it? In the current economy, this may be the only option available for financially constrained supply chain executives.
Find Out Why It Didn't Work
It's easy, but not always accurate, to blame software functionality. Check for fit, focus and functionality, and don't stop once you identify a problem. Often several causes are combined to throw a software implementation off-track. Be sure to solicit input from everyone involved in the project, from IT to process users.
Reset Project Goals
Once you understand why the original initiative fell short of expectations, take some time to reassess. Are the initial project goals still relevant? A tool may have originally been purchased to help your company manage high growth in customer demand, while today's priority may be cost reduction. Reset project goals as necessary and decide if the situation calls for fixing the existing installation or implementing anew. Develop your plan accordingly.
One Last Chance
A focused effort to re-evaluate and re-implement existing tools is the fastest and least costly option. If you determine that your problems stem from software inadequacies, you may be able to negotiate with the vendor to fix what's wrong, instead of investing in a newer or more expensive software suite.
Our Point of View
Supply chain technology needs to dovetail not only with existing systems but also with the people and processes that use it. And while implementations and upgrades involve complex issues, the benefits are compelling enough to warrant their undertaking. According to the Gartner Group, synchronizing demand generation and fulfillment can increase supply chain systems' ROI by 30 percent to 50 percent over a three-year lifecycle.2 Supply chain technology is a means to gain a competitive advantage by reducing costs and improving service at a time when others in the industry might wait and see.
The decision to invest in this technology depends on your specific organization, the industry and a host of other factors. While no one can promise you a trouble-free implementation, you can mitigate potential pitfalls by honest appraisal and thorough planning. Understand and prioritize your needs and be sure to fully evaluate the costs and benefits of proposed solutions. When choosing a solution, accuracy and reliability are almost always more important than speed. And make sure you have adequate resources — the right number of people with the right skills — and that you prepare them for change.
Endnotes
1 Van Berber, Bob. "The value of CRM." Energy Markets, September
2001, p. 66.
2 Cecere, L. & Eisenfeld, B. "New Opportunities from Back- and Front-Office
Integration." Gartner Group, October 2, 2000.
