| By Chuck Schaeffer
Ten Key Questions That Drive Supply Chain Management Strategy & Software Selection
Until recently, Supply Chain Management software was focused on creating supply chain efficiencies. Fortunately, software vendors are increasingly developing software automation feature sets to support strategic, adaptive, demand driven and global supply chains. However, implementing a more modern supply chain system will result in a bigger and more sophisticated SCM footprint on an organization—facilitating either more opportunities or more complexities depending upon how the system is deployed and managed.
Proper planning is the precursor to maximize system capability while not becoming overwhelmed by the enormous capabilities available from supply chain systems—most of which is unnecessary to any particular organization. In fact, most implementors suggest that they use less than 30 percent of what's available from their supply chain software. It's important to ask the right questions, and uncover the right answers, to make sure you focus on that portion of the software that delivers the most value, while not diluting your efforts in areas that are little more than a distraction. To guide your planning, here are 10 questions to both stimulate your thinking and streamline your planning toward the highest impact software automation capabilities.
1. What is driving the need for new SCM software?
Whether the current supply chain system is over stressed, outdated or inadequate, it is essential to perform a gap analysis and identify inefficiencies, core problems and missed opportunities. One common way to identify these issues is to assess business needs and find the gaps where the current SCM software does not enable or support those requirements. Developing a complete list of prioritized and weighted gaps, along with measurable benefits derived from resolving those gaps, is a critical success factor and valuable component in the supporting business case for a new SCM system.
2. Are you addressing SCM execution, planning or both?
Supply chain planning and execution systems need to be tightly integrated, in order to achieve coordinated business processes and strengthen competitiveness. The long and mid-term plans need to integrate with the tactical plans for transportation, distribution, inventory management and other execution systems. The execution systems need to provide feedback to the planning systems and the planning systems need to recast plans based on the execution feedback.
3. What are the SCM goals, requirements and scope?
Supply chain management software benefits and requirements that are intuitive and obvious to one stakeholder group may be different for another. Plus, its all too common for stakeholder requirements uncovered in the supply chain software selection process to evolve into something different during the implementation. Taking time and deliberation to map out the prioritized expectations of all the key stakeholders and build a roadmap that establishes the SCM initiative goals, requirements and scope, is critical to the implementation team's success.
4. Will organizational and reporting structures change?
Virtually all major business initiatives drive changes to the systems and organizational structure; this is even more so with SCM systems. Acquiring new skill sets, implementing new processes, and establishing new command and control structures are inherent with a major SCM initiative. Recognizing this challenge suggests planning for organizational change with a proactive change management plan which counters resistance to change and the inevitable user adoption challenges.
5. What is the impact to trading and supply chain partnerships?
Managing the impact to partners can be particularly challenging—as they may or may not be responsive to your requests and requirements. Key partners may even silently walk away from a relationship without giving a chance to rectify their grievance. It is important to get out in front, collaborate as much as possible, make accommodations and sell your partners on the benefits. The level of difficulty of getting partners to cooperate depends on who is more dependent on the partnership, but proactive and enthusiastic communications can secure cooperation despite dependencies.
6. What goes into the budget and cost controls?
Some of the obvious costs include software, hardware, consulting fees, resourcing, training and travel. There are also likely to be some new downstream costs such as new skill requirements, higher end PCs, additional training for new employees, additional IT infrastructure systems, and additional SCM system personnel. A robust framework for managing the implementation budget and measuring long term savings provides for more informed budget and cost decisions, heavily influences the supply chain strategy to be implemented, and provides the basis for declaring success as well as a journey of continuous process improvements.
7. What is your risk tolerance?
Supply chain management system risks come in many forms, including the risks of staying with the current system versus going with a new system. One category of risks is implementation related. Good project management mitigates this risk, however, failed SCM software implementations are the topic of frequent media banter. Globalization increases the the level of business risk and heightens both the likelihood and impact of occurrence. A supply chain strategy should include a risk management assessment and identify mitigating solutions for the full range of risks across all SCM subsystems.
8. What are key SCM system characteristics?
The following characteristics enhance SCM's effectiveness to improve information accuracy, shorten lead times, eliminate waste, facilitate better decisions and align supply chain management software with business needs:
- Top level key processes un-encumbered by department and organizational boundaries
- Integrated planning, forecasting and scheduling
- Collaboration across organizations, disciplines and reporting levels
- System generated transactions
- Automated data collection devices
- Better visibility to information
9. What are your industry SCM best practices?
Best practices are widely accepted practices that are best suited for a particular industry, situation or business function. The challenge is identifying, evaluating and selecting the right practices best suited to your company or business use cases. Industry associations, online communities, SCM organizations, software vendors, consultants and academia are all good sources for learning about best practices.
10. Is best of breed or an integrated suite the right approach?
One approach to supply chain management software is to select an integrated suite of SCM solutions. An alternative approach is to select best of breed software systems. Depending on your business and IT requirements, a best of breed approach might be the best choice to gain specific software feature sets or automation, but this approach generally requires IT to build interfaces between systems. The integrated suites often deliver a single system of record, broader process automation (across departments and lines of business) and are typically easier to implement as interfaces are already built and end to end business process support is delivered out of the box. There will be third party add-on specialty applications that supplement either approach.
The Supply Chain Software Bottom Line
The only way to get the right answers which then best impact supply chain strategies is to ask the right questions. Further, the number of questions to be answered is expanding as modern Supply Chain Management systems are increasingly strategic, adaptive, demand driven and global, and deliver a much bigger foot print with even greater affect on an organization than earlier SCM systems. Asking the right questions is the single best method to ensure informed decision making when it comes to creating the right vision and supply chain strategy, along with the best fit SCM software that will empower a sustained contribution to the organization's global competitiveness.
Categories: Supply Chain Management Software
Tags: SCM strategy
Author: Chuck Schaeffer