| By Chuck Schaeffer
A Supply Chain Management Framework For Stakeholder Requirements
The cost and disruption of implementing a new Supply Chain Management software system is significant, but necessary to keep pace with market demands. The long term success of an organization depends on the supply chains ability to plan, reduce cost, shorten lead times, improve the efficiency of inventory management and quality of fulfillment.
A critical first step to selecting the best supply chain management software is to gain consensus around a clear vision backed with measurable objectives and a solid business case for implementing a new SCM system. Performing an assessment that fleshes out stakeholder goals, user group requirements, and gaps in the current system is a precursor to any SCM software selection project. The key stakeholder requirements can be challenging to identify, communicate and prioritize, but are nonetheless critical to align a new supply chain system with the company business strategy and ultimately demonstrate deployment success. Establishing a SCM software selection framework to identify and weight the various requirements from stakeholders and all affected constituents will simplify the process and lead to a predicted result. Once the stakeholder assessment is complete, you will be far better prepared to continue the software selection and later the SCM software deployment.
Sample components of a requirements framework, at a minimum, should include, functional, performance and risk management requirements. Process and best practice requirements are not addressed in this article, but its advisable to also consider them in your assessment.
Functional requirements are often organized by areas of responsibility and SCM time horizons. For example, the time horizons could range from a 5 year plan to daily tactical planning. Examples of areas of responsibilities with key requirements include:
Executive Leadership—These requirements include the information reporting tools, analytics and Business Intelligence (BI) that help both senior executives and line of business decision makers improve strategic planning, revenue projections, integrated sales and operational planning, allocation of resources, performance monitoring and problem resolution.
Demand Management—Requirements are needed for the staff responsible for managing product lifecycle, managing customer value, producing accurate sales forecasts, tracking historical trends in demand, tracking events affecting demand, shaping demand and fulfilling inventory and sales order needs.
Supply Management—Requirements are needed for the staff responsible for planning the supply network, operating capacity, sourcing strategies, inventory distribution, procurement and replenishment.
Collaboration—Requirements include tools to help manage strategic partnerships (such as joint ventures, outsourcing, VMI and 3PLs), enhance processing and workflows between departments, organizations and hierarchical levels as well as facilitate trading partner planning and forecasting, facilitate supplier replenishment and improve trading partner compliance.
Supply Chain Execution—Requirements are needed to align facilities, equipment and other resources with strategic business goals, manage warehouse operations, manage transportation, plan and schedule resources, and provide feedback to SCM planners.
Performance requirements depend in part on the types of demand. For example, predictable demand requires a lean operation with most decisions being automated. Unknown demand needs an agile approach with skilled workers having access to accurate and up-to-date information which can be seamlessly leveraged with predictive models. Customer value proposition and contribution to competitiveness are other requirement considerations. The performance requirements should be driven and tied to the financial goals stated in the SCM business case.
Risk Management Requirements
Early visibility to potential risks as well as risk avoidance and risk mitigation are a special set of requirements. Risk management requirements can be evaluated on the likelihood of an event happening and the extent of an event impact. Other evaluation criteria are the capabilities or options to mitigate risks—which may ultimately be modeled and measured in the supply chain management software. The more likely occurring events or high impact events need integrated flexibility with supporting software systems to provide the intelligence and best case scenarios to either minimize an event or execute alternative plans.
Continued SCM Software Selection
Once the stakeholder assessment is complete with a supporting document illustrating the prioritized and weighted objectives, the software selection team can continue their evaluation process toward selecting the best fit supply chain management application. A critical success factor is to ensure that the remaining software selection project clearly delineate and adhere to the project's boundaries as determined by the stakeholder objectives. This is necessary to keep the focus on successfully selecting and implementing a new SCM system that achieves the most important consensus objectives and doesn't wade into acquiring software features or solving business problems that are less pressing.
Also remember that the project team or software selection committee is going to need an Executive Sponsor who keeps the team aligned with the vision, facilitates challenges, approves deliverables and manages the Project Manager. The Executive Sponsor is normally a key resource if and when objectives, priorities or project scope need to be revisited. This can occur based on changing market or business conditions, or upon new information or recognition of previously unknown software capabilities.
It's also important for the project manager with the guidance of the executive sponsor report on project activities (resourcing, schedule, budget, quality of deliverables, etc) AND tie these activity accomplishments back to their contribution toward stakeholder objectives and the supporting business case. This responsibility should be similarly delegated throughout the project team to each stakeholder group representative and subject matter expert (SME).
Once the software selection team has identified a leading SCM software contender, its important to validate and measure the fit of the software pursuant to stakeholder objectives before making a recommendation. As important as how the software specifically accommodates the objectives, is recognizing in advance where the software doesn't fit and how those objectives can be satisfied using alternative methods.
Later in the software deployment phase, the stakeholder objectives will be ratified in the actual software during the conference room pilot process. This will mark a major milestone that will both ensure the implementation is pursuing an agreed upon path and is extremely likely to achieve a successful outcome.
Supply Chain Software Selection Bottom Line
The key to a successful supply chain management software selection is to march the software selection team and company toward a predefined destination. If SMART (specific, measurable, achievable, realistic and time-bound) stakeholder objectives are not completed up front, the rest of the project is likely to be aimless and without ability to accomplish forecast goals.
Done right, selecting a new Supply Chain Management system enhances an organization's ability to compete. Conducting a robust assessment of the SCM needs and requirements pursuant to what is most important to the company and each of its stakeholder groups provides a rock solid backstop and a sound operational framework to focus efforts in the right areas to achieve forecasted success.
Categories: Supply Chain Management Software
Tags: SCM selection
Author: Chuck Schaeffer