What defines a successful Supply Chain Management (SCM) solution implementation?
The degree of sophistication in supply chain management and optimisation technologies has advanced. Supply chain solution components are now more integrated and more interoperable than ever before, dramatically expanding the opportunities to improve supply chain performance. The scale of supply chain technology deployments has grown along with the complexity of solution implementation.
The key to maximising rewards is minimising the level of risk. Organisations can do this by:
- Understanding the scope of the supply chain challenges they're trying to address
- Ensuring any new supply chain technology supports the organisation's overall business strategy
- Assembling a great project management team that combines internal as well as external resources where appropriate
- Attaining results through meticulous project planning and execution supported by effective organisational change
The degree of sophistication in supply chain management and optimisation technologies has advanced. Supply chain solution components are now more integrated and more interoperable than ever before, dramatically expanding the opportunities to improve supply chain performance. The scale of supply chain technology deployments has grown along with the complexity of solution implementation. The key to maximising rewards is minimising the level of risk.
During the 90s, companies raced to implement Enterprise Resource Planning (ERP) and Supply Chain Management (SCM) software only to see disappointing results or executive management question whether a positive ROI was ever achieved. It was difficult to measure and attribute tangible benefits to specific initiatives because multiple process and technology re-engineering initiatives were often undertaken simultaneously across diverse functional areas and varying timeframes.
The amount of new information generated from a re-engineering project and the inability to effectively interpret data also made it difficult to measure the value of a SCM solution. Another frequently encountered issue was companies proceeding with a technology project on the misguided assumption that customers and suppliers were willing to change their systems and share information.
Arguably the most difficult and costly issue was adapting software to suit an outdated business model. This was despite the business case for purchasing new software regularly highlighting the need for significant change. With the benefit of hindsight from unsuccessful technology deployments (particularly in the ERP space) leading organisations have become more astute when it comes to planning and executing technology deployments as part of wider restructuring projects. But perfection in the world of technology implementation still remains a distant dream for many, particularly amongst those who do not have the in-house experience and expertise to handle such complex technology installations.
Nonetheless, the approach needed today is really no different to 15 years ago. Software applications can act as a catalyst for dramatic improvements in efficiency and customer service. However, the really successful projects require well-managed planning and execution, and effective organisational change management.
There are a number of tactics that can help drive a successful supply chain software implementation:
Ensure new supply chain technology supports corporate strategy
SCM systems are mission-critical technologies and so should be selected on the basis that they are evolving strategic tools that support the organisation's long term strategy and goals rather than tactical point solutions that only fix short term problems. This can be achieved by considering best in class technologies and benchmarking them against rival offerings. The selected technology needs to configurable so it can be adapted to meet different scenarios that may present themselves, it needs to be constantly evolving so it can meet changing industry-specific requirements, and it needs to be scalable to facilitate future business growth. This is vital to support the company's long-term business direction and objectives.
Assess whether functionality supports specific business scenarios
One system cannot meet all business needs for all companies. It is imperative that IT executives perform an objective gap analysis when considering which supply chain system to implement. This will bridge the gap between system functionality and actual business needs. Once a number of systems that most closely match business goals have been selected,companies should not rely on functionality check-lists as most advanced supply chain systems will look very similar and claim to tick all boxes. Instead, the vendor should be asked to demonstrate how its solution would handle particular business scenarios.
Ascertain realistic objectives and time-frames for achieving a positive ROI
When implementing a supply chain solution, the business case needs to be robust and the time frame for delivering results must take into account the software learning curve. Deployment times should be proposed and verified from research on similar projects and executives must make an assessment based on a rational analysis of what needs to be done. Appropriate members must be recruited into projects and executives must agree a realistic time frame for delivering a positive ROI. Once a specific vendor's technology has been chosen, executives have to define the various needs and objectives of different stakeholders and need to set out what they might require from them.One of the best ways to establish these needs is to run an executive workshop led by an experienced facilitator. The facilitator helps produce a vision of the project along with broad goals which together define the path ahead. This enables the team to create processes and detailed action plans to meet business goals.
Identify and use best practice
Adopting best practices with a software provider is a quick way to bring significant benefits and enable process improvement changes that would otherwise be unattainable. Good suppliers should be able to advise users and client to develop an implementation strategy which seeks to unearth process improvements by considering time, cost, functionality and risk.This route should provide an established system of project management that facilitates a clear analysis of a company's operations and distribution channels. Subsequently,this identifies the steps necessary to improve processes that deliver operational efficiency improvements and facilitate growth.
Don't underestimate project management resources
If a company does not already have the necessary project management resources on staff, it should consider leasing or buying the best it can afford. While some organisations have highly qualified project managers,many are stretched beyond their current resources. Effective management of the implementation includes coordinating various teams with different objectives; a complex but necessary part of project management. A project's success will hinge on the organisation's ability to make decisions, resolve issues and coordinate activities of multiple departments and initiatives.
Involve the operational team
Although software and technology constitute a major investment for any corporation, it's common to find highly effective technology teams, but with limited representation from operations. A successful project will maintain and ultimately improve all operations to realise optimal supply chain performance.However, involvement from the operations team is also critical in testing, training and conversion. Less frequently encountered but a situation to avoid is the reverse scenario, where a project team is operations-heavy and lacks sufficient representation from the IT team.
Involve suppliers at an early stage
Where a company's SCM solution relies on interaction or collaboration with suppliers, it is essential they understand their role in SCM implementation. There are always those organisations that are hesitant to change and there will be a number of suppliers who are 'early adopters'. These suppliers automatically see the improved structure and process the new system brings, which will help drive efficiency.
Test the system
Testing really takes on three phases – system testing, integration testing and user acceptance. System testing ensuresthe system has been configured correctly to support defined business processes. Integration testing is when the system is plugged into a company's existing systems and external supplier or customer's systems, which will make sure they all work together seamlessly.User-acceptance involves 'super-users' – operational staff who will be the heaviest users of the system – and getting their buy-in that the system is fit for purpose. In each testing phase, companies should use actual data that has been copied from their live business environment, involve real users and adhere strictly to established business processes. Critically, and this is the 'stress' part of this phase, project managers should not underestimate the importance of volume testing.
Untrained users take up to six times longer to perform the same tasks, and typically a two per cent increase in productivity produces a 100 per cent ROI in outsourced, instructor-led training. Leading solution vendors should have proven methodologies to support software implementation, process development, daily operational procedures and change management to expedite system adoption throughout the organisation. Executives should therefore strongly consider leaning on their solution vendor for some of their initial training needs.Executives should also make sure users understand the importance of following the Standard Operating Procedure (SOP) and that SOPs are clearly documented with use of screenshots and non-system-related processes that users also need to follow.'Training the trainer' will minimise the longer-term reliance on the vendor organisation for training needs by ensuring that the training skills required for bringing future system users up to speed are transferred to the user organisation.
Communicate effectively and aim for a quick win
During the system's pre- and post-implementation phases, ensure there is a structured communication programme in place so that the project team regularly meets, shares issues, exchanges ideas, reviews costs and reports on progress and achievements.For large-scale and complex supply chain technology deployments, companies should aim for a quick win. In a climate where results are the watchword, they should plan to deliver at least one significant and tangible benefit within the first twelve months so they can quickly demonstrate value to the business. A bigger ROI will take longer, but this helps garner support from executives eager to see progress is being made.
Assess long-term risk and undertake scenario planning
Make sure implementation planning takes account of the time up until the solution has been successfully implemented and also the long-term timescale. The future beyond that is even more critical when project teams may have been partly disassembled or when key project team members have left the business. People will need to be available who know how to address impending issues, which may be a threat to the business. For the longer-term, companies need to have established a team made up of individuals who worked on the project as well as stakeholders from other functional areas within the business. Collectively they should have a responsibility to periodically assess risks and the probability of those scenarios occurring to prepare for high-risk events or developments.
The key to a successful implementation, over the short, medium and long term, is having quality people and enough of them, dedicating sufficient time to complete the project whilst communicating effectively internally and externally with suppliers and clients throughout the pre- and post- implementation phases.
These tactics all point to the importance of the pre-selection approach and how business operations execution plays a critical role in delivering the benefits promised by software applications and technology. When business operations embrace and internalise the changes associated with supply chain process improvements, the effective and long-term use of sophisticated and complex software can occur. When the focus is on meticulous execution, ongoing risk monitoring and a well-orchestrated implementationdriven by skilled programme managers, superior business benefits can be achieved, delivering a positive and measurable ROI.
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