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Don’t Miss the First Critical Step When Evaluating New Supply Chain Technology

Jan 9, 2018

Many companies pursue new supply chain software to drive better efficiency, higher profits, and lower costs. However, improving your supply chain operations is far more complicated than simply making a software purchase. While your company may already have expertise in supply chain operations, the implementation of a supply chain system is an extremely complex undertaking that takes a lot of due diligence. 

Without expert planning and support, a new software system just allows you to make mistakes faster. Instead of making you more efficient, you may end up with a very expensive new application that creates bottlenecks, slows your processes, and erodes operational proficiency. To top it off, these new systems typically are very complex, and the entire project cost will be a significant investment. So, how do you make sure you invest your time and money well?

Evaluate Your Current Operations 
Document your current “actual” processes and look for areas of improvement.  If you have Standard Operating Procedures, are they accurate and are personnel adhering to them?  Do you follow Lean processes and/or have a continuous improvement team that can analyze your current operations and look for areas of improvement? Often, you can find wasted time, effort, and resources in your operations as they exist today. This is the heart of Lean: eliminating waste, or “muda.”  There are many possible sources of waste where your personnel are spending time and/or money on activities that do not add value to your operations. 

When reviewing current operations, question why processes are as they are. Do they add value to the bottom line, or are they simply done “because we have always done it that way?” Have customer expectations changed, or are they anticipated to change soon? This can affect operational processes dramatically. During the analysis, it is helpful to have a neutral set of eyes participating in the reviews.  This neutral set can be from the outside in the form of a consultant, or it can come from an internal source. If using an internal source, make sure to work with someone who has experience in audits and/or is from a related, but different department. For example, a shipping lead can provide valuable input to the picking and packing process to make the flow of product smoother. At the same time, the shipping lead should not have habits (good or bad) from the pick and pack areas, so they are more likely to recognize opportunities for improvement. If there are multiple facilities, use an auditor from a different facility when practical. When looking for improvement ideas, couch efforts as a competition or reward. For example, enter all improvement ideas into a drawing and have prizes (gift cards, free lunches, etc.) for teams who have their idea drawn from the box.

Develop Your Detailed Requirements
Truly understanding your current operations will enable you to create the list of requirements for the new system. Develop a ranking system so requirements can be prioritized more easily, such as “1 = Required / Must have, 2 = Optional / Like to have, and 3 = Good idea, but no major operational impact.” To help rank improvements, the teams should provide realistic estimates of the cost to make each improvement as well as the expected benefit. Some teams may shy away from providing dollar values for their recommendations, but they should be able to give an estimate of the amount of time it would save / additional capacity it would generate.

After completing your full operational analysis, you may conclude that you can meet many of your goals simply by improving your processes and operations. However, even after assessing the operational improvements, you may determine that you need to implement a new supply chain system. In this case, build upon the work done in the analysis and improvement phase. That foundation will provide you with a solid basis of knowledge about where your current operations are and where you want them to be. 

Begin the Selection
When you begin to consider a new solution, you should enumerate the pros and cons of going to a new system. List your specific reasons and expectations for the technology. What goals do you hope to accomplish? What issues do you see being caused by switching to a new system? It can be very helpful at this point to engage a consulting firm with expertise in evaluating and selecting supply chain systems as they can help you understand the benefits of the various options on the market in light of the needs of your business and industry.

The selection process likely will take a few months for you to determine the optimum vendor match.  The length of time will rely on how well you have defined your processes (current and to-be), the goals you have for the system, and the technology stack specified (current and to-be). The detailed requirements you generated during your operational analysis will be a huge help during this phase.  

Conduct Detailed Design Sessions
Once the vendor has been selected, you will begin detailed design sessions for the new system. Here again you will draw upon the processes (current and to-be) that were developed and improved upon in the earlier phases as well as the requirements documentation. The detailed design sessions will determine if there are any system modifications needed as well as the associated costs. 

Making it to the Home Stretch
So, you have now invested the better part of a year just in developing the foundation of what your system will do for you, and improving your current operations. This requires a significant amount of work. However, the better defined your processes are, the more prepared you will be, and the smoother the rest of the implementation will go. These same baseline processes will be referenced throughout your implementation in configuration, reports and label development, task definition, testing and training programs, etc. By having documented and solid processes you reduce the number of late-breaking changes that will be expensive to align with your business direction. The later these changes occur, the more impact they will have on the project and your operations.

It is impossible to underestimate the importance of solid planning and attention to improvement activities. Invest the time and money up front to learn all you can about how you operate today and the expectations for tomorrow. Then, you’re in excellent shape to improve your processes and prepare for the final stages of the project.   

Involve the Experts
For additional details on how to approach your supply chain execution system challenges effectively, browse 4SIGHT’s blog for related topics such as developing requirements, implementing metrics and improvement programs, and managing change in your organization.