Daily Archives: April 7, 2010

Want that new Supply Chain System? Avoid These Hot Buttons

A recent article over on the Harvard Business Review that chronicled eight things executives hate about IT just handed you a checklist that you can use to make sure your request for that new IT system isn’t immediately denied. All you have to do is find a system that doesn’t have any of these issues.

  1. IT Red Tape

    If your organization has an IT bureaucratic process that rivals the tax code in complexity, and approval depends on IT’s okay, you’re probably already sunk.

  2. Heavy Internal Support Requirements

    In most organizations, high level people in IT are never available and the low level tech support is overworked. Although this won’t be a show stopper, if enterprise history is that most platforms with heavy internal support requirements end up becoming shelf-ware, you’ll be fighting an up-hill battle.

  3. Fixed Process Requirements

    Your business, and the process that run it, are always changing. If it’s hard to change the workflow, that software essentially comes with an expiry date that’s not much further out than a litre of milk.

  4. Flashy Bells and Whistles

    You’re in business to make money. Flash doesn’t add to the bottom line, features do. And paying for functionality you’ll never use is one of the reasons Gartner says that eight out of ten IT dollars is “dead money”.

  5. Extensive Implementation/Integration Requirements

    Chances are there are already too many never-ending IT projects in the organization. The last thing the C-suite wants is another one.

  6. Not Forward Looking

    Organizations want to be strategic and proactive, not tactical and reactive.

  7. No Innovation Support

    Even if they don’t actually do it, everyone wants to say they’re innovative. So the platform better support innovation!

  8. High Likelihood of Bad News

    Executives know that even a successful launch is always accompanied with the inevitable onslaught of bugs, crashes, and change requests. If it looks like the number of these will be higher than usual, you’ll have a lot of eye rolling to deal with, at best.

I’m not saying finding such a solution will be easy, but if you can do it, you’ll probably get your system (provided it doesn’t cost more than the GDP of some smaller countries).

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SYSPRO: Forecasting and Inventory Optimization for Small & Mid-Sized Businesses, Part I

SYSPRO is an established ERP suite provider (that has been around for over 30 years) that also provides Forecasting, Inventory Optimization, and Warehouse Management solutions in addition to the 40+ other modules that it provides. The Inventory Optimization solution (in SYSPRO 6.1) is one of their newest offerings. It’s built on top of their solid forecasting module and provides SMBs with a good inventory management and optimization solution, especially if they are already running SYSPRO.

While SYSPRO (a Microsoft Gold Certified Partner) isn’t an Oracle or SAP, they are a fairly significant company in the mid-market with over 14K customers in 60 countries that contribute to their 300M footprint. Furthermore, their solution is built on top of the Microsoft .Net platform, integrated with the Microsoft Office suite, and easy to pick up by anyone who is familiar with Microsoft Small Business Products. In particular, if you can use Microsoft Project, you can use their products. This is an appropriate technology stack (and strategy) for most of their target market who are already using Windows and Microsoft (Back Office) Products as it minimizes the new-user learning curve.

Their forecasting solution is quite robust. (For a discussion of forecasting, see the glossary page, which also contains links to some relevant posts.) It allows you to forecast at the individual SKU level and at the product family level, which generally creates more robust long-term forecasts. The forecasting solution can take into account historical data, projected sales, promotions, current stock levels, target stock levels (by location), lead times, and policies and create a (monthly, weekly, or daily) forecast using a variety of algorithms. You can select your preferred algorithm, or let the program choose the algorithm that is the best fit given historical data patterns. The program tracks the current forecast, the draft forecast (revision) under consideration, and the suggested forecast created from the last modelling session, which you can manually alter or revise to create a new draft forecast, which will become the new forecast once approved by an administrator.

The algorithms at your disposal include competition, Holt-Winters additive, Holt-Winters multiplicative, annual seasonal profiles (smoothed and unsmoothed), mean, median, moving average, exponential smoothing (with or without trending), multi-period weighted average (six, twelve, etc.), and a few others. (A good overview of these forecasting models can be found on resample.com.) In each case, the system will generate a forecast and graphically plot it against sales for the last three relevant periods (e.g. if you were forecasting Jan to Dec 2010, it would plot Jan to Dec 2007, Jan to Dec 2008, and Jan to Dec 2009, if available), the current forecast, and the current draft forecast so that you can visually see whether the forecast is in line with historical behavior and what is currently expected. This allows you to quickly spot whether a trend might be out of whack or whether (or not) the revised forecast produces spikes in line with upcoming promotions.

The system will also generate all of the relevant statistical data, including the cumulative forecast error, mean absolute deviation, mean square deviation, mean absolute % error, and tracking signal so that you can check the calculations and understand how much confidence you should have in the result. For each algorithm, it will also allow you to alter any of the controlling parameters (and re-run the forecast at any time). (But you should only do this if you are well versed in the art of forecasting and know what you are doing. However, if you are an expert, it’s great to have all this power to run multiple what-ifs and understand the ripple effects minor deviations in sales trends have on your forecasts, which in turn can effect your optimal inventory strategy.) And, as I noted above, you can do this forecasting at the group / product family level or the individual SKU level. This allows you to quickly generate a robust group forecast and then dive in and alter only those individual SKU forecasts that need to be tweaked to take into account upcoming promotions or new seasonal trends. In addition, you can also restrict the group forecast to any meaningful combination of warehouses, stock codes, suppliers, and product classes — which gives you a lot of power and flexibility in forecast creation. And the more advanced users can set up batch forecasting runs, forecast-over-forecast comparisons, and even Pareto analyses, but this takes us into the realm of inventory optimization, which is the subject of Part II.

In other words, the SYSPRO forecasting module packs a lot of power into a relatively easy to use SMB software solution. And with SYSPRO 6.1, you now get a true Inventory Optimization Solution!

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