Monthly Archives: July 2009

System Implementation Tips from the SSON

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Every technology implementation is a disaster waiting to happen (and many actually end up that way in practice) — and this goes double in supply chain where millions of dollars could be riding on every transaction. Success requires good project management, good change management, and eternal vigilance. And a few tips every now and again don’t hurt. Here are “ten tips for system implementation”, courtesy of the SSON.

  • Keep Focus
    Avoid scope-creep like the plague. While it’s important to keep track of good ideas that arise and, if time permits once the base implementation is complete, implement a few of them, scope-creep can kill a project within weeks of its start.
  • Optimize from the Beginning
    What’s the primary task for the system? And how do you make that task as quick and easy to do as possible?
  • Get Buy-In
    A system that no one uses isn’t useful. Make sure your users are on board with respect to utilization and training.
  • Get the Right Team for the Job
    Would you hire a plumber to wire your house? A lawyer to diagnose a health problem? So why would you hire a consumer Web 2.0 expert to implement your ERP system?
  • Don’t Forget the Users
    Once you’ve got buy in, be sure to keep them informed and involve them in important decisions. Otherwise, that buy in might disappear by the time the system goes live.
  • Beauty is Not Truth
    Usually, you have a choice, due to time and cost constraints, between a system that looks good and a system that works good. Hopefully you know how to choose the right one.
  • Don’t Be Too Rigid in the Schedule
    You never know everything when you start a project. Some phases will take longer, some phases will finish faster. Have the necessary flexibility.
  • The Budget is Golden
    While some flexibility is required where the budget is involved, you have what you have and you need to keep that in mind at all times.
  • Communicate, Communicate, Communicate
    The best way to keep your users excited is to communicate constantly, showing that you’re not forgetting them.
  • Go All the Way
    The implementation is not complete until the goal is accomplished. Which is not a live system, but a live system that does what it was supposed to do.

Agile Goes Global (in Your Supply Chain)

As noted in a recent Baseline Magazine article on “Building an Agile Organization”, agile organizations have processes and structures that enable them to know what is going on both internally and externally, as well as to provide the mechanisms needed to act quickly on that knowledge. This agility not only helps them to respond to changing market conditions, and survive tough times, but also helps them in their global expansion and global sourcing efforts.

As per a recent article in Global Services on globalization & agile, the key principles of agile, which is not just for software development anymore, provide us with the cornerstones of global sourcing. Specifically:

  • Collaboration and CooperationAgile requires a higher level of collaboration and communication across cross-functional teams than exists in an average organization. Done right, agile drives the formation of relationships, problem resolution, decision making, consistent delivery on (global sourcing) projects, and faster time-to-market than other approaches.
  • IT & Business AlignmentIterative refinement of requirements and project plans allows the stakeholders to buy into a new system or software acquisition sooner and to adapt to changes that support market conditions and trends quicker.
  • Risk MitigationWith an agile mindset, plans and proposals are analyzed for potential problems and risks sooner, allowing them to be addressed, and mitigations to be devised (and, if necessary, incorporated into a contract) before a project is completed or a contract is signed. Risk is controlled, managed, and communicated continuously.
  • Financial ManagementAgile focusses on managing project value, continuously monitoring estimated costs and expected returns, and insuring the ratio is sensible and profitable to the business.

In other words, an agile mindset goes beyond simple software selection, development, and implementation to the core of a new global sourcing strategy that allows you to be more productive and more effective in your global sourcing efforts.

What If Your Supply Chain Software Vendor Goes Bust?

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A recent article in Logistics Viewpoints, the ARC Advisory Group Blog, asked a very important question given that many of the smaller vendors in this space are not on the solid footing they once were — What If Your Supply Chain Software Vendor Goes Out Of Business?

It’s a good question, especially since you’ll be in bad shape if you haven’t negotiated perpetual rights to not only the application but the code-base if you’re using a hosted solution and the vendor goes under or if you haven’t negotiated 24/7/365 full data access if you’re using a SaaS solution with mandatory notices before ceasing of operations, as I have noted you must do on several occasions.

In the first case, unless you happen to have an A1 development team in-house who can maintain the code base and customize it to your liking with little impact to your overall IT budget (which is likely not the case for 99% of non-IT supply chain companies), you’re going to have to migrate to another solution. If you suspect your vendor is going to go bust, and see the gradual warning signs of multiple layoffs, lack of solution updates, increased turn-around time on issue resolution, lack of insight into the roadmap, and the run-around when you try to inquire into their financial health with (what’s left of) senior management, then you need to start evaluating your options. If you start early, you can analyze your options, find the best one, and develop a staged migration plan that will minimize interruption to your day-to-day operations. If you don’t, you’ll be relying on expensive third party maintenance and prayers to keep you running until you can accomplish a stressful, organizational wide, all-at-once changeover.

In the latter case, you still have to migrate to a new solution, but if you negotiated full data access in a standard format, it’s just a matter of selecting the next best SaaS solution, loading all of your data, and then hiring a third party integrator to re-create any linkages to your current applications for automatic data exchange. You’ll have extra work while you manually export and import data until the new linkages are live, but since you’ll (again) negotiate full data access and the ability to export and import what you need, when you need it, with a bit of training and documentation, the interruption to your staff’s daily routine should be moderate at most.

Why Do We Still Have The Seven Timeless Challenges of Supply Chain Management?

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A recent article in Supply Chain Digest listed “the seven timeless challenges of supply chain management”, as described by Dr. J. Paul Dittmann, the Director of the Office of Corporate Partnership at the University of Tennessee. While I have to agree that these challenges are “timeless” in that we (needlessly) see them again and again and again, I don’t understand why … since all of them are solveable with today’s technology. More specifically:

  • Too Much Product Complexity
    Most companies have too many SKUs, and, to be precise, too many underperforming SKUs. But a good “spend analysis” with a modern data analysis package, which includes profit and loss data, can easily identify these SKUs which can be phased out and eliminated when contracts end.
  • Too Much Slow-Moving and Obsolete Inventory
    While good forecasting and demand planning can never eliminate obsolete inventory, a regular “profit” analysis that factors in the carrying cost to date and current price point makes it easy to identify when it costs more to hold on to inventory than to get rid of it at a discount, making it an easy decision from a loss-prevention perspective.
  • Supply Chain Considerations Not Part of the Product Design Process
    Simply do a total cost of ownership in the design phase and your critical supply chain considerations come into play right away.
  • No Supply Chain Strategy
    This is an easy fix. Sit down and define one.
  • Ineffective Matching of Supply with Demand
    With a slew of (near) real time supply chain visibility solutions on the market, all you have to do is implement one.
  • Physical Network Problems
    There are a number of strategic sourcing decision optimization platforms on the market that can perform detailed network analysis at very reasonable price points. Get one, and if necessary, get the consulting help to do it right. A few hundred K on a network optimization project can easily save you a few million.
  • Global Issues and Outsourcing Problems
    With a number of expert niche consultancies and deal architects that are very affordable, this problem is easily solved as well.

Rub The Red From Your Bottom Line By Going Green

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Industry Week recently ran a great article on why “going green can mean less red for your bottom line”. The article quoted some great statistics from a recent Economist Intelligence Unit study that found that companies undertaking green initiatives as part of a strategy to cut costs and increase profits are

  • much stronger than their closest competitors in their ability to find and exploit new opportunities (20% compared to 11%),
  • much more profitable (24% compared to 13%), and
  • ahead in revenue growth (23% compared 11%).

In other words, green-based initiatives are twice as likely to increase your revenue, increase your profit, and increase the new opportunities available to you. In other words, going green yields more green in your pocket.

The article also pointed out a recent WSJ article that detailed an academic group’s independent confirmation that a Subaru auto plant in Indiana not only decreased solid waste by 99% but saved millions in the process by undertaking appropriately chosen green initiatives.

And the article pointed out that you don’t need to undertake massive efforts to get massive results. You can start with a series of small efforts and the collective results will yield big savings, which you can then put towards bigger efforts down the road. For example, regular maintenance on the right equipment will cut energy costs 20% to 30%. Compressed air systems are a prime example. Small part failures and minor leaks alone can increase energy utilization requirements up to 30%.

For more great ideas, see previous green category posts.