Common Pitfalls in Supply Chain System Implementations V.B-101

Common Pitfalls in

Supply Chain System

Implementations

Common Pitfalls in Supply Chain System Implementations

Most companies go in search of the supply chain holy-grail of improvedperformance to customers, while improving efficiencies in manufacturing,inventory turns, and profitability. Billions of dollars have been spent on softwareand consulting services for improving demand planning, Inventory optimization,Sales & Operations Planning, Available-to-Promise, etc. But why do so manysupply chain implementations fail?

It’s been so many years that we have been selling, implementing, and maintainingSupply Chain Planning systems and all kind of related services around that. So wethought it would be nice to put together a document to talk about the most commonmistakes companies make in implementing their SCP systems. Now, this is not acatch-all document but hopefully it will help you avoid major pitfalls, save sometime, and money.

That being said, from both an operational or consulting perspective, there appears tobe a number of characteristics that can help you predict whether a project will besuccessful or not. Let’s see…

Common Pitfalls in Supply Chain System Implementations

Leadership, Leadership, Leadership,Plus a little teamwork

When two companies in the same industry implement the same piece of software, with the same

fundamental objectives and data, why can one do it in 4 months and the other in 18 months? It

comes down to leadership and teamwork.

Strong leaders usually have built strong functional teams. When purchasing software, they know

what to look for and have a roadmap developed on how to bring the organization, processes, and

tools together to deliver improvements. The vision and authority of upper management enables the

teams to execute and be successful in every step of the project which usually leads to a shorter

period of implementation time.

Almost all projects that affect the performance of

the supply chain processes affect the organization

globally (i.e. many stakeholders). Take the

leadership out of the equation and thecommon thread is gone. We have seen many

projects where the control of the project is left in

hands of an isolated few (usually with lower

organizational ranks) to determine what the

requirements are, locally. In that case, projects

usually take a long time because the team ends up

implementing to a different set of requirements

than when they started, and try to optimize every

little detail according to their own needs.

Naturally, leading to ridiculously long project timeframes.

Common Pitfalls in Supply Chain System Implementations

The software is not a panacea

The Pareto Principle trumps everything in determining supply chainproject success. Simply put, 80% of the value will be derived from20% of the requirements. One characteristic of projects that take avery long time is the expectation that the software will solve allproblems, including making up for some inefficient processes andorganizational structure. Remember, “software” enables the processnot the other way around.

Common Pitfalls in Supply Chain System Implementations

Data will not improve your supply chain,

In itself!

As the requirements list grows ever longer, the need tocreate and maintain ever larger amounts of data grows,accordingly. Most companies’ data quality is poor--(No…you are not the only one!). So not having goodcontrol over the scope, and lack of project focus, makesthe data gathering and cleaning task complex and timeconsuming.

Common Pitfalls in Supply Chain System Implementations

What’s more Important:

Complete Data or Accurate Data?

Complete data is far more important than accurate data. For instance, if we strive tohave accurate data you will never implement a supply chain solution – accuratedata doesn’t exist! Complete data may not be accurate but it enables youto execute a new process.

Link this with a continuous improvementmethodology and accuracy will improve, processeswill be sped-up, and organizational improvementwill occur. Data needs to be directionally correct tosupport decision making – and that is what supplychain disciplines are all about – risk mitigationand decision making.

Common Pitfalls in Supply Chain System Implementations

Spreadsheets are not a planning system

Spreadsheets are a two dimensional calculator that lead people toincorrect decision making. When a new system is in, look to eliminate thespreadsheet-dependency wherever possible. We suggest setting upcontinuous improvement forums with planners to understand what theyneed and migrate it to the system.

The last thing you want to do is spend large capital dollars on software sothat you can download a result to a spreadsheet and allow planners to redothe plan. You’ll never know if the system was giving a correct answer--andyour process speed will once again be dragged down.

Common Pitfalls in Supply Chain System Implementations

When it comes to models

more detail is not always better

The first impulse that most companies have isto try and model, as closely as possible, themanufacturing operations to the point ofindividual seconds. Instead, what theyshould be looking at is what is the level ofdetail required to get to a good solution.

The point is that randomnessexists within processes which can not bemodeled through the planning system. Forexample, why model the operation time tothe exact second when you don’t know whenthe operator is going to take a break.

Keeping the models at a higherlevel while accurately representing themanufacturing process provides a cleanerresult, and sets the right expectations.

Common Pitfalls in Supply Chain System Implementations

Consistency, Consistency, Consistency…

Consistency of theimplementation team is

critical.Implementations fail

when there is not a clearview of the design, plan,

and objectives by allmembers of the team

throughout theimplementation. In

many cases the teammake-up changes which

results in a loss ofknowledge and

confusion. This leads tolonger implementation

schedules and inextreme cases fullsolution rework.

Common Pitfalls in Supply Chain System Implementations

When Testing,

Small and Accurate is the key!

The true purpose of unit testing is often misunderstood. Unit tests should beused to prove out expected model functionality in a controlled environment.In many cases, the unit test data set contains a full download of all source data.This is very difficult to work with, and understand, if all logic is workingcorrectly.

Instead, small controlled data setsshould be used along withspecific use-cases to examinefunctionality results. This is the casefor both the model and the integration.Once everything has been thoroughly testedand accepted you should proceed tointegrated testing. This is whereprogressively larger data sets should beused. Take small steps and continue tomove forward; instead of taking a large step,then three steps backwards.

Common Pitfalls in Supply Chain System Implementations

Big Bang Approach Can Explode!!!

When looking at supply chain management, many functions are needed (Demand Planning,Inventory Optimization, Supply Chain Planning, Factory Planning, Available to Promise, etc.) tocreate an integrated supply chain. However, when it comes to implementation a big bangapproach can usually lead to disaster--since this is a complex problem, having too many movingpieces can be daunting.

A logical rollout in overlapping phases should be used.For example, Demand Management to create the demand signal, Supply Chain Planning to createdemand sourcing and the statement of supply, Available to Promise to provide real time promisedates, then fine tuning through the use of factory planning and inventory optimization.

This approach will keep the team focused, andensure the end users are not overwhelmedwith process changes that accompany thesoftware releases.

Common Pitfalls in Supply Chain System Implementations

Just because you can

It doesn’t mean you should!

Planning systems may have a number of functionalities that seem cool

at the time, but you need to ask the question are they really needed.

Just as adding too much detail in the models can lead to confusion and

false expectations, adding too much functionality can leadto confusing results and loss of control. This is not to

say that you should not use enhanced functionality, but rather it should

be closely examined during the design phase to understand what is

needed to support it and how it affects the results.

Common Pitfalls in Supply Chain System Implementations

Time in design,

pay now or pay later!

Design is without a doubt the most critical phase of any implementation.This is where the foundation is set and the plan developed to guide theimplementation effort. Just like building a house if you have a good blueprint execution is straight forward and the result is success, but if theblue print is put together in a rushed manner you only have two outcomes,either poor construction or increased schedule and cost due to rework.

The design effort should be well supported by both business and technicalusers. In many cases the effort is driven by a technical team only. Wherethis occurs, although the solution arrived at may be technically correct, itmay be of little use to the business users--and be seen as a failed attempt.

Common Pitfalls in Supply Chain System Implementations

There is no magic bullet here…

In conclusion, to cross the finish-line on a supply chain system

implementation as quickly and as successfully as possible,

remember to keep the scope small, the requirements tight, and

implement a continuous improvement methodology that expands

the software as the process and data matures. You’ll be up and

running in no time and on the path to real supply chain

improvement.

Common Pitfalls in Supply Chain System Implementations

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