Humans in the Chain: Part 2 - why IT needs to learn about supply chain before selecting software
Article by Hugh Williams from Hughenden Consulting - This is the second in a three-part series for eye for transport on why overlooking the humans in the supply chain causes various initiatives to fail. This post will focus on IT’s role in selecting...
At Hughenden, we stress the importance of people and skills development in supply chain planning, so it may surprise readers that we should focus this post on software selection. However, we have been hearing reports from the field that this important process sometimes fails to include valuable input from the very people in supply chain who will rely on these systems day-to-day to meet their goals. One of the delegates in a workshop I recently chaired reported that its IT people chose some planning software, without any consultation with the supply chain team at all.
On the one hand, we have a ‘good problem’ in supply chain in that its importance is becoming much more visible. Not only through crises like the recent scandal of horse meat entering the beef supply chain, but through positive stories of supply chain directors sitting on executive leadership teams of companies like Rolls Royce or even getting the top job, as with Tesco. However, with the industry going mainstream, some IT professionals falsely assume that the industry is becoming so commoditised that selecting supply chain software is now just as straightforward as, say, selecting accounting software. Not so!
One factor making this situation worse is that incumbent ERP and enterprise software vendors are approaching IT directly with their supply chain solutions and luring them with the prospect of being able to bolt-on a supply chain module onto an existing application suite. Unfortunately, this is extremely misguided. IT might think it’s saving money, including integration costs, but it is very unlikely that the software will be fit for purpose if supply chain people aren’t involved in the decision.
To solve this, we are pushing hard to convince IT colleagues to actually sit in on supply chain meetings like the master planning meetings and the S&OP review meetings to get a better understanding of the job and how its processes work. This is very helpful because for IT people to make informed decisions on selecting the best-fit software for supply chain planning, they need to understand a much more granular level of planning detail that many vendors conveniently gloss over. For example, many older systems aren’t sophisticated enough to analyse granular data like order-line level detail, seasonality and the patterns of slow-moving, intermittent SKUs. This can result in completely useless forecasts for planners who need to take this data into account.
Depth of understanding behind vendor claims and terminology is so important because, for example, you might get a vendor who claims to support the ability to run weekly forecasts but really only divides a monthly forecast into four equal segments, completely failing to account demand fluctuations within the months. These fluctuations are vital to establishing the right stock replenishment policies that affect profitability and customer service levels.
Ironically, it’s the IT people who end up bearing some of the worst consequences for not involving supply chain people in the software evaluations. If the tool doesn’t do the job, IT ends up with more expensive ‘shelfware’ that prevents it from being able to make other purchases. The spreadsheets that IT tried to ban from the planning process start creeping back in because they wind up being the ‘least bad’ solution.
Given the strategic importance of supply chains and their ability to make or break companies today, we urge IT departments to learn from and engage their colleagues in supply chain. The market has expanded to include new applications designed to overcome some of the complex planning and data challenges that companies face today. In many cases, we find that the best-fit solution is not necessarily the one that comes with the highest price tag or the slickest marketing literature.