SUPPLY CHAIN MANAGEMENT SOFTWARE IMPLEMENTATION BEST PRACTICES
BEST PRACTICES IN SCM SOFTWARE IMPLEMENTATION
Enterprise software implementation projects can be difficult and disruptive to any organization. Business executives are understandably weary of technically complex and unwieldy projects. Many times prior experiences have shown these initiatives to be ill-defined and unable to produce the forecasted return on investment. If an SCM software implementation project is not planned and executed with precision, it will likely have the unintended but predictable effects of reducing efficiencies, decreasing visibility through the supply chain and preventing optimal delivery of goods and services. The following supply chain management software implementation best practices are designed to bring attention to key activities and avert implementation failure.
The absence of full time and dedicated project management is a recognized contributing factor to unsuccessful implementations. A Project Sponsor needs to be appointed and may be the same person who sponsored the vendor software selection. The Project Sponsor should be a senior SCM executive, or another senior executive who clearly understand SCM strategy. This person will have responsibility for selecting and overseeing the Project Manager, allocating resources, approving deliverables, coordinating with other executives, and maintaining relationships with key external stakeholders. Key external stakeholders may include trading partners, SCM partners, 3PLs and software vendors. The project manager must have the requisite skills to lead cross functional teams, work with executives of all business areas and have experience in implementing supply chain management software projects. If this person is not on staff and available full time for the project, a consultant should be engaged to fill this key role. It is important not to select a project manager based solely on a project management professional (PMP) certification. Several senior executives should interview the candidates and obtaining recommendations from prior clients is highly advisable.
To insure that the key stakeholders are in agreement with the implementation plans, the project charter from the software selection process should be reviewed in detail and updated, or a new charter developed specifically for the implementation project. An important decision is the roles and responsibilities of the application software vendor. The vendor should provide application consulting experts, subject matter experts (SME) to assist on the implementation, developers to make requested modifications to their systems and an Account Manager to coordinate the lines of communication. At this point, the team can start work on defining the project plan, milestones and deliverables.
Key supply chain implementation project deliverables are normally focused toward end results and should include the following areas.
SALES & OPERATIONAL PLANNING (S&OP)
Project deliverables include the policies, procedures and systems to evaluate and make judgments on the sales forecast, supply plans and the impact to the financial plans. The supply chain software should facilitate the analysis, planning and reporting for the periodic (usually monthly) executive meeting to approve the plan. Other considerations include the reconciliation of the approved S&OP plan with the detail sales and supply plans. As the S&OP plan is being executed, there should be a process for capturing feedback for future planning periods.
Islands of autonomous information result in different departments working from different plans. By consolidating planning with accountability for delivering “One Version of the Truth”, everyone is then working from the same playbook. To facilitate a central consolidated planning structure, the planning software will need the ability to recast plans based on different models and assumptions. Other considerations are the coordination and collaboration with marketing, supply management and other stakeholders. Primary project deliverables for consideration should include the following.
Demand Forecasting – Includes systems and procedures for capturing demand, defining forecasting models, forecasting structure, forecasting time horizons and periods, and interfacing to the sales forecast.
Sales Forecasting – Includes systems to recast and calibrate the demand forecast into a sales projection based on internal and external demand drives, and a process to incorporate judgments from the S&OP producing the final sales forecast.
Planning Demand Shaping – Leveraging analysis and planning tools that assist the Sales and Marketing Departments to evaluate options to shape and align demand with the sales forecast.
Demand Fulfillment – Includes systems to evaluate current demand needs and prioritize orders to fill and stock locations to replenish.
A key challenge is to develop processes and configure application software to effectively manage the supply of goods and materials that achieve the desired financial and service level benchmarks. This challenge includes coordinating plans for the efficient flow of products and information to meet demand requirements. Consider the following project deliverables when addressing this challenge.
Supply Network Planning (SNP) – SNP is a mid-to-long term planning tool that integrates inventory management, distribution and transportation. The planning component helps design and model supply networks, including cost, constraints, lead times and risks. Features should include sourcing and capacity optimizations (based on targeted benchmarks), good visual graphical tools, and what-if analysis.
Distribution Planning – This analysis includes planning tools to optimize inventory strategies to support the S&OP plans and should include detailed planning of product mix and inventory positioning.
Replenishment – This function includes features to support inventory requirements for demand and sales orders. Requirements include the ability to analyze the gaps between supply and sales, initiate purchase orders and maintain inventory levels.
Procurement – This is often a marketing and financial based tool that includes bid, contracts and catalog management, along with planning tools to align sourcing with demand and manage PO processing.
Project deliverables for this function include planning and management tools for supporting trading partner segmentation strategies. Other information system deliverables include trading partner collaboration, vendor compliance, contract management and trading partner value tracking. Many of these feature sets rely in part on integration with enterprise resource planning (ERP) and customer relationship management (CRM) systems.
WAREHOUSE MANAGEMENT SYSTEMS
Because of complex interfaces with trading partners, WMS requires special consideration. Even though the exchange of data between trading partners is based on industry standards, key trading partners should be included from the beginning of the SCM software implementation project and participate in end to end testing. Key implementation decisions include functionality for cross dock (flow through), central stock inventory, value added services, seasonal and temporary facilities, which tasks need automation, and which types of auto identification to support.
Implementation considerations include:
- Appointment Scheduling
- Yard Management
- Planning and Processing Inbound Trainers
- Processing Outbound Deliveries
- Quality Management Policies
- Policies and Procedures for Returns
TRANSPORTATION MANAGEMENT SYSTEM
TMS planning and project deliverables depend on the use of private fleet versus 3PLs. Both options need the systems to plan, facilitate and coordinate logistics with trading partners that operate in different time-zones. Also, TMS must have the ability to track multi-modal inbound and outbound deliveries, optimize trailer loads and optimize transportation routing. Companies that operate a private fleet will likely want to implement driver and asset management features.
Access to information is generally an overarching objective when new application systems are implemented. Therefore a determination can be made on who needs access to the different types of information, how long data needs be kept before purging, the types of reporting that is needed and what system resources IT needs to deploy. A visibility strategy should address real time execution needs (such as visibility to product flow, exception handling and constraints) and access to short term, midterm and long term plans. Once a strategy is defined, the team should work with the vendor’s SMEs and IT on how best to implement the strategy.
Shared Services are made up of the databases, business rules, process flows and web services that are common to all applications, such as managing customers, suppliers and product profiles. It is important that the project team develops the shared services specifications, and not outsource this task to the software vendor. There are many factors not on the vendor’s radar including interfaces to other systems, initial populating of files with data, developing policies and procedures, and building custom applications.
Once objectives, deliverables and project plans have been analyzed, most supply chain management software implementation can then be structured into a four phase implementation methodology.
Although the specifications are complete at this point, the stakeholders need to stay actively engaged in crafting the end product. Challenge for the Project Manager throughout the build phase will include producing a quality SCM system that achieves stated objectives while avoiding scope creep.
If your IT department does not have a QA Manager that can be dedicated to the project full time, a consultant should be retained early on in the project. Before going live, robust internal testing and thorough testing with trading partners should be conducted. If key trading partners are involved early on, they will be prepared and will understand the need and benefit for regression testing.
Old habits are hard to break. Prior to implementing a new SCM application software system, user and IT training is critical and should include all uses who will have access to the new information system. It is hard to describe or quantify the confusion that users will incur during the first week or two upon going live, however, suffice it to say there will be confusion. SMEs should be onsite and immediately available for the first few weeks to answer questions and help users learn the new software. Training on new policies, procedures and new SCM concepts is important and may be facilitated by your Human Resources (HR) department.
SME experts should document policies and procedures. The Project Manager should update and archive the project documents. All software configuration, integration and customization should be thoroughly documented and updated for continuous reference.
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