SUPPLY CHAIN MANAGEMENT SOFTWARE SELECTION BEST PRACTICES
BEST PRACTICES IN SCM SOFTWARE SELECTION
It is universally understood that a poor enterprise software selection will lead to a poor software implementation and to a degraded post-implementation production system. To remedy this all too common result, the top best practices in supply chain software selection are illustrated for your review.
Clearly Defined SCM Evaluations
SCM projects are usually driven by an organization’s needs to be more competitive and therefore are initiated at the highest levels of an organization. At this point, someone needs to be appointed as the owner or executive sponsor of the initiative. That person typically kicks off the project with a requirements study.
Detailed Requirements Study
Will you need a consultant to assist with the requirements definition, because of the complex and nuance requirements? SCM strategies and supporting requirements will vary based on many factors. Below are examples of three different supply chain strategies:
- The supermarket supply chain facilitates high volume, high turns, accurate forecast and low cost.
- Fast food restaurants deliver fast, cheap and predictable.
- A jewelry retailer focuses on style and the customer experience of buying jewelry.
Supply chain management practices in other industries may focus on short product life cycles, postponement strategies (to be more responsive to shifts in trends) or build-to-order. Without an in-house industry expert experienced in the nuances of SCM strategies, a consultant should be considered in order to help flush out and articulate a detailed strategy with supporting requirements.
Business Strategy and Vision – Documenting the strategic reasons for the SCM initiative is good starting point for putting together a business strategy and vision. Examples of reasons driving the new initiative could be improving financial performance, growing market share, supporting a new line of products, an acquisition or moving manufacturing off shore. Changes to the business such as process flows and new functions should be documented along with the expected improvements.
SCM Model – Starting with a Key-Stakeholder-Analysis that includes individual areas of strengths and areas of interest helps to establish a plan for collecting critical information for formulating the requirements. A detailed evaluation of what drives demand and what constrains demand (such as value, suppliers, products, competition, channel partners and regulations) is critical. Workshops or brainstorming sessions are another tool to formulate requirements. At this point, it can be highly advisable to look outside the organization for new ideas and to externally validate the SCM model and requirements.
Budget Authority – Approval for a budget and a commitment of organizational resources should be reviewed and approved.
A project charter establishes the framework for the Project Manager and project team. The software vendor selection project charter should include key and salient information such as project team, stakeholders, objectives, requirements (from the requirements study) and scope. To start formulating the big picture, the charter should be written to address both the selection and implementation of SCM application software; the charter should be considered a living document and can be revisited at anytime for review and updates.
The software selection project team should get training on modern SCM software systems. Between the Project Manager and outside consultants, there should be a large enough pool of industry knowledge to cover the basics. Software demos and site visits to companies that have already implemented SCM systems is another good training tool.
Kicking off the research with an initial presentation of features from the different vendors can be a valuable educational tool to update the team on state of art SCM systems.
Collecting detailed data for each software application solution and organizing the data by categorized and weighted requirements is critical to the evaluation and system selection process. At some point, the team needs to decide which application software approach will best serve the company's interest: Best of Breed or Single Integrated System approach. Supply chain management software vendors are continuously expanding their line of products thereby making the single integrated approach a more viable option that was historically often not available. A third approach to consider is whether to use one vendor for supply chain execution (SCE) and another vendor for supply chain planning (SCP). A Gap Analysis based on key requirements, will complete the initial vendor research. At this point, it might make sense to narrow the list of vendors.
Ground rules for vendor presentations should be firmly established by the project team. After each software vendor presentation, team meetings should be immediately held to discuss pros, cons and items not addressed in the presentation. After each presentation, a follow-up call may be needed with the vendor for clarification on any open issues.
The first step in software vendor selection is to eliminate the suppliers that most everyone agrees are not their first or second choice. The team should revisit the Gap Analysis to provoke constructive dialog towards a consensus on which vendor to select. A weighting should be given to each requirement from “must have” to “can live without” and a more subjective value may be given to further describe how well each software supplier meets key requirements. A To-Do-List can be started in order to carry ideas into the software implementation phase. If a weighted scoring or consensus does not clearly suggest a front runner, consider group consensus to the point of reaching a super majority. As a last resort, two vendors can be selected for either follow-on software demos or a Conference Room Pilot (CRP).
Conference Room Pilot
The conference room pilot (CRP) validates the evaluation and purchase decision and identifies implementation planning while surfacing implementation issues. Using a demonstration version of the vendor’s application software, the project team takes a simulated walk through all the key processes. As issues come up, potential resolutions are crafted and documented.
A CRP sponsor, without a vested interest in the outcome, needs to be chosen. The sponsor develops the CRP plan and processes including the structure for conducting the CRP meetings, the objectives for each test process, equipment and facilities, IT support and scoring rules. The CRP sponsor will solicit the help of subject matter experts (SME) to define the key SCM process scenarios based on the SCM model and requirements. For each vendor, CRP schedules are set.
Develop Process Scenarios
For each processing scenario, the assigned SMEs will diagram current business process flows as well as the To-Be flows. The transaction-based diagrams should have a representation of both product and data flows. Relevant collateral information supporting the diagrams should also be included.
The project team is walked through each business process cycle. Open issues are catalogued and appropriately documented. Depending on amount of time available and the interest at the group level, the issues can be addressed during the CRP or a meeting can be scheduled after the CRP to address all open issues together.
Open issues not satisfactorily resolved during the CRP are updated as implementation issues.
FINALIZE VENDOR SELECTION
The CIO should be a key stakeholder and experienced in negotiation with enterprise software vendors. If this is not the case, retaining outside consulting help can pay for itself multiple times over. The CIO should be involved early on in the selection and take the lead role in negotiating terms such as implementation support, service level agreements, licenses and maintenance fees, and access to source code.
The project requirements and project charter documentation should be maintained, reviewed and updated with approval for any changes. An implementation schedule can now be be initiated and reviewed at a high level for reasonableness. Taking the implementation schedule further generally begin the implementation planning process.
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