29 May 3 Reasons Why Process is Still King – A Globetrotter’s Report
As we at SCM Connections have recently wrapped up an Eventful Group conference in Johannesburg, South Africa, a Gartner Supply Chain conference in Phoeniz, AZ, and prepare for SAPPHIRE NOW + ASUG in Orlando, FL, there is one theme that comes up over and over again:
Process is much more critical than technology.
There are specific forces accelerating this trend, and we’re seeing it pop up in all corners of the globe in all different conversations:
Technology is Evolving in the Cloud
Technology is becoming easier to manage, configure and support. The cloud platform revolution is changing everything we used to know about IT and supply chain. A cloud hosted solution is effortless to install and support from a client’s perspective. This allows for more time to focus on the solution and less on the servers.
The flexibility also allows for businesses to break free of system constraints such as pre-configured transactions, batch jobs, and separate reporting systems. When the tasks related to overhead in a project are reduced, the team can focus on actual business improvement using new capabilities.
In the context of SAP’s IBP solution, this means that new capabilities like simulations for S&OP, inventory optimization, and aggregate planning capabilities can be exploited for business value faster by building process with these new capabilities. The process needs to support the gaps in current business capabilities, and getting there with cloud solutions has never been faster.
Thanks to cloud computing, it is common for an 8 – 12 week standard solution or proof of concept. This is due to the ability to start the project almost immediately without focusing on the overhead involved in setting up a new technology. This format reduces friction, speeds time to value, and allows for a process focus first.
Process = ROI
Everyone is looking for a guaranteed return on their investment, and rarely does technology do that on its own in a planning context. True returns are not measured in speed of planning transactions, but at the quality of information available, and the analysis possible. These advantages will come with a process focused on integration, efficiencies and quality of data. Integration is key to a good process. The more silo-ed and disjointed the process, the more room there is for error.
This integration requires key elements that all boil down to “one source of the truth”. One demand plan, one data set, one capacity plan, one set of assumptions.
In practical terms it means the result of the consensus demand plan MUST be integrated to supply. It means the master data for BOM, routings, lot sizes, and capacity must be aligned between the S&OP process and integrated within the process flow of the decision making process.
Applications focused on integration have features that allow for this integration to be performed with ease. Features such as unified data platforms and social media integration make this requirement easier than ever to meet. However, it requires a coherent process to ensure consistency. No system can replicate the value that a process simply defined, followed, and measured.
As we delivered a workshop on “finding hidden value in your SAP solution” some of the attendees expected tips and tricks on transactions codes, buttons they’ve never used before. They were a bit surprised to see us focus on a best-in-class planning process, but that is the truth. An inclusive and integrated process with one set of the truth used as its foundational data platform has the ability to extract more value from an IT solution than any IT application ever could on its own.
Real Project Starts when the IT Project Ends
The real work on getting an increased ROI on an IT system doesn’t end when the hypercare phase is over; it only starts there. There is a recognition that this is the riskiest period of any project. The time between hypercare closure and full maturity has the potential to make or break a project’s ROI. However it is usually the one most neglected. People are tired, they are looking for closure, and some may even be seeking new roles in the company. It is at this time focus on the process must take place.
It is easy to go back to old habits, but that would reduce the overall ROI of a project. In our experience it would take about 3-6 months of stability before the project can truly be seen as closed. This requires constant support of super users, support organizations and business leadership to ensure the best practices are followed and improved upon as usage increases.
We feel so strongly about this phase of the project that we have developed an entire business to support this need. SCM Minds was developed to ensure ROI on a project by supporting best practices, measuring KPI’s and improving the business practices. Specifically this includes focus on forecast accuracy, optimization results and safety stock target verification. These business value added activities focused on the actual results that make up the return on investment, going far beyond system deliverables.
Successful projects in the near future have the ability to deliver value on a scale never before realized in previous generations of enterprise software. The development of cloud-hosted solutions, flexible configuration, and fast time to value project plans allows for a focus on process in order to deliver new capabilities that will enable value faster and more efficiently than ever. In some ways, all of this change puts the focus back on the basics more than ever. Whether planning a supply chain via a solution like IBP, spreadsheets, or even a whiteboard and a napkin, the basics still apply. Process is key to realizing any value in the supply chain, and has the potential for a higher ROI than any IT project ever could. That is the future.