Best-of-breed supply chain planning software is constantly being upgraded and improved to meet an ever-evolving array of needs for business today. As your business needs grow and shift over time, companies should consider new supply chain planning software every 7–10 years. This range is getting shorter over time, so in a few years it may be a shorter lifecycle. When it comes time to reconsider the planning software, there is an act of discovery and familiarization that is not unlike dating. In this courtship, there are five key points in the decision that should be avoided. Likewise (and current good blogging practices compel me), there are five things you should do in the selection process.
Do not: Focus on corner cases.
Do: Focus on differentiated requirements.
These are roughly two ends of the same continuum. Sometimes companies will focus on their most difficult business situation, i.e., the one customer who has an 8-hour service delivery requirement versus the other 98 percent or more of the sales that have a 48-hour service delivery time. If too much emphasis is given to the eight-hour service window (or other complex requirements), much of the solution’s benefits for all the other customers may be overlooked or neglected. One of the goals of a planning solution is to reduce the efforts of the planners—to allow the system to manage most issues with business rule-driven recommendations, while the human planners manage the exceptions.
It may sound like I am backtracking here on my previous point, but supply chain software selections should focus on the differentiated needs. These are not rare “corner cases” but rather are mainstream requirements for your company, but they may not necessarily be mainstream for everyone else. The importance here is to not ask a planning company to demonstrate how they perform a finished goods distribution plan, or to show how they do a best fit forecast model across multiple algorithms. These are table stakes for supply chain software companies. Focus on the items that are unique and will differentiate your contenders. For example, maybe the product portfolio has considerable turnover each year, but the company needs to plan/reserve capacity in upstream production facilities at a longer time horizon then the specifications of the finished goods are known. Asking a vendor to show how it can plan for “family level” capacity when the family member attributes are not known would be valuable to know. It is a balancing act between these requirement groups.
Do not: Focus initially on the software price.
Do: Focus on functions.
Too many times planning software purchases are oversimplified to a buy/sell transaction. The presumption is that all software is equivalent, or that the buying company has a vanilla supply chain and commercially available off-the-shelf software is as interchangeable as a tee shirt. This is fallacious thinking; worse, it distracts you from buying the best functions you need.
The first step is to focus on the functions your supply chain needs. Find the software vendors that meet the must-have requirements. Later in the process is the time to focus on the cost. (By the way, always ask for a cost in your request for proposal [RFP]; just don’t make next-step decisions based upon the responses.)
Presumably your company has a business case to improve supply chain effectiveness. Convert this to a time-phased cash flow analysis on the impact of the improvements. Understanding when and how the benefits will be achieved will then help you negotiate the final costs. With SaaS models, now software negotiations can be tailored to fit to the benefit curve. Many software vendors are willing to work with customers on crafting the costs to match with the benefits. With a strong value proposition, the return on investment will be less sensitive to the sunk cost of the software; likewise, so can you. (By the way, almost all vendors will offer to create a business case for you; however, this may not be the best idea—it may be akin to asking the wolf to take an inventory of the chickens in the henhouse.)
Do not: Overemphasize IT participation.
Do: Have the business measure usability.
Your Information Technology (IT) team is integral to the selection process. However, in too many situations the IT department either drives the selection process or wields too much influence on the outcomes. In my experience, I recommend a few items for consideration with regards to IT: (1) clearly define IT’s role in the process; (2) as a rule, IT input can eliminate a participant but should never win a selection; and (3) on demo days, host a second meeting between the vendor’s product team and your IT group without direct business involvement to perform a deeper dive into the platform and assess integration needs. These three guiding principles will give IT their due regard in the process and balance out that the business is getting what it needs and wants.
Aside from managing IT influence, software usability is often not considered and/or overlooked. The “best” tools are worthless if the planners keep using them as spreadsheet holders. Determine the value of usability in the selection process. Ask the business community to score how well they could see themselves using the tools as presented in the demonstrations.
Do not: Select the software solution based upon gut reaction.
Do: Have a transparent scoring process and mechanism.
Too often, supply chain software buyers will either decide based upon a “gut reaction” or hyper focus on a small subset of the supply chain planning solution. These types of decisions can often result in selecting the wrong tool(s) or worse, they end up selecting the correct tool(s) but because the decision was made without broad regard or in a heavy-handed manner, the company loses the benefit of including the selection process as a step in the change management and transformation.
If the goal of upgrading supply chain planning software is to enact a business transformation, then there is a great opportunity to consider the selection activities as part of the change management process. Over the course of a selection process, business stakeholders provide input to requirements and see those translated into demonstration scripts where they can review how the vendors show how they would address the key problems. A critical aspect of the selection process should be a transparent scoring process. To counter “gut reaction” decision-making, the criteria of the selection process should be broadly known and visible throughout the process. The transparency will allow the vested parties to understand the value of each step in the process—RFP response scoring, technical reviews, demos, strategic alignment, and cost. Companies often believe the transformation effort begins software implementation—the main course, let’s say—and neglect the opportunity for an appetizer.
Do not: Ask for reference contact data in the first round.
Do: Have clear and regular contact with vendors.
I always find it curious when in the first round of discovery with software vendors, companies ask for references and contacts. I get the ask for references, but to ask for names and contact data? Hmmm. Even in today’s world of PPI and enhanced fraud techniques? I always want to ask the requesting party, “if we were to win this work, would you want me to broadcast your name and contact information in every subsequent RFP I get?” Clearly, the answer would be “no”; yet even last week I received an initial finding RFP from a seemingly mature company but requesting names and contact information. In the early stages of the process, reference client names and descriptions of services/results should be sufficient.
Finally, as in a budding courtship, neglect can be disastrous to a relationship. This is important here as well. The sales folks you are dealing with have managers they must answer to, when you leave them without information, you lose their focus. A little bit of contact will go a long way to keep the interest kindled. I know this can be taxing because every time you contact a salesperson they go into sales mode—this in unavoidable. However, this is a once-every-7–10-year adventure.
There are many other dos and don’ts along this path, but these are just some of my favorites. At KPMG, we support our clients by shepherding this “courtship” process. I love taking our clients through the murky waters of the supply chain software selection process with mathematical precision. Over the last several engagements of this nature, I am confident that the best fit was selected in every case, and that it was (a) a defensible decision for all parties and (b) the choice was not what was expected when the process began.
