Whether you know it or not, the pandemic (or the next crisis) can free you from the legacy constraints of “we’ve always done it this way” supply planning excuses. In fact, this is perhaps the best opportunity to make the case for transformational improvement.
Even when the need to change is well understood, change is perceived as difficult and disruptive. Developing support for a new solution can often feel as challenging as the problem you’re trying to solve. This is as true in supply chain management as it is in any other part of the business, and maybe more.
Supply planning software vendors present an amazing vision of an ideal supply planning process. It’s easy to buy into the hype. For that reason, when evaluating a new supply planning software platform, a clearly articulated business case for change is vital. Convincing your leadership team which bells and whistles are important and which are not requires diligent explanation of the problem as it exists, the challenges which the new software would resolve , and plenty of honest discussion about the costs, benefits, timelines and how to deal with any mitigating factors that might encumber a successful outcome.
The problem you are trying to solve (more than likely) is firmly entrenched in the human side of the supply planning process – as everything in the forecast is assumed to be true. When it is not true, various compensating behaviors add extra lead time AND extra capacity buffers to make up for unplanned variance.
Oftentimes, most problems are not solved by technology. Poorly derived inputs and heroic but faulty assumptions place even the best systems and processes into jeopardy. Garbage in, garbage out, then expedite.
When developing a supply planning transformation business case, you will want to ensure your proposal is both succinct and deep, which seems paradoxical. In order to achieve this, a well-written executive summary that jettisons the heroic assumptions and behavior compensation for “this is how we have always done it” is of paramount importance.
Beware of Excel.
Building a business case with Excel for a new supply planning software platform is always problematic. It’s very easy to get a formula wrong which may well have a significant impact on the output. A minor tweak of input assumptions either way can have a huge impact on cash flow, inventory levels, and more. Torture numbers and they’ll confess to anything.
When possible, all business cases should avoid spreadsheet presentation. If you are evaluating a software package, ideally you would load your historical data in the same supply planning application you’d deploy. This ensures no vendor smoke and mirrors. This approach means operational, inventory, and working capital improvements are clear and the detail to support them is there. The additional advantage of this approach you can get your potential vendor to do much of the work, and if selected you can hold them to the presented results.
Aside from historical data and a forward looking simulation, a good business case will include a brief description of the problem you’re trying to solve, why the current approach creates the problem, and will make the case for your idea, topline data from any analysis you’ve completed, the pertinent timeline and costs for implementation, and finally key risks and recommendations for proceeding.
In essence, your proposal should demonstrate that you’ve done your homework and conducted all the appropriate due diligence, and your executive summary should be a clear distillation of that groundwork and the full benefit in not only operational improvement, but perhaps more importantly financial. Working capital reduction and return on capital employed are powerful metrics to include. Focus upon the outcome.
Seems easy. Too bad even the best business cases face scrutiny and skepticism. One of the best ways to demonstrate value is by understanding how your proposed initiative aligns with the business’s overall strategic direction. How does your proposal enhance or more deeply contribute to the overall vision of success throughout the organization? To illustrate this, ensure your proposal focuses heavily on tangible benefits versus some of its more abstract advantages. For instance, does your proposal improve the accuracy of your forecasting or de-risking the forecast? Does it streamline your inventory management? Quantifiable results are where the rubber meets the road for those in decision-making roles, so be sure your focus is on them.
Understanding how your case for a substantive change in supply chain management aligns with your organization’s broader vision, and how successfully you illustrate that, is what will ultimately determine if your proposal is accepted or not. Every organization functions a bit differently, and the onus is on you to ensure your proposal is crafted to your organization’s unique needs and processes, those to retain and those to revise. If you don’t, prepare to continue to accept the status quo. There is the risk of change, and the cost of retaining the status quo.
The full benefit of new methods and technologies is only realized when the organization adapts, becomes disruption resilient with people and process. De-risking the forecast – and implementing that process change – has challenges that can be addressed without financial risk.