It's hard to imagine trying to manage all the pieces of today's sprawling supply chain without relying on information systems. And the larger and more dispersed the supply chain, the more complex the task of selecting and implementing systems appropriate to your needs.
Not very long ago, anything that involved computers was more an art form than business. The artistes involved had their own language(s), and relatively few people could translate anything they said into plain English. The technology was complex, sometimes deliberately so. Even today, customers often find there's a gap between what they believe they need and what the vendors are selling. Dr. John Maeda, a computer science expert, has said "Everything I touch doesn't work."
Fortunately, systems have gotten better and more user friendly. But buying still requires a careful review process. Whenever a change in information systems is undertaken, there is the promise of success (whether the promise comes from a vendor's representative or from the internal IT department) and the risk of failure. What is the best predictor of success? Commitment. By that we mean the dedication of the entire organization, from senior management to the hourly worker. New systems work well only when people want them to. And the best system in the world can be brought to its knees by people who don't want it to work.
There are other factors in a successful installation, of course. Information technology must be closely coordinated with operations. Ample training must be provided. The system must be thoroughly tested. And if you're purchasing the software, the right supplier must be selected.
Unfortunately, IT initiatives sometimes fail. One common cause of failure is political unrest within the user organization. Other common causes include poorly prepared specifications and insufficient education and training. Failure to manage expectations can also doom an installation; if left unchecked, "scope creep" can extend development and installation times beyond any reasonable limit. And sometimes the downfall is lastminute modifications; these are seldom done well under pressure.
That said, selecting and implementing warehousing, transportation, global trade or other logistics software need not be overwhelming. What's required is an understanding of the potential benefits and risks, and a deliberate selection process that keeps the focus squarely on business requirements, not system bells and whistles.
What's also required is a clearly stated description of requirements. That means avoiding technical jargon and describing your needs in plain English. For example, if you were creating a sample checklist describing the requirements of moving product from inbound staging to storage location, the list might include directed put-away, exception handling, updating of inventory records, confirmation of put-away and crossdocking. The technical requirements are the responsibility of IT and the software provider.
The requirements definition must consider customization. What is the ratio of standard code to customer-specific code? A 90/10 answer leads to a very different development approach than a 10/90 ratio.
Make or buy?
Once you've drawn up a list of requirements, you're ready to proceed with the software selection process. There are several decisions to make along the way. The first: should you make it or buy it?
Those who elect to write their own are often looking for greater security as well as exclusivity and the opportunity to customize the solution to highly specific operating requirements. Some choose the in-house route because they're unable to find an outside source at the right price; others because they can't find the specific skills needed from an outside supplier. It's important to keep in mind, however, that in-house development often costs more and always takes longer than buying a system. There is a high failure rate. Sometimes availability of resources is a challenge, although in recent years the use of offshore resources has been an increasingly popular option.
Those who buy (or more frequently these days, tap into systems online) do so to save time or to save money—or to provide scalability against future growth. We should note, however, that the possibility of failure does not disappear in the "buy" alternative.
If youdecide to outsource, you then face a new set of choices. For example, you must decide whether you want an enterprise system or "best of breed" software—warehouse management systems (WMS) or transportation management systems (TMS). Enterprise systems—integrated software packages that are designed to handle most of the functions of a business—have over time added increasing supply chain functionality, competing with those focused on particular segments of the supply chain such as warehouse management. At the same time, vendors of best-of-breed software have also extended their systems' scope by developing modules that can be integrated into a basic system, or purchased as a stand-alone package. These include labor management, load building optimization, warehouse simulation, slotting optimization, transportation optimization and yard management modules.
Choosing a software vendor
Once you've decided what you want and have collected proposals from vendors, it's time to sit down and assess the responses. This task may take longer than you expect, since it usually requires a team to evaluate every feature of the proposal. Be sure to allow plenty of time for sending follow-up questions to the vendors so you can make certain you completely understand their proposals.
As you consider questions to ask the prospective vendors, here are some tested examples:
- What is your primary business?
- Can you supply us with customer references?
- How much support service is programmed into your proposal?
- If things don't work out, how do we unscramble the eggs?
As you qualify vendors, there is one question that is more important than any other—and you should pose some variation of that question to both software vendors and their customers. Here's what to ask the vendors: If I handed you $500,000, how would you use it to further develop your product?
Here's what to ask a vendor's existing customers: If you could spend $500,000 on enhancements to this product, what features would you add or improve?
When you've narrowed the field to no more than three finalists, schedule demonstrations and customer site visits so you can see how all of the programs' features work. If members of your decision-making team are located in more than one city, Web conferencing can be a vital part of the demonstration.
Help is at hand
Fortunately, as the supply chain technology market has taken off, both trade associations and independent analysts have begun publishing reference guides to help prospective buyers sift through their options. Two such references are the Council of Supply Chain Management Professionals' annual software guide (www.cscmp.org) and Selecting Warehouse Software, published in 2004 by independent consultant Phil Obal (www.idii.com). Companies also have the option of retaining management consultants to guide them through the software selection process.
As you begin to narrow your choices, check to see if there are user groups for the software packages you're considering. These groups can be great sources of information both during the initial selection process and later on, as you get under way with your installation.
Managing the supply chain is essentially a straightforward business, even in the more complex global networks. Don't let systems make it complicated when it doesn't have to be. If a vendor or advisor can't explain an IT product or service in plain language and make a clear case for its benefits, consider that a red flag. Get rid of that contractor and find someone who can.
Loxo/Planzer