Why is it So Hard to Realize the Business Benefits of Supply Chain Planning?
A Three-Part Series on the Characteristics, Pitfalls and Lessons Learned from Project Implementation
By Tom Chason, Principal SCMO2
In my first post, which can be found here if you have not yet read it, I painted a picture of just how complicated it really is to integrate all the business processes and platforms and resources and stakeholders that are involved in a total supply chain system. This week, I want to emphasize how, due to all this complexity, quite a number of things can go wrong. And quickly.
However, in the decades of time that I have spent involved with dozens of supply chain projects, I also realized when thinking about this topic that there is some predictable commonality between all the pitfalls associated with supply chain implementation. That’s very helpful, because it allows us to anticipate these problems in advance and if not avoid them altogether, at least be prepared to respond when they arise.
I summarize each of these common buckets of problems here in hopes of helping you also anticipate them in your design and implementation.
Ineffective Team Members
Miscalculating the importance of having a combination of good process knowledge and technical aptitude when selecting team members to participate in the process is a challenge we encounter frequently. A process is only as good as the people involved, and just as employing the wrong equipment can negatively impact a manufacturing process, involving the wrong human resources will have a negative impact on a supply chain process. Sure, it takes a highly capable platform. But the planning, execution and implementation of data into that platform also needs to be managed by highly capable people.
Overly Complex Designs
Sure, they were fun to build! But the key to elegance is simplicity. Complex problems do not always require an immensely complex design to solve them. After all, Einstein summed up the entire universe in a beautifully basic equation. Even if the complex design “works” it will often degrade over time as they are harder to scale and even more difficult to sustain. Starting with a streamlined and efficient solution from the start is crucial to long-term success.
The lack of a master data management process, or undervaluing the importance of one, completely undermines the entire effort altogether. Data needs to be collected in real time, all the time, across the entire organization, in a manner that is consistent from point to point to point. Variations in the process, or periodic data blackouts, devalues the results generated by the solution. It’s really the age-old “garbage in, garbage out” philosophy, but it is so true in supply chain planning. Without a strategy for how data will be input, the whole solution lacks integrity from the start.
Incomplete Testing and Analysis
Frequent testing and analysis, especially in the early launch of a new system, helps prove out the processes and data sets. Start by developing a test based on small master and transactional data sets to determine that forecasts are accurate and inventory levels and mix make sense. We always test and analyze a new system, and expect to get weird results. Processes are refined by testing and analysis, which ensures their accuracy moving forward. Then, ongoing dedication to a holistic analysis of results, at both a detailed and aggregate level, is important to ensuring long-term reliability. Systems change frequently, so ongoing adjustments should be expected.
The takeaway: Supply chain planning solutions often go wrong because companies do not involve the right team members, and are not fully committed to creating the right design, data collection and testing processes required to support that solution. The cheapest and quickest path is rarely the cheapest and quickest in the end.
In my final post, we will review the lessons learned from these pitfalls and explore the basic rules to follow from the start to ensure a smooth and successful implementation at the conclusion.