On June 21st, Gartner’s lead supply chain technology analyst, Tim Payne, led a thought-provoking Steelwedge Agility Series Webinar on re-thinking technology selection criteria for supply chain planning. In this session, he advocated that the current top two criteria often used –ability to integrate with an ERP system, and general system functionality– are not giving companies enough of an agile, competitive advantage and long term value. Instead, Tim highlighted three criteria that manufacturing companies should re-prioritize:
- Technology Architecture
- Vendor Thought Leadership and Innovation
- Application Deployment Model
Interestingly, in polling the supply chain leaders participating in the live webinar, some interesting trends emerged:
- 72% said that technology architecture is very important
- 55% felt that the most crucial part of vendor thought leadership was to allow them to be able to innovate; 35% said a clear roadmap also mattered
- 38% said they were balancing a combination of cloud and on-premise technology for planning; 17% plan to change to the cloud and 12% are already ONLY in the cloud.
Following are a few top questions from the webinar that Tim provided additional perspective on:
Q: Historically, companies typically develop process first, then follow with technology. Can today’s advanced technology actually help advance the process development and testing, too?
A: Yes. With some of the newer solutions, the way in which the process is more explicitly mapped and managed within the context of the technology solution, you can test out the process changes. We increasingly see what Gartner calls process templates within planning applications that model different processes.
Take S&OP for example, that tends to look more like a cookie cutter process approach in the lower stages of maturity. Then we’ll morph and evolve into a more company specific process as it goes up through the maturity stages for various reasons. You’re looking for a newer technology–the planning platform—for the ability to help map out those new processes and chart the differences and changes to those.
Q: What are some of the best in class tools for analyzing the 2 year-5 year horizon?
A: Modeling scenarios is key to longer term planning so tools that are good at this are key. There are two dimensions to scenarios: the ability to socialize the scenarios with the right stakeholders; and to adequately model the realities of the value chain. You need both of these capabilities to successfully do the necessary scenario work. Also, the tools need to perform the financial impact analysis of the different scenarios adequately so that you can assess the impact of the different scenarios.
Finally, the plans/scenarios have to be reviewed/approved in the context of a suitable process – so some form of process management s going to be needed.
Q: How does technology drive forecasting?
A: A few ways:
- it helps to establish a common, standardized demand planning process;
- it helps to automate the number-crunching behind a forecasting process allowing planners to focus on value-add activities;
- it helps give visibility to demand across a disperse supply chain;
- increasingly, it will help to analyze ever-increasingly large data sets to help find patterns in the data to drive improvements in forecast accuracy;
- it helps to integrate demand and supply plans together to drive a balance between the two.
Q: What are the most important KPIs to track with an S&OP Technology?
A: The KPIs will be different at the different levels of the S&OP process – BUT they will be related and interconnected. At the lower levels of the S&OP process, you want to measure the health of the supporting processes such as demand and replenishment planning. At the higher levels of the S&OP process, you want to measure the financial health of the plans you are reviewing to make sure they marry up to the longer term goals of the company – so KPIs that support an assessment of profitability, cash flow, market share etc. – these types of measures that align with the goals of the corporation.
A huge thank you to Tim for sharing his perspective! Do your planning technology priorities align to this? We’d love to hear from you.