How to choose the right Supply Chain Execution IT vendor

Transcription

1 BEST PRACTICE How to choose the right Supply Chain Execution IT vendor A Consafe Logistics White Paper. Author: Victor Surpaceanu, Product Management

2 Index Introduction... 3 Build a strong business case... 3 Questions you need to answer:... 3 Use the business case to drive change... 4 See ROI differently... 4 Use a structured template... 4 Beware the cost of implementation... 5 Do the maths... 5 Fight for your right to prioritize... 6 Look for a partner, not a supplier... 7 Ranking vendors... 7 Seem the same?... 8 Be ready for the future... 8 What are you waiting for?... 8 Consafe Logistics contact... 9 COPYRIGHT 2014 CONSAFE LOGISTICS GROUP. 2

3 Introduction In the past decade, Supply Chain Execution has taken centre stage. It has become a key driver of organizational efficiency, visibility and enhanced customer service. As hardware and software plays an increasingly important role in your company s success, choosing the right Supply Chain Execution IT vendor becomes a make-or-break decision. How do you go about finding, evaluating and selecting the right Supply Chain IT vendor? One that has the required blend of technical expertise and real-world business know-how? These four best practices will help you avoid some of the biggest and most common mistakes companies make when choosing a partner. BEST PRACTICE 1 Build a strong business case When a Supply Chain intensive company engages a technology vendor without fully conducting and articulating the business case first, it can waste a lot of time and money. The investigation process is essential to the success of any Supply Chain IT engagement. While any change management process focuses by definition on rationalization and efficiency, there are many soft values that will impact on the success of any change. Thoroughly analysing your company s business is a critical first step. It sets the right criteria for evaluating potential vendors. Questions you need to answer: What does the process look like today? Who does what? In what order? What supporting systems are in place? Where are the bottlenecks? Where are your sweet spots? What are your KPIs? How do you perform against them? Who monitors the deviations? Why are changes necessary in your organization? Are the drivers for change internal, external or both? Is the change to catch up? Or lead the pack? Who needs to be involved/informed of the change and the reasons for it? Can business change in a radical way? Where is the potential for additional savings and earnings through services that add more or new value? What are your future KPIs? Knowing where you are today and your vision for tomorrow doesn t mean you have to create the solution yourself. To match processes with IT may not be your core business. COPYRIGHT 2014 CONSAFE LOGISTICS GROUP. 3

4 Use the business case to drive change When the vendor selection process is supported by a clearly defined business case, getting internal acceptance and commitment is easier. A thoroughly prepared business case ensures that top management gains acceptance from people further down the organisation for their choice of vendor X as the right company to partner with. As an example, a clear business case highlights the impact of service and support on operations in your part of the world. While appearing as a small detail easily overseen by top management, it can play a huge role in the operators everyday work and their attitudes to the changes. Think about what steps can you take to influence and engage your affected co-workers. Who should be part of the project? How much time and effort do you need to invest in testing and training? What internal campaigns and events will facilitate a successful go-live? If you don t have the answers, add change management experience to your vendor selection criteria. BEST PRACTICE 2 See ROI differently A proper ROI analysis gives you an understanding of your current business processes, and where and how to improve them. It will demonstrate where your savings will come from and how fast you earn back your investment. To evaluate ROI more accurately, don t base your calculations on the cost of acquisition alone. Quantify the benefits of your investment and put that against the total costs of that investment over time. In reality this could be a challenge, as some of the costs can be hidden, while some of the soft-value benefits are hard to measure. It is advisable to partner with an expert who will pinpoint the impacts these aspects will have on each part of your processes. Use a structured template Use a structured template to compile and analyse all relevant data. If you don t have such a template, put it on your requirement list. Back this up with a process study to learn how your processes branch and how they interconnect with your other business processes. Use your findings to identify areas of potential. Address and verify the potential in a workshop involving all concerned parties. The outcome is your finalized ROI calculation. COPYRIGHT 2014 CONSAFE LOGISTICS GROUP. 4

5 When you are about to deploy you are faced with immediate costs that are obvious and future costs which may be easy to overlook. For instance, operation and maintenance costs can dramatically affect the Total Cost of Ownership (TCO). Companies should take a longer-term analysis of the total cost of ownership that accounts for the entire solution lifecycle. A more accurate calculation will include post-acquisition costs such as application revisions, on-boarding costs for new users, updating the device OS, conducting backend system upgrades, purchasing new hardware, adding new back-end integration, and making changes to the mobile network. Beware the cost of implementation Two thirds of organizations underestimate the time and effort required for a back-end integration. This was highlighted in a 2012 study by Antenna Software and Vanson Bourne, a technology market research organization. In the same study, nearly half of all organizations (43%) said they needed multiple design or build cycles to achieve the desired result. Nearly one third (30%) said they needed additional management and security functionality which drove up the costs of the engagement. Do the maths This is obvious, but you d be surprised how many companies miscalculate the benefits and costs of a new Supply Chain IT system. Underestimating the benefits, or even overestimating the costs, may mean you select the wrong solution from the wrong vendor. COPYRIGHT 2014 CONSAFE LOGISTICS GROUP. 5

6 BEST PRACTICE 3 Fight for your right to prioritize Once you have a realistic idea of the costs and benefits of the proposed solution, you re ready to develop a shortlist and select your preferred vendor. When organizations don t bring enough energy to this important step, the result is a poor fit and an unsatisfactory outcome. A thorough review includes five critical dimensions: Expertise, Products, Support, Reputation and Technology: Expertise: Look for proven expertise in integrating SCM/SCE solutions with ERP and other systems. Future-proof your business by building in flexibility and the room to expand your solution as your business develops. By selecting a Supply Chain Execution IT vendor with a track record of complex system integration, you can be sure that they ll be able to keep pace with your evolving needs. Ask about the types of solutions they suggest for complex operations, such as adding a new sales channel like ecommerce, or adding automation, and why they propose those solutions. Tip! Benchmark against what they achieved in other industries that have a similar flow to you. For instance the food industry learns from consumer goods suppliers and vice versa. Why not visit the benchmarked company to see how solutions work in practice to get input into how you want to work? Products: Take a closer look at the products a potential vendor offers. Will you receive any longterm benefits from a standard solution compared to tailor-made? How and why do you rank: Modularity Upgradeability User-friendliness Access to customer portals and user groups Finally, does the vendor invest in market research to ensure their solutions stay competitive? COPYRIGHT 2014 CONSAFE LOGISTICS GROUP. 6

7 Support: Inefficient support can significantly inhibit adoption rates and functionality for a new technology, so finding an effective, responsive support partner is critical. Look for a vendor that: Offers integrated services: hardware, software, and support Has both a local presence and an international reach Guarantees a 24/7/365 response Demonstrates financial stability Reputation: What do local consultants and international analysts such as Gartner, ARC and Forrester have to say about the various vendors? Note the vendors participation at conferences, trade shows, and other industry events: are they actively sharing knowledge and demonstrating leadership? Do they contribute white papers, lead workshops, and invite people to seminars? Of course, it s a good idea to talk to the vendors past and present clients to get a first-hand account of their performance. Technology: Make sure the vendor is capable of providing the complete technology solution you need. Not every vendor will offer software, hardware, and support services in an integrated package. Some may not be able to offer the localized support you need. When evaluating the vendor s technology platform, check that it s scalable, upgradeable, customizable, and build on industry-standard, mature, proven technologies. Financial stability is a pre-requisite for futureproof solution. BEST PRACTICE 4 Look for a partner, not a supplier For today s complex and continually evolving technology requirements, your company needs a vendor with an active, partnership approach rather than a passive, supplier mentality. While a supplier simply delivers what your organization demands, a partner asks questions and is comfortable stepping into the role of a trusted advisor and technology resource within your organization. Look for a vendor that is not afraid to challenge your assumptions. Someone who brings new perspectives and real-world experience to the table, and isn t afraid to point out potential problems and present creative solutions. But look too for a vendor where you feel a click," where it feels right, where your corporate cultures match. Ranking vendors If ranking suppliers seems a daunting task, use the list below as a guide: List your requirements. Grade them from 1-10 where 10 is must have Filter the list so all your must haves are at top of the list. COPYRIGHT 2014 CONSAFE LOGISTICS GROUP. 7

8 Grade vendors using the same criteria. 10 is now top performance. Different vendors will score differently according to your various requirements. Filter each vendor so that their 10 is at the top. Compare your lists by putting them side by side. Analyse which vendor scores the highest on your must haves. They will be easy to spot since the same criteria will come first as in your requirement list, reading top down. Seem the same? If you can see no rational difference between two vendors based on your lists, then going with your emotions is probably the right way to achieve what you need. Be ready for the future In the last 10 years, technology has transformed the logistics industry in ways that few organizations could have predicted. In the next decade, the trend will intensify as Supply Chain execution technologies mature and adoption becomes more widespread. Enterprise mobility, modular warehouse management systems, and smart production logistics give your organization an advantage in a highly competitive marketplace by helping you manage costs while offering a new level of service to customers and partners. What are you waiting for? Your choice of a Supply Chain Execution IT vendor is one of the most important business decisions you ll make, and one that s integral to your business success. Making that choice based on price alone was never a good idea, but in the 21 st century, it s positively foolhardy. As the saying goes, If you think hiring a professional is expensive, wait until you hire an amateur. By taking the time to evaluate potential Supply Chain IT vendors using a broader range of criteria, and by defining the scope and business benefits of your project thoroughly, you can make a more informed decision and find a vendor that can meet your logistics and technology needs today and provide ongoing strategic guidance as your company grows and responds to new market opportunities and challenges. Good luck! COPYRIGHT 2014 CONSAFE LOGISTICS GROUP. 8

9 Supply chain Execution IT for agile companies Consafe Logistics is one of Europe's leading suppliers of Supply Chain IT, creating competitive advantages for supply chain intense companies worldwide. We design, develop and implement solutions for Production, Warehousing, Transport, Delivery and Store. Our expertise in Supply Chain Execution IT is unique and with the competitive portfolio of; software, hardware and services, our customers gains the advantage in their field. Consafe Logistics has 350 employees and helps clients in over 30 countries all over the world from our offices in Sweden, Norway, Denmark, Holland, Poland and the UK. Antalis, Arla Foods, Atlas Copco, Berggård Amundsen & Co, Berendsen, Canon, Carlsberg, DSG (Dixon Group), Dahl, DanCargo, Coop, Cloetta, Elektroskandia, Europris, Heineken, Helly Hansen, Hitachi, Jysk, Kesko Food, Mediq, Menigo, Netto, Nestlé Waters, Perfect Home, Peugeot, Qualified Logistics, Pierre Robert Group, Reining, Saint-Gobain Group, Scan, Sanistål, Schoeller Arca, Stena Line, SuperGros, Swedwood, Videojet, Würth. Contact us: Consafe Logistics AB (Headquarters) Lund, Sweden Phone Consafe Logistics A/S Skovlunde, Denmark Phone Consafe Logistics AS Kjeller, Norway Phone Consafe Logistics Ltd Shrewsbury, United Kingdom Phone +44 (0) Consafe Logistics B.V. Oudenbosch, Holland Phone Consafe Logistics Sp. z o.o. Warsaw, Poland Phone sales@pl.consafelogistics.com Contact the author: Victor Surpaceanu, Product Management Phone victor.surpaceanu@consafelogistics.com To learn more about the Consafe Logistics Group, please visit Consafe Logistics Group owned by JCE Group AB, with headquarters in Gothenburg, Sweden. Join us: COPYRIGHT 2014 CONSAFE LOGISTICS GROUP. 9