I read that the recent market plunge of nearly 1,000 points was due to what we would call in the IT world, "user error;" in other words, an error that occurs someplace between the keyboard and the chair.

It’s been reported that a trader entered a "b" for billion instead of an "m" for million in a transaction that likely involved a Dow component, which in turn triggered the plunge.

That made me think about a project I’m currently working on and some of the discussions that we’ve been having. As I mentioned in a previous post about this project, we are upgrading an old warehouse management system (WMS) to a newer version. More accurately, we are replacing the old WMS with a new WMS since the two versions have so little in common; the systems are so different that it almost feels like they are from a completely different software vendor (which they’re not).

So during "future state" design discussions for projects such as this one, one of the team members – sometimes all of them – will say, "what if ‘Bubba’ presses Enter before he remembers to Tab over to the reason code field and plug in the right value? The old version wouldn’t let "Bubba" do that!"

This is the point where we imagine – and try to proactively avert– many of these Armageddon-type scenarios that could possibly cause the walls of the DC fall in and kill us all. (Okay, maybe that’s a small exaggeration.)

As this room is filled with a bunch of smart folks, we know that we wouldn’t do such a stupid thing, but Bubba would. So we are all paying very close attention to the options where we can limit the likely Bubba-caused disasters through proper change control and training, and those options that could really trigger some major systems’ problems and require extreme human intervention to reconcile. The latter really requires us to make the option Bubba-proof.

The bottom line is that you can never make a system idiot proof. As soon as you do, up will walk an even better idiot and prove you wrong. But what we are doing is walking the fine line in trying to Bubba-proof the system as much as possible while making sure that we capture all the key components to affect proper change control.

What has Bubba done to your system lately and what did you do about it?

--David

A few posts back, I asked, "Where is that last dime?"

Now, as I’m starting a new WMS upgrade / implementation project, the question is even more timely and critical to the success of this particular project.

So here’s the background:

This company has been using one of the more well-known "Best of Breed" (or BoB) SCM software packages (see Tom’s recent post on ERP vs. BoB) since the early 2000s.

The package has been highly modified over the past several years to accommodate incremental improvements in business processes. During this time, the company also added many reports to assist in four wall DC visibility.

Fortunately, since the original implementation, the software supplier has taken great strides in increasing the core functionality of its WMS so that some (hopefully many) of the enhancements and additional reports may be able to be retired.

With that said, why is it such a challenge to continue to find other ways to lower the Total Cost of Ownership (TCO)?

Also, did I mention that this company outsources its fulfillment to a logistics service provider?

To begin with, these guys are well known for operating on very slim margins. And, they are already using engineered labor standards and performance incentives, which drive costs down and increase service levels. Not a very target-rich environment – all of the low hanging fruit has already been picked.

Here is the plan:

This is not a "find and replace" type WMS upgrade. There is very heavy integration with other systems (ERP, TMS, LMS) and homegrown reporting tools. So I intend to carefully weigh the integration alternatives, which include:

• Decoupling external systems – What can be brought into the core application and what additional integration (or re-integration) may be eliminated, along with the staff required to support those external solutions?
• Automation of reports, queries, and other output files – What business critical reports require human intervention or manipulation and can they be automated?
• New technology integration – Are there opportunities where the integration of new supply chain information technologies (e.g., voice picking, etc.) can provide a payback with either improved service level, inventory accuracy, or reduction in labor cost?
• Host order profile – Are there opportunities to work with customers to change order line quantities prior to download to the WMS that could result in more efficient picking (e.g., round up/round down to layer quantities to reduce less efficient case picking)?

Where else can I look? I’d like to know.

-- David Meyers

Photo credit: wildxplorer

Rate your collective experience with software sales reps. How honest have they been on a scale of 1-10, with 10 being absolutely honest and 1 being a total sleaze bag? Think of the used car sales rep and "We’re dealing" when you think of a 1.

In all fairness, this exercise is not intended to prove that the average software sales rep has the scruples of a politician.

Many enterprises view their key software vendors as strategic partners and the vendors’ account managers as integral to the relationship. As a general rule, I don’t believe that supply chain software firms engage in deception as a sales strategy.

The potential fallout from sub-performing implementations is just too great of a risk. Personally, I think that supply chain software reps are more honest as a category than most other sales professionals.

However, I won’t be surprised if a fair number of folks rated TV pitch ads as more believable. Some of this negativity is due to circumstances beyond the control of the salesperson.

For example, a project may go south due to poor vendor delivery or client execution. And, although the sales rep played it straight during the sales cycle, he or she may be considered guilty by association.

But I have to believe that a lot of this skepticism would come from people who felt they were sold a false bill of goods during the sales process. I have seen too many vendor proposals and responses that promised more than they could deliver.

Of course, any successful sales professional plays to win. Would you really want to buy a mission-critical application from a vendor that employed only brutally honest sales reps? I don’t think so.

Viability typically matters too much when selecting a software vendor. If a vendor isn’t willing to occasionally stretch the truth in pursuing sales, how successful will they be?

I’m not suggesting that it makes sense to seek vendors who employ pathological liars as sales representative. I’m only stating the obvious.

We expect software sales reps to aggressively spin their wares and package their message in pursuit of the ultimate prize. We realize that the truth may get twisted as part of this process.

This is why it is an accepted best practice to put structure around software selections. We document requirements, issue RFPs, rate vendor responses, conduct scripted demos, do site visits, and check references.

This helps, but it can’t guarantee complete honesty. It doesn’t eliminate the potential for over-promising and under-delivering.

At the end of the day, our selection process relies on words. And words are always open to interpretation.

We set up processes to validate vendors’ responses, but we also provide incentives that can implicitly encourage vendors to play loose with the truth.

The best we can do is to minimize the risk by doing a good job on our due diligence.

Solid contracts, project management and project teams are principle weapons to combat sub-performing projects.

But if we accept an offer that is really too good to be true during the sales process, then we have huge problems that will haunt us throughout the delivery phase.

Skepticism and disbelief cannot be the basis for any successful software procurement process. Trust must come into play as you proceed toward signing a contract.

However, trust needs to be accompanied by verification. So, how do you keep your vendors honest?

I think we all have a lot to learn in this area, so let the comments roll.

Tom

Photo credit: Emilio Labrador

All right. We’re all a good way into the economic hiccup and gearing up for the recovery.

Budgets have been cut. Locating financing for new initiatives is like searching for the leprechaun at the end of the rainbow. Forecasts and actuals are way out of whack, and many of our plans have not reached what we’d expected a couple of years ago.

We’re seeing signs that we may soon be swamped with demands to achieve volumes and service levels that meet or exceed those that we were dealing with before the downturn.

As mentioned in the last post, there is no silver bullet for across-the-board, world-class, or best-in-class transformation. But, there are some well-understood steps that can make a major difference in preparing the organization to meet the demands of the recovery and achieving a market-dominating position, depending on your current situation.

There are moves that can be made today to demonstrate a clear, positive ROI, and you can build a business case that’s sure to gain the thumbs-up from the executive suite. What we want to explore here is what these look like based on where you are today.

First off, take a step back and look at the IT that’s currently in place and perform an assessment. What IT investments have you made that either satisfied your needs or wound up short of expectation? Are there improvements that can be made or additional components that can be added to bring more cohesiveness to you supply chain or a better basis for handling the rapid changes that are right around the corner?

Let’s begin the IT assessment by looking at two areas in the supply chain IT spectrum: (1) Supply Chain Management and Planning and (2) Global Trade Management and Supply Chain Visibility.

1. Supply Chain Planning and Management (SCP/SCM)

This is the area that most often sees the largest "bang-for-the-buck" in regards to IT investment. Key areas to address for your SCP/SCM business are:

• Manufacturing (either contract or in house) – Capabilities for managing order quantities and frequencies, lead times, and relationships with manufacturers based on market competitiveness
• Inventory – Determining the best levels and positioning, especially any that impact costs and handling processes in other areas of the organization
• Product Importance/Prioritization – Meeting service levels and the organization’s overall priorities

The implementation of solutions to address these issues very often falls at the lighter end of the scale when looking at the IT wallet, but it does require a good deal of organizational coordination and acceptance. Introduction of improved IT (or better configuration of existing supply chain technology) in the area of demand forecasting, sourcing and procurement, and distributed order management, often yields return on the investment in a major way.

For some, there is little investment required as the solutions may already be installed or available on your own shelf.

2. Global Trade Management (GTM) and Supply Chain Visibility

This is another area that sees a great deal of return in a short time-frame in terms of IT investment. A bit deeper coordination (internal and external) than the SCP/SCM elements is required, because it typically involves external trading partners and the broader segments of the supply chain network.

The positive here is that the focus is on linkage and visibility in meeting existing service goals can very often be the driving business case element, more so than establishing new goals for the entire organization. Key areas for assessment and improvement include:

• Supply Chain Visibility – Are you proactive or reactive in regards to disruptions?
• Other Systems – Are you linking your GTM system (either in-house or provided by freight forwarder) to other systems for better status updates on distribution labor and transportation resources?
• Performance Expectation – What steps do you need to take to ensure freight forwarders and other trading partners are performing as expected?
• Import and Export Management Functions – Are these functions siloed, or are they being communicated with meaningful updates to the rest or the organization?
• Cash Flow – Is the cash-out to cash-in cycle capable of being shortened by improving the ability to address adjustments and by increasing the visibility of progress to satisfy demand? (By the way, cash flow, of course, is a major motivating factor for adding more effective IT solutions to address these needs.)

Time to deploy, cost to deploy, and return on the investment for these two areas are receiving a lot of attention – and rightfully so. They are the areas that provide for the coordination to address the broad needs of supply chain flexibility and setting a new standard for speed-to-market and customer service levels.

These well-aligned supply chain IT updates set a new level of competitiveness and ability to take market share. All of this can be achieved with relatively little IT spend as compared with other major supply chain initiatives.

So, finding your leprechaun (in other words, finding financing for IT initiatives) may take a little more than luck; it takes a firm business case that’s built with a solid assessment.

But, feel free to hold your rabbit’s foot or horseshoe while you’re working on it.

We’re interested in knowing your thoughts. What are you doing to prepare for supply chain IT investments? And, what would you like to know more about in this area?

Ciao for now!

Matt

Photo credit: little_frank

While our CEO and President Jim Tompkins tells us that he’s been called many things in his lifetime, one of his favorite nicknames is "the Prophet of Boom."

The name emerged due to his clear and consistent message that economic recovery is here, and he has been encouraging business leaders to "shake off the funk" and prepare for the Great Comeback.

With his positive message backed by economic evidence, no wonder he got the name "Prophet of Boom." But, so that we’re clear, I usually stick to calling him Jim.

As a supply chain system guy, when I pass along the "Great Comeback" message to folks, the question I get most often is, "What can my company do, from a Supply Chain Information Technology (SC IT) perspective, to come out of this economy in a position to beat my competition?"

That’s a great question, and the answer that I give is, "well, it depends." I’m not side-stepping the hard question, but this opens the opportunity to review the important actions that should precede any investment in SC IT.

When preparing for your company’s Comeback and SC IT needs, the first step is executing an "Environmental Assessment" and determining the impact that the global economy, domestic economy, business cycles, consumers, investors and government are having, and will have, on your business.

For the second step, do some "Competitive Intelligence" and determine where you are and what you’ve been doing as compared to your competition.

Next, set your "Comeback Expectations": When are your turning points and what is your recovery lead-time and future volumes?

After that, the next critical step is performing an "Organizational Analysis," which typically includes benchmarking your operational processes and supply chain benchmarking, and seeing how this measures up and/or how it could be improved.

It is now that you can "Define your Comeback Plan" based on the first four steps.

Now that you have the process for building your Comeback Plan, let’s talk time frame.

As a sidebar, if you are not already working on this process, you may be too late in coming out of the recession ahead of your competition. But, even if you have not begun, now is the time to start. I’ll explain this a little more in a second.

Right now, I want to stress that I am by no means arguing for the implementation of technology for technology’s sake. What I am suggesting is that you need to have a good understanding of timing for the assessment, selection, and implementation of technology that best supports the goals and objectives of your business.

OK, now that I got that off my chest, we can begin looking at the array of SC IT solutions best performing companies are using and chart that against where you are in your current state of supply chain excellence and information technology maturation.

There is no silver bullet or magic potion that will transform your organization into world class or even best-in-class, but some basic blocking and tackling will keep you on the path to success.

What are some of the basics? Well, if you’re like most of the folks that I work with, you are being held to a fairly high set of standards, as most waste and non value-added steps have already been removed from your supply chain operation and technology solution set.

Your budget has been tightened and the bar has been raised for your key performance metrics. But the thing that remains consistent is your performance being measured against budget and the successful execution of your work plan.

It is more critical than ever that you understand the present value, the return on investment, and total cost of ownership of any investment in SC IT, as well as how long it will take for you to define the requirements, select the best-fit solution and implement it effectively.

My colleagues and I have talked through some high-level estimates of how much time it takes to select and implement several key types if SC IT solutions and here is a table that summarizes our thinking.

Note that the above estimates will vary based upon your specific situation, and the costs to implement will also be subject to more a detailed analysis. IT really does depend. But the time for you to be making your plans is now.

Are you already planning your next steps? Do you agree or disagree with the estimates above? Let us know what you think.