How far software can help you in managing transportation costs and optimise delivery time/cost?

Ever increasing customer expectations, supply chain becoming more and more complex driven by globalization, increased volatility and shrinking margins have put much higher pressure on managing your shipping costs and time. This, when combines with shortages of drivers, trucks, railcars, ocean slots, ports and escalating fuel costs, becomes a nightmare for a supply chain executive.
A lot of organizations have already embraced technology to get better visibility into their transportation budget and operations. It has helped them in keeping the transportation costs checked and manage consolidation & globalization of outsourcing suppliers. But, the question I raised in one of the recent discussions at a supply chain forum, that how far software alone can help you in this regard? Is the software enough to take out of all operational issues or you will need to transform the practices also in your organizations to reach the goal? Of course, there are no prizes for guessing that both the approaches are required but what should take precedence? Can there be strategy around this?
While, the software will promise a lot like providing logistical processes control and visibility, optimising planning cycles using real time data, shortening of time duration of planning and fast adapting to changing regulations but most of the promises will hover around your capability to exploit the software using process discipline and providing right data set as the input to the software. For example, one of the CIOs shared that they deployed the best available solution for transportation management but still there was no improvement in on-time deliveries (in-fact it went down for first 3 months) or hardly any improvement in load optimization. After lot of drill down, they found that the sales team was not following any process for entering orders – means they used to keep on entering orders in the ERP but lot of these orders were not to be fulfilled ultimately. It means, there were a large number of cancellations in reality and these were not flowing to ERP and hence the transportation management solution was planning for those orders also which were not to be shipped. Due to this, the logistics team had to do lot of rework in re-planning after taking out the orders manually and the results of load optimization were also impacted. The sales team was adamant that they will not change their process just to meet process of the software and kept on working the same way. Normally, the CEOs will never bother much about the software and will always thing that it is the job of the IT Team to ensure the software works as per business needs and this organization was no different. Without looking at the reality, and not listening to the CIO, the CEO branded the software solution as useless and a liability. It is at this time, that the CIO had to escalate even beyond CEO and a consulting company was hired to really clear the mess.
After spending 3 months and consuming lot of organization’s resources and money, the consulting company gave the same recommendations and sales team had to change the process in such a way that they will cancel the orders which are actually cancelled by customers and rest of the orders which are not fulfilled even after 2 months, will be cancelled by ERP itself. The results after this change were humungous. Within 4 months, the on-time deliveries were improved by 14%, they were able to reduce number of planners by 20% and allocated them to other areas, cost per tonne got reduced between 10 – 15% and host of other non-tangible benefits were achieved. The software is same but a small tweak in process became a game changer for them.
It may not be the case with all of us but the point that came out of this story was software alone can do nothing – it will only provide you capabilities to do certain automations and bring visibility but ensuring that input going to the software is as good as the software, will bring the desired change.

Do you have a roadmap to kill your ERP or you are happily married to it?

If you were doing an IT Job in early and mid-1990s, you would remember the Euphoria around ERP systems. Almost every organization wanted to implement an ERP system so that they have an integrated view of their processes, business applications and financial data. Lot of organizations, consultancies as well as product companies benefitted during that phase of ERP implementations across the globe with US leading the way and Europe not far behind. Especially consulting organizations had a windfall of revenue just because they could package their services along-with Business Process Reengineering and ERP product implementation capabilities which included customization abilities too. Customization became a new tool to make money by consultants and the cost of customization and support for an ERP project started going through the roof sometimes hitting 5 times the size of implementation fees.
ERP has come full circle in last 20-25 years and realization in client organizations as well as ERP product organizations, that customization is not the right way to go, started bringing changes in the solution and the way it was used. ERPs now became liabilities instead of assets because of inabilities to peacefully upgrade or take advantage of a new functionality in product as some or other customization is blocking it to be used in some or other way. The product organizations started a new trend of cloud with leaders like Oracle and SAP leading the pack by introducing products like Fusion Applications or Line of Business SaaS respectively.   The new age is talking only about Cloud based ERPs (mainly Software as a Service Model) and the old guard is expected to give way. The ERP (on premise model) has started dying as all incremental applications have already started moving to Cloud which will be followed by the core business processes also making their way out of organization owned data centres.
Are you ready to KILL ERP?
If you are a services organization, it is highly likely that you already have a plan to kill existing ERP and move to cloud (do you?) but if you are a manufacturing company or a trading organization that deals with mainly products and assets, you still are waiting for others to take the plunge first. It is expected that there will be around 8-10 years difference in ERP life at services organizations and manufacturing organizations as ERPs traditionally have done a good job in mapping the processes and delivering results for a manufacturing company rather than a services company, but the end is near for sure.
The big questions are: Are you ready? What is your plan? Are you still struggling to fix business analytics reports based on ERP because of data integrity issues or have started thinking to move to state of the art best in breed applications on cloud that that have their own analytics capabilities?
Is it really the time to shed your love for existing ERP that you implemented, nurtured and supported all these years or it is time to move on and take on new challenges so that your organization can be early mover and can take a competitive advantage using new technology?

ERP Implementation - What is expected from you?

Often, I have seen discussions happening between the business users, the implementation partner and the IT Team in an organization on who will do what and this becomes one of the bottlenecks in success of a project. Lately, when I was addressing a CIO Conference on the subject of transforming business with the help of ERP and advanced ERP products implementation, this question popped up again and forced me to try and document expectations from each team so that it can work as working standard for the organizations as well as IT vendors.  I will be publishing my understanding of expectations from each team in the next series of posts as I think I have the requisite experience and exposure to ERP implementations in all roles viz. Business User, IT Consultant as well as a CIO across the globe and in multiple industries. To start-with, let me try to put together the expectations (in-fact I would like to mention small activities also which the other two teams expect from the 3rd team) from the IT Team of the organization which is implementing an ERP Solution. I have divided the expectations in 3 major sections that are given below:

Pre-Implementation Expectations from IT Team:
  • Finalize broad scope of work, create and float RFP to potential partners
  • Select product and its fitment into existing architecture, footprint, industry and solution
  • Evaluate Vendor proposals on technical competence, past experience and commercials
  • Arrange executive sponsorship, drive steering committee creation in the organization
  • Drive creation of core user group from all stakeholder teams in the organization
  • Arrange for logistics like sitting area of core users, implementation partner team, desktops, phones etc.
  • Decide on project plan, major milestones and key success factors with steering committee 
  • Plan for Application Instance Strategy (Development, Test etc.)
During Implementation Expectations from IT Team:
  • Organize business users and implementation partner teams interactions
  • Drive sign-offs from business on requirements and other major project milestones
  • Monitor project success vis-à-vis project plan
  • Arrange all requisite IT infrastructure for the project
  • Decide on data upload strategy (how much data, from which systems, by when etc.)
  • Extract data from legacy systems and arrange cleaning by core user team
  • Provide inputs on solution fitment into existing solution
  • Provide inputs on key design elements
  • Approve/Reject Customization(s) suggested by implementation vendor
  • Freeze requirements
  • Arrange business users participation during key milestones like Solution Design & Demonstration, Testing etc.
  • Arrange training for core team users by implementation partners
  • Ensure proper staffing of resources by implementation partner
  • Arrange steering committee meetings for project health check regularly
  • Ensure core team users impart training to other intended users
  • Drive change management steps in the organization for faster acceptance of new application
  • Plan production cutover testing and planned downtime as per application instance strategy
  • Review key success factors delivery by implementation partner
  • Take final sign-offs from core team for going LIVE
  • Drive steering committee for GO LIVE readiness decision
Post Implementation Expectations from IT Team:
  • Hand hold business users to run the new system for first month
  • Set-up central help desk for post implementation related issues and queries
  • Monitor and resolve any IT infrastructural related issues
  • Handle change management issues with the help of steering committee
  • Arrange short refresher trainings for end users to reduce mistakes in new application
  • Ensure proper documentation of project is provided by implementation partner
  • Ensure complete and proper knowledge transfer from implementation partner to application support team

If I can get valuable inputs from readers, I would like to add/delete/modify to these working standards do that it really becomes useful tool for the organizations and vendors alike and helps in making ERP Projects more successful for all stakeholders.