Many Supply Chain Planning Leaders Still Rely on Spreadsheet Software
Supply chain planning (SCP) software is critical for every organization to drive growth and provide agility in a competitive and fast-paced environment, but many supply chain planning leaders still rely on basic spreadsheet software, according to Gartner, Inc. To address this challenge, Gartner has identified three steps that leaders can follow to develop a strong business case for an investment in SCP technology.
“Reducing costs and enhancing decision making are the top factors motivating organizations to invest in supply chain technology. An investment in SCP software can support the needs organizations are looking for,” said Alex Pradhan, senior principal analyst at Gartner. “However, we see that business cases for SCP software have a high risk of failure when there is a lack of clear communication of the business value to senior leadership.”
Below are three steps to set supply chain planning leaders up for success:
Define the Problem or Opportunity
One of the goals of a business case is to convince stakeholders that there is an existing problem and that it should be a strategic priority. Therefore, the key initial step must be to clearly define the problem or opportunity and explain how it impacts the overall business. “Although it may seem intuitive, this step is often overlooked,” Ms. Pradhan added. “Usually with the result that key stakeholders will not understand why an investment is needed when legacy systems provide ‘good enough’ capabilities.”
To prevent the project from failing before it started, leaders should socialize their ideas in advance with both decision makers and groups across the organization that will be impacted by the investment. “Engaging with key stakeholders early in the process makes it easier for them to understand how the initiative supports the overall business as well as the impact to their specific areas,” Ms. Pradhan said.
Align the SCP Technology with the Business Strategy and Maturity
When developing their business case, supply chain planning leaders might be tempted to suggest the technology solution with the most advanced capabilities and features. However, this approach puts the success of the business case at risk because it is not clear for the stakeholders, how the investment will support their individual goals as well as the overall business strategy. Technology and business process maturity should complement each other.
“Take an organization in the early stages of maturity that is currently using spreadsheets to create their demand plan and wants to improve its forecast. The organization should seek a supply chain planning system of record which can provide support for demand planning capabilities.” Ms. Pradhan explained. “When the organization is ready to advance to more sophisticated capabilities, for example demand-sensing, it will have established a strong foundation to support these more advanced capabilities. However, an organization that uses spreadsheets would currently not have the business process maturity to draw value from those advanced features.”
Determine Benefits, Risks and Costs
A compelling business case for SCP technology should always include credible estimates of financial outcomes and metrics to track the relevant business benefits. For example, the business case could focus on how the new technology improves forecast accuracy, which reduces inventory, improves customer service and lowers working capital.
At the same time, risks and costs must be evaluated and communicated to stakeholders. “To determine the impact of the technology, consider running a pilot. Many SCP vendors offer a variety of evaluation programs, that can help validate the financial analysis, determine the financial benefits and translate the improvement potential into financial impact, evaluate systems capabilities and track key performance indicators,” Ms. Pradhan concluded.
Gartner clients can find more information in “How to Build a Strong Business Case for Your Supply Chain Planning Technology Investment”.
About Gartner | Gartner, Inc. (NYSE: IT) is the world’s leading research and advisory company and a member of the S&P 500. We equip business leaders with indispensable insights, advice and tools to achieve their mission-critical priorities and build the successful organizations of tomorrow. Our unmatched combination of expert-led, practitioner-sourced and data-driven research steers clients toward the right decisions on the issues that matter most. We are a trusted advisor and objective resource for more than 15,000 organizations in more than 100 countries — across all major functions, in every industry and enterprise size. To learn more, visit www.gartner.com.