Recent upheavals in global supply chains and changes in consumer behavior have taxed even the most robust processes used by elite planners on top tier software. Supply chain is the new buzzword, discussed in boardrooms and in mainstream media.

For sure, it’s a great time to be in planning. We know demand planning is the backbone of our supply chain and S&OP is the nervous system that makes it function.

But many times, we fail to give it the necessary attention or perform preventative maintenance to keep our demand planning and S&OP in top condition. Knowing it’s importance and value to the organization, now is a great time to reevaluate the planning tools we use, processes we have including S&OP, and consider upgrading our own skills.

Planning Tools are Good, but…

In this post, I’d like to offer some considerations when looking at the systems, processes and people that manage our planning processes the next time you need to drive improvements.

If we aren’t maximizing the value of our current software, then what makes us think a new one will produce better results?

Too often, we think we need a new tool or the latest software. Maybe that’s true, but my experience suggests that most of us aren’t taking advantage of the functionality offered in our current tools. If we aren’t maximizing the value of our current software, then what makes us think a new one will produce better results?

Most demand planning software use the same sets of algorithms and have comparable functionality

Most demand planning software available on the market not only use the same sets of algorithms but often have comparable functionality. Comparable functionality might include the ability to allow the software to recommend a best pick model, forecast simulations, manual forecast overrides, and outlier detection.

Most of them typically use some sort of internal sources of data like order bookings or shipments and all use varying time increments for forecasting and measuring results.

However, they can differ greatly in types of data available to build models (internal, external, structured, and unstructured data), user ability to interact with the data, segmentation, metrics and even how results can be shared.

Replacing existing software with something new is expensive. The cost to replace software includes not just the initial investment of a onetime implementation fee, but also ongoing subscription fees and costs relating to ongoing training, system enhancements and maintenance.

Before making that investment, make sure users understand how to use the existing tool

Before making that investment, take the time to evaluate the current tools and make sure users understand how to use the existing tool and see if there’s additional functionality your tool offers for the business to use. You own this tool, why not first explore maximizing the value of the existing software?

Examine Your Processes Before Spending Money On New Bells & Whistles

Next, before rushing to replace that tool, evaluate your processes. Complicated or highly manual processes will undermine the efforts of even the most sophisticated software.

Replacing one software for another while continuing to use the existing complicated or inefficient processes will, at best, let us get the same (or perceived better) results faster. That may be worthwhile in the immediate future, but it won’t be long before we’re back in the same situation looking for something “new” to fix our problems.

Another way to look at it: my new software gave the appearance of fixing the issue since I got the results, I thought I wanted, faster, but it failed to address the underlying issues creating the initial problem.

Instead, we should be just as critical of our internal processes, corporate behaviors, and policies as we are to the tools currently used to drive the business. Process issues not only increase the time in our demand planning and S&OP cycles – they also impact the speed of our software and general confusion in the business.

Understanding our process and the relationships it has with our tools is a critical component in understanding if we need a new tool or perhaps, we should re-implement or change how we use the current one.

Check Your Team’s Skills Relative To Industry Standards

One last thing to consider are the skills and knowledge of our planners. We have a team of skilled forecasters but where do their skills lie? For example, they could be skilled in how our company has always done business but not really understand industry best practices or the interconnected relationships with the software.

Our forecasters could be new to forecasting or maybe even veterans loaded with industry experience, but not really understand how our organization runs its business. Just like with processes and tools, skills of our people are equally important in determining the success or failure of our demand planning and S&OP processes.

Understanding the skills of the people currently running our process, and comparing them to the skills we believe we need in those roles, can prove enlightening.

No matter where individuals on your team fall (forecast newbies to veteran planners), having your team network and collaborate with industry peers, participate in conferences and other events, and seek ongoing professional education creates better understanding and provides opportunity to improve their processes. Encourage planners to seek opportunities to learn the new skills needed, perhaps consider being certified as a CPF (Certified Professional Forecaster) with IBF!

Reinvigorate the Tool, Tweak the Process, or Upskill Your Talent?

Demand planning and S&OP are critical in the value they provide to the success of the business. As we function in this highly variable, global market, it’s imperative that we keep up with the latest software and technology available.

However, it’s equally important to keep driving process improvements and keep the knowledge and skills of our planners up to date. Improving demand planning and S&OP processes and increasing their agility is necessary to keep up with the rapidly evolving global market. Ask yourselves if it’s time to reinvigorate the tool, tweak the process, or upskill your talent.

Misty will be speaking at IBF’s Global S&OP & IBP Best Practices Conference in Chicago from June 15-17. You’ll learn the ingredients of effective planning, whether you’re just getting started or are finetuning an existing process. Early Bird Pricing now open – more details here.

Keeping up with available technology and being able to respond to the rapid changes in the market make it necessary for organizations to adopt “new” planning software including enterprise resource planning (ERP) tools.

Hours of work are put into getting approvals, securing financing, building excitement, and getting support of the organization. Once launched, it’s easy to think we’ve succeeded since we’ve passed the hurdles of approval, selection and launch. Much emotional energy has been spent discussing the frustration and failures of the old software while customizing and launching the new. Users are excited for the new software and the perceived promise it will fix all our issues or at least certain issues.

Practically speaking though, users are excited until they get through the initial honeymoon phase and now realize they must use the new tools and make changes to their daily workflow, habits and schedules.

When processes and tools have been in place for years or even decades, change can be especially challenging. As a result, the new software we’ve just launched could be in danger of being abandoned with unintentional self-sabotaging behaviors. The following details common post-launch behaviors that, if unchecked will limit the ROI of any investment in technology.

Behavior 1: Treating The Software Like A Black Box

Launching new software is both hard work and exciting. Because of this excitement, any time users discuss the results, reports and metrics produced by the new software, it gets both the praise and the blame. Conversations will typically start with “new software says…” as if the new software was to blame for the poor result or is the sole reason for success. The new software may have an issue in calculation, formula or connection, but with post launch support, these are usually quickly resolved and fixed. Unfortunately, this language continues long after any bugs and errors in the software have been corrected.

When used indiscriminately, especially for negative results, our customers distrust the new program and start longing for “the good ole days”, forgetting the issues they had before. We must give our internal stakeholders a reality check—if the software is operating correctly, it’s only providing the results of the data supplied based on the assumptions loaded, and it isn’t a mysterious black box. In other words, if you don’t like the results, there is either a data issue, or an assumption has changed and is no longer applicable.

These assumptions are more than just the forecast (although the forecast or demand plan is important) but may include other factors such as lead times, cycle time, capacity, variability, yields, bills of material, minimum order quantities or even item attributes such as case pack, cost and many others.

New software usually provides expanded capabilities and visibility to the organization. It has better algorithms, calculated assumptions like demand or supply variability and may even have additional fields not available in the primary system of record. The improvements provided by the new software typically provide solutions to the weaknesses of the old planning tools. Forgetting the new features and failing to remember or understand how they work negatively affects perception of both the new software and reputations of planner’s abilities and knowledge.

Rather than constantly saying the “new software says,” try changing terminology to “per data,” or “based on our current plan.” Both of those recognize the power within the organization to control the results rather than the new software seeming to operate independently as a black box.

Behavior 2: Training Just Once On The New Software

Users typically receive extensive training as part of their pre-launch activities. However, that is a lot of information crammed into a very short period, including how to do regular daily activities in the new system and how to use the exciting new features. Unfortunately, there’s so much data even the most tech savvy users will struggle to remember it all, let alone use it in the months post launch.

Post launch, users are busy trying to apply the new tools to their daily jobs and keep the business running. If continued post-launch support and training is offered, it’s either limited to a few super users or isn’t fully taken advantage of by the team. Failing to offer post-launch training and refreshers is a missed opportunity to help users incorporate the new tools into their daily activities and inhibits long term success.

Many a software platform has failed or been abandoned not because users aren’t willing or because it isn’t working, but because it isn’t being used to its full potential. In general, without continued support, users may find it easier to fall into old habits because it’s familiar and using new tools is time-consuming and, initially, difficult. User training including refreshers and enhancements post launch is critical to long term success and organization adoption. Continued training provides the best opportunity to maximize user abilities, process improvement and future enhancements to the new software to meet the evolving needs of the business.

Behavior 3: Failure To Celebrate Wins—Even The Little Ones

An important part of any new system launch is understanding how success is defined. Defining what success will look like pre-launch using goals and desired target results can provide the tools necessary to help change negative perceptions by reminding the organization of where we’ve been, and the improvements made. The desired targets should include a broad spectrum of goals surrounding implementation, such as hitting launch timelines, user acceptance or adoption rate, and business goals, such as KPI improvements pre vs post launch or new metrics available as a result of the new software.

While big celebrations are typically done for big milestones, it’s just as important to celebrate and provide recognition for the small everyday improvements that may not be as easy to measure such as time saved or improved process visibility. Little win celebrations in the months after go-live are big opportunities to continue to sell the new software to casual users.

Behavior 4: Measuring Success In A Vacuum & Ignoring The Complete Picture

Measuring successes—both big and small—is necessary. However, be wary of attributing too much importance to any one measure, especially any measure in isolation. For example, it would be easy to say we have more on hand inventory than last year and therefore the new software isn’t working. However, if holding more inventory meant taking advantage of opportunities with customers and making more sales, fewer stock outs, and improved service levels, then the statement more inventory equates to a failure by the new system is misleading. Yes, inventory is greater than last year, but increased inventory was necessary to meet the other goals set by the organization.

When we make big changes, it takes time to see the long-term impacts on the business. Setting appropriate expectations for what will happen post-launch helps manage expectations. Unfortunately, there will be times members of the organization will get hyper focused on a single metric. “Single metric mindedness” may be normal but making the effort to keep the focus on the broader scope and agreed upon measures of success is necessary to prevent abandonment of the new software.

Conclusion

Hyper focusing on a single measure to define success of new software, especially by those in leadership roles, is dangerous. Instead, refocus efforts by regularly reporting and celebrating results—even the little wins. This maintains focus on how much positive change was brought about by the new software as well as providing a realistic and comprehensive view of performance.

Adding consistent, frequent user support and training post launch gives the organization the best opportunity to not only take advantage of the new software but to identify any future improvements that may be needed due to the natural changes in business.

We must be especially mindful of how we speak about the new software as this positively or negatively shapes user perception. Positive speech has the potential to reap enormous rewards not only regarding longer-term adoption of the software, but also confidence in user expertise and the organization’s planning processes.

Misty will be sharing further insight into forecasting and planning at IBF’s Business Forecasting, Planning & S&OP Conference in Orlando, held from October 19-22 at the Wyndham Orlando Resort. The biggest and best event of it’s kind, it’s your opportunity to learn best practices in S&OP, demand planning and forecasting, and network and socialize in a fantastic setting. See here for details.

The special issue of the Journal of Business Forecasting, Technology in Forecasting & Planning, is now available for download. Download it here.

This special issue is designed to help you make the right investment in forecasting and planning software. It includes articles on how to define your planning software requirements and how to avoid common post-implementation pitfalls, brought to you by experienced planning leaders that have taken the journey you may be embarking on now. It also features excellent commentary on whether Artificial Intelligence should be a decision maker or decision supporter in your organization, and valuable insight into how blockchain will improve demand planning in the years to come.

Underlying all this, we have a revealing interview with Doug Laney, the creator of Infonomics, which reveals the importance of developing a data-centric culture to properly leverage new technology. I am also pleased to say we interviewed Sir Ralf Speth, the CEO of Jaguar Land Rover, who discusses JLR’s journey in Big Data and the IoT. See the full list of articles here.

IBF spoke with Jaguar Land Rover CEO, Sir Ralf Speth, about Big Data and the IoT.

Articles in this special issue:

• Planning Software – The Features You Need, What It Costs & Estimated ROI
• Blockchain – Its Role in Demand and Supply Planning
• Interview With CEO of Jaguar Land Rover, Sir Ralf Speth
• 4 Dangerous Habits That Can Lead to Abandonment of Forecasting & Planning Software
• Shimano North America’s S&OP Technology Journey
• Artificial Intelligence – Decision Maker or Supporter?
• A Primer on Probabilistic Demand Planning
• The Next Generation of Demand Management Technology
• Interview With Doug Laney, Best-Selling Author & Creator of Infonomics
• And more

Become An IBF Member & Get Full Access To The Journal

When you become an IBF member, you get the Journal of Business Forecasting delivered to your door quarterly, as well as up to $100 off all events, access to exclusive members only tutorials and workshops, access to the entire IBF knowledge library, and more. Get your membership.

In most companies, Enterprise Resource Planning (ERP) provides the informational backbone needed to manage day-to-day tasks and processes. The system connects programs from business functions (Finance, Marketing etc.) into one program that runs off one centralized database. In short, it connects different areas of a business, allowing for sharing of information, faster processes and crucially, centralized decision making. The result? Cost savings, improved forecasting in supply chain and superior strategic decision making.

ERP allows for integrated planning across the functional areas in an organization, allowing us to better meet demand with supply

ERP Is Designed To Support Modern Business Management

To understand what ERP is and does requires an understanding of how business management has evolved. Managing a large company can be done in one of two ways. One approach is to essentially decentralize the company around autonomous units. This way, each entity operates as a satellite, working independently from a sales and manufacturing standpoint and sharing products developed by the research centers. These units are not coordinated operationally or strategically. This is largely the way the companies operated prior to the standardizing initiatives that began the 1990s. The other approach to managing a large company is based on integration and coordination so that different parts of the business act as one whole, regardless of geographic location. The benefits of this are significant, but achieving it relies on successful implementation of ERP and effective change management.

Enterprise Resource Planning Software

ERP systems vary according to the vendor but typically they are intended to support functions in Finance, Manufacturing, Logistics, Sales and Marketing, and Human Resources. As demand planners, forecasters and S&OP professionals, we are interested in ERP because it allows for integrated planning across the functional areas in an organization, allowing us to better meet demand with supply. By working to the same information and having a system that allows for effective collaboration on a global scale, we can serve customer needs faster and more cost effectively. If implemented properly, ERP can:

• Reduce inventory
• Standardize manufacturing processes
• Improve visibility in order flow
• Integrate financial information and customer information
• Speed up the whole order fulfillment process

I see the evolution of ERP systems in much the same way as car models evolve. Automobile manufacturers introduce new models every year or two, making minor changes and refinements. Major changes are much less frequent, perhaps every 5 to 8 years and the same is true of ERP software. ERP vendors are constantly looking for ways to improve the functionality of their new software, so new features are often added. Many of these minor changes are designed to improve the usability of the software through a better user interface, or added features that correspond to the ‘hot’ idea of the time. Major software revisions that involve changes to the structure of the database, changes to the network, or computer hardware technologies, are made only every 3 to 5 years

Process reengineering is more difficult to achieve than the implementation of ERP computer hardware and software

Implementing ERP On A Global Scale

I was part of a multinational company with 35,000 staff and several manufacturing plants across different countries. An ERP system was implemented to manage the coordination of the manufacturing, sales and research facilities around the globe as new products were developed and introduced. Developing and deploying a new product is a complex process, requiring marketing plans and manufacturing coordination, and an ERP system facilitates this, coordinating different areas of the business to make the process as smooth as possible.

ERP Software Is Only The Start

The decision to move to an ERP system is only one part of true enterprise integration. Reengineering processes to fully utilize the integrated information support is essential. In practice, process reengineering is more difficult to achieve than the implementation of ERP computer hardware and software. Moreover, if processes are not changed to support the software, the ERP system will create additional work for people rather than less.

Global Policies For Implementing ERP Systems Are Crucial For Success

I highly recommend adopting a set of global polices that are documented and included in users’ handbooks. Create a common set of measures to guide change management across each function and location. This should contain a comprehensive set of policy activities, measures, and goals that define how manufacturing, planning and control system activities are evaluated.

Deployment of this common set of policies to all manufacturing units provides a shared vision of manufacturing excellence around the world and allows you to see which areas are doing what is required, and which need improvement. Further, processes as well as measurements and goals are also commonly based on the those defined in the policies.

Implementing new technology is straightforward compared to getting people to adapt to new roles

Golden Rules For ERP Implementation

• Ensure top management visibly supports the project at Kickoff, status meetings etc.
• Hold firm on project scope and management expectations.
• Assign ownership of deliverables to business leaders.
• Effective change management and user training is imperative.
• Have a solid, integrated project plan down to the people/task level so everyone understands their responsibilities.
• Work to critical path delivery dates and make timely decisions.
• Develop management performance objectives that are tied to savings and deliverables from the start.
• Avoid interfaces wherever possible.
• Always challenge consultants to do better than the timeline and set high expectations for the entire project team.
• Ensure knowledge transfer from consultants to internal employees.
• Document procedures and ensure they are part of end-user employee tasks.
• Whenever possible, change process before technology.
• Do not underestimate the “people change” side of the equation. Implementing new technology is straightforward compared to getting people to adapt to new roles, responsibilities and measurement systems.

How Much Can You Improve Demand Planning, Forecasting and S&OP Through ERP?

The value of ERP to a company depends to a great extent on the potential savings that can be derived from the ability to centralize information and decision making, and the synergies obtained from quick access to information from multiple functions in the company. Everything thing you do throughout this process must contribute to these fundamental ideas.

When it comes to improvements in operational performance, results vary greatly since much depends on how well the company handles the implementation process. But benefits should be gained from the elimination of redundant process, increased accuracy in information, superior processes and improved speed in responding to customers’ requirements.