Should ERP & Related Supply Chain Technologies Be a Priority?

ERP and related technologies should only be a priority if you want to grow and succeed for decades to come. By utilizing ERP and supply chain technologies, you’ll maximize your efficiency and drive customer satisfaction. If not, it will be the same as if you said you wanted to stick with the horse and buggy instead of leaping into a Ford.

To put this into perspective, according to Deloitte Insights (from 20220), manufacturers’ average IT budget as a percentage of revenue is 2.14%. Of course, it depends on whether you are small or large, but the ballpark remains valid. If focused on ERP (as a modern ERP system is vital to success), a rule of thumb is that you’ll spend 5-7% of revenue (for the full project price and implementation cost). How do these compare with your budgets?

Why Should ERP & Related Technologies be a Priority?

The future will be for those who are innovating and using technological advances. Manufacturers and distributors are navigating a mountain of geopolitical, natural resource and rare earth issues in addition to navigating interest rate impacts and a host of other economic challenges that create negative headwinds on preparing for profitable growth and contributing to key financial indicators. Instead of pushing a boulder uphill, it makes sense to look for new solutions and strategies to solve old issues. One of these strategies is to maximize the power of ERP and related technologies.

Will my ERP System Suffice?

Of course, the answer to whether you should upgrade your ERP system is that “it depends”. Upgrading your ERP system isn’t for the faint of heart. 80% fail to achieve the intended results. Yet having a modern ERP system that supports your needs is absolutely essential to support growth plans.

No matter your situation, you can start immediately by better leveraging your underutilized asset. In almost 20 years of consulting, I’ve yet to find a client that couldn’t better utilize their ERP system to attain bottom line business results. Read our comprehensive article to find out how – The MacGyver Approach: Leveraging Your Underutilized ERP Asset. For example, an aerospace manufacturing client was struggling to provide high service levels to their customers while dramatically reducing their inventory levels with a wide breadth of products to support their growth goals. In addition to process improvements and common goals, a key ingredient to success was leveraging additional ERP functionality to improve their production and inventory planning processes across their production facilities.

However, as customer expectations have increased, supply chains have become increasingly complex, and margins have been squeezed with rising costs, having a modern ERP system is the only viable path forward for sustainable success. How do you know if your ERP system will suffice and whether an upgrade should be a priority? Read our article on find out the answer. If you determine you should modernize your ERP system, check out our guide for selection and implementation success.

What Technologies are Required to Support Success?

Again, of course, the answer is “it depends”. With that said, the answer is NOT that you can afford to sit still. What is absolutely clear is that only manufacturers and distributors that pursue advanced technologies will thrive in today’s volatile and complex age.

There are countless technologies that might be appropriate. No client should pursue all of them. If everything is a priority, nothing is a priority. The key is to review your growth plans and assess your SIOP (Sales Inventory Operations Planning) process results to set your technology priorities. A few of these technologies that pop to mind include:

• Robotics: Almost every client is testing, trialing or using robots. There has been controversy over people vs robots in some circles although manufacturers are flipping that equation to people and robots. Read examples in our article, People vs Robots. It doesn’t make sense in every situation. In fact, one equipment manufacturing client chose not to pursue a specific robot because it didn’t provide a return on investment and slowed down the process after thorough testing. On the other hand, another client continues to add welding robots which automates repetitive tasks.
• Artificial intelligence: Demand planning, also known as sales forecasting, is important for every company, and artificial intelligence can always add value to the forecast yet is especially key for hard to predict patterns such as those in consumer products industries. AI is used in countless manufacturing and supply chain technologies. Check out our recent article on AI, titled “ChatGPT & AI: Good or Bad?“.
• Predictive analytics: Business intelligence, big data, and predictive analytics are proving essential. Every ERP system can provide you with an overwhelming amount of data. The issue is sifting through the data to get meaningful information for decision making. Read our article to get strategies to turn data into insights. Taking that a step further to using your data to predict the future can give you an advantage over your competition.
• E-commerce (B2B and B2C): Consumer expectations continue to increase. After all, who doesn’t expect immediate deliveries from Amazon? What goes on behind the scenes to make that happen isn’t a no brainer. Read our articles on manufacturing opportunities in e-commerce and B2B, B2C & Associated Technology.
• Digital twins: What could be better than simulating your factory, products, your supply chain etc.? Digital twins enable better designs, planning, and much more to contribute to customer success and EBITDA growth.
• Autonomous capabilities: These capabilities are used widely in manufacturing environments to supply or move materials and components; in logistics and distribution environments to move items and in transportation and goods movement to move products.
• And many, many more such as drones, blockchain, additive manufacturing, mixed reality/ metaverse, internet of things (IoT), 5G, etc.

The Bottom Line

Jump into the world of technology. Bring on experts and deep dive into those areas that will provide significant benefits to your business. Minimally, you should test and trial the use of advanced technologies. Perhaps you’ll even combine technologies in a new way or develop a new technology to support your profitable growth.

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Modernize Your ERP System: A Guide for Selection & Implementation Success

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Lisa Anderson was quoted in SelectHub on what will be important in ERP circles in the year ahead. Read about the importance of business intelligence and ERP. “Clients have realized they need to be able to slice and dice data to quickly assess changing conditions, make directionally correct decisions rapidly to keep demand and supply aligned and get a quick handle on what’s coming so that they can be ahead of the competition and prepared for whatever is ahead. Combining BI with advanced CRM, forecasting and B2B/B2C software functionality are essential to successfully managing demand. BI with IoT, MES, WMS, TMS “and advanced planning systems are [the] cornerstone to successfully managing supply.”

“An ERP software system is often one of the most significant investments a company will make. This solution is a major financial and practical decision that can impact all parts of your business, like human resources, accounting, manufacturing, marketing and more. Before selecting a new system, buyers should research current solutions and ERP trends coming down the pipeline. … We spoke with several leaders about the upcoming ERP trends we can expect to see. Between a movement to the cloud, the internet of things (IoT), industry-specific ERP solutions and artificial intelligence (AI), the future of ERP looks brighter than ever.”

To read the full article, click here.

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Should you be rethinking your supply chain strategy? Absolutely! There is so much volatility going on in the world that you must reevaluate your supply chain.

• Should you expand your supplier base? Yes, think about diversifying geographically, ensuring backup sources of supply, reevaluate if you have enough support in friendly countries.
• Should you reshore, nearshore, friendly-shore, and produce “for the region in the region?” – Yes, in most situations, positioning close to customers in regional clusters is the name of the game to service customers and proactively position your company for success.
• Should you move suppliers? Yes, in many situations, you must reevaluate whether your suppliers will meet your needs and your customers’ needs.
• Should you advance your use of technology? Yes, there is no doubt that only those companies investing in the appropriate technology to better serve customers’ needs, improve efficiencies, and innovating will thrive.
• Should you utilize big data/ business intelligence? Yes, sifting through the overload of data to what is meaningful, incorporating it into your strategy and taking action is key.
• Should you reevaluate your inventory strategy? Yes, this should be a continual review process. Cash will be critical as we navigate inflation, recession, disruption and more.
• Should you build capacity? Yes, there will be vast opportunity to expand market share as owners retire, companies merge, firms struggle, and those that have built flexible capacity will be able to ramp up rapidly and grow.
• Should you focus on energy? Yes, energy powers the supply chain.
• Should you focus on talent? Yes, there is no doubt only the companies with talent will be thinking ahead and ready to take advantage of the opportunities.
• Should you evaluate site selection & network optimization? Yes, there are significant changes occurring and your supply chain needs to get in front of them. Why not be the disrupter? It is no longer sufficient to be resilient as changes occur.
• Should you utilize a SIOP process? Yes, assuming you’d like to stay ahead of the curve with changing conditions and leapfrog your competition, you must rollout a SIOP process to align supply and demand and constantly engage your team with an operational rhythm.

Who Should You Engage?

The supply chain is a system of systems. You are only as strong as your weakest link.

• Your core suppliers and the next few tiers of core suppliers:  Do you know who is in your end-to-end supply chain? Find out!
• Your go-forward customers: Don’t model your supply chain after a large volume customer you are losing money with on a consistent basis. Find your target customers.
• Your internal team: Involve key people in delivering a superior customer experience.
• Your colleagues: Collaborate with Finance, Sales and other key functions. Gain their input.
• Your technology partners: Utilizing the appropriate technologies will be critical, and so you need the “A” team to devise a path forward.
• Your trusted advisors: No client has the resources to accomplish objectives quickly enough. Leverage your trusted advisors (consultants, attorneys, CPAs, commercial bankers etc.). If you would like a referral, contact me.

What’s Next?

Perform a quick assessment so that you know which moves will drive the most value for your customers and your business, engage your teams and TAKE ACTION. The next few years will not be for the faint of heart. Take control of your future.

Please keep us in the loop of your situation and how we can help your organization thrive during these times of volatility and disruption. There will be more winners created than at any other time than since emerging from the Great Depression. To gain additional ideas and insights on how to best navigate these volatile times and thrive, read our new eBook Thriving in 2022. Learning from Supply Chain Chaos. Download your complimentary copy.

The post Are You Rethinking Your Supply Chain Strategy? appeared first on LMA-Consulting Group, a supply chain consulting firm.

As clients become interested in S&OP (Sales & Operations Planning), also known as SIOP (Sales, Inventory, and Operations Planning) to get in front of customer requirements while simultaneously increasing margins and profits, executives want to know if software is required to support S&OP success.

Is Software Required to Support SIOP Success?
Although the answer to this question is that “it depends”, after almost fifty successful SIOP projects with clients across multiple industries and sizes (from closely held businesses to private equity backed to large, global organizations), SIOP specific software has not been required for success.

With that said, there are benefits to using SIOP specific software products in certain situations. On a related note, ERP and related technologies are integral to success, and data is cornerstone to a successful SIOP process and results.

Is an ERP System Required to Support SIOP?
Almost every client has an ERP system. At their core, ERP systems perform the transactions required to support taking orders, purchasing materials, planning production, picking and shipping product, handling returns, and invoicing customers. As complexity and disruptions abound in the global supply chain, it is no longer sufficient to simply have an ERP system. To thrive during these volatile times, an increasing number of clients are upgrading to modern ERP systems to better support evolving customer requirements, increasing automation and efficiency needs, and predictive analytics capabilities.

In 98% of the client situations, having an ERP system is required to support SIOP success. The only reason we didn’t use 100% is that we worked with an innovative building products manufacturer still using QuickBooks Enterprise to successfully roll out a SIOP process. They were the exception to the rule as they had a CRM (customer relationship management) system and an Excel based forecasting system in place, were progressive in nature, had put process disciplines in place and were in process of selecting an ERP system. The main reason an ERP system is essential to SIOP is because you’ll need to capture demand and supply information to roll up into your SIOP process. Although at times it can prove valuable, it is NOT required (and sometimes not preferred) to use detailed transactional data. On the other hand, there is key demand and supply data stored in your ERP system that will be integral to your SIOP process.

Do You Need to Upgrade from an Outdated ERP System to a Modern ERP System to Implement SIOP?
No, you don’t need to upgrade to a modern ERP system to implement SIOP. Although you will likely improve upon your demand and supply data with a modern ERP system, we have worked with many clients with archaic systems to successfully implement SIOP and achieve results. In most of these situations, they had an ERP upgrade on their IT roadmap but didn’t want to delay progress in getting in front of their customer demand and EBITDA performance. From a SIOP point-of-view, so long as you can get data out of your ERP system, you will have what is needed to succeed.

Do You Need a CRM System to Support SIOP Success?
No, you don’t need a customer relationship management (CRM) system to support SIOP success. With that said, you need CRM type information to support SIOP success. For example, you need to gain sales and customer input to changing demand patterns, new customer opportunities, the strength of key regions and product lines, etc. So long as you can gain access to this information through verbal feedback, spreadsheets or via an extract from CRM, the SIOP process will be successful.

Many of our most successful SIOP clients have a CRM system even if they do not directly tie the CRM system data to the SIOP process. What we see is that as clients use a CRM system, they develop the appropriate process disciplines to improve upon the sales and customer input to the process. For example, a building products manufacturer captures potential business opportunities in Salesforce, but they do not tie the information directly into their SIOP process. Instead, they involve key sales leaders who interpret the CRM data, add market intelligence, and collaboratively build a sales forecast in support of the SIOP process. Results follow. On the other hand, an industrial products manufacturer uses Oracle’s CPQ/ Big Machines, and by connecting that information directly to the SIOP process, the client gained an immediate benefit of visibility to future sales.

Do You Need a Forecasting System to Support SIOP Success?
No, you don’t need a forecasting system to support SIOP success. The majority of our clients including many large, global manufacturers with several facilities across multiple countries implement SIOP successfully without having a demand planning / sales forecasting software. On the other hand, you will need a picture of future demand.

In every SIOP project, we have worked with the client to develop a demand plan. Whether high-volume make-to-stock (MTS) items or make-to-order (MTO) items such as configure-to-order (CTO) or engineer-to-order (ETO) items, you will need a demand plan. In order to look into the future to make the appropriate strategic decisions (manufacturing sourcing, capacity allocation, supply chain network, strategic inventory), you have to start with your expectations of future demand.

Many times, you can build a demand plan using an Excel model. It will be sufficient to get the process started and results occurring and can be automated and upgraded down-the-line. In other situations such as in high volume industries with complex supply chain networks, a forecasting software is recommended to best support your needs in a sustainable way; however, it won’t prevent you from getting started with a simple forecast. If your process would benefit from a forecasting system, there are many software options, ranging from the simple to the sophisticated.

Translating Your Revenue Plan into an Operational Plan
Once you have a sales forecast in dollars, the key is turning revenue projections into directionally correct unit forecasts and resulting capacity and supply plans. If using a software, it should convert from dollars to units easily. With that said, it is frequently more complex than a simple conversion factor. Thus, this translation of dollars into meaningful units is often one of the top drivers of SIOP success.

For example, a life sciences manufacturer brought us on board to specifically turn their revenue plan into a directionally correct operational plan. They could see the dollars coming in the door, but the operational leaders didn’t know how many people would be required, which skills would be needed, or which long-lead time materials to order because they couldn’t translate the demand plan into a consistent and standardized unit of measure. Thus, although they had long-term visibility to revenue, they couldn’t fulfill the revenue on a timely basis without taking on too much risk. By rolling out a demand planning process and turning dollars into standard and meaningful units of measure, they were able to quickly gain the appropriate approvals to hire the appropriate skills, reallocate resources, and purchase the equipment to support their growth plans. They aligned their demand and supply plans.

Similarly, a drone manufacturer had intense specificity with their revenue plans but they could not translate revenue into material purchases so that they could plan ahead with suppliers to secure supply with reduced cost. We worked with the client to devise a process to translate revenue into unit sales by product grouping which were translated into key materials and commodities. We were able to provide a conservative, directionally correct forecast for key suppliers so that we could gain the appropriate approval to put supplier agreements in place to support business growth with shorter lead times and significantly reduced costs.

Both clients had CRM systems although neither used CRM data directly to start the SIOP process as it would have held up progress. Instead, we used data and insights from CRM to support the development of a sales forecast/ demand plan which translated into an operational / purchase plan. It just so happens that neither client had a forecasting system. We developed a demand planning model in Excel that used information from their ERP system to support SIOP in both instances.

Do You Need a Business Intelligence (BI) Software to Support SIOP Success?
No, you don’t need a business intelligence (BI) software to support SIOP success although having business intelligence and analytic capabilities will enable success. At a minimum, you will need to be able to extract data from your ERP and related systems and combine with spreadsheets and other data. On the other hand, if you have a business intelligence system, it is likely you’ll be able to get access to the appropriate data more quickly, analyze trends and slice and dice the information as a part of SIOP to turn data into data into insights.

On the other hand, we frequently see clients get hung up in creating the ideal reporting platform, and miss the forest for the trees. As much as standardization of information and pretty charts and graphs might be a nice end state objective, delaying SIOP progress will cause more harm than benefit. The most successful clients start with directionally correct, immediately available information and continually improve upon and refine the information with changing circumstances. They summarize key highlights into a few charts and graphs using PowerPoint and bring clarity to pivotal decisions through the SIOP process and executive SIOP discussion. As advanced BI functionality can be incorporated in a meaningful way, it will be a great addition to the process.

Do You Need Supply Planning Software to Support SIOP Success?
No, you don’t need a separate supply planning software to support SIOP success. For most clients, your ERP system will support your supply planning needs. Capacity planning, production planning, distribution / replenishment planning, material planning and logistics planning are supported with ERP. In some situations, an advanced planning software is preferred to support advanced replenishment needs and/or production scheduling requirements.

Whether you implement SIOP or not, this type of software better supports service, cost and inventory objectives in certain situations. For example, a consumer goods company used an advanced planning software to reallocate orders and capacity between sites and to replenish service centers to ensure high service levels to customers. Similarly, a healthcare products manufacturer supplied its customers’ locations (vendor managed inventory) based on replenishment methods with an advanced planning software.

Do You Need Financial Planning & Analysis Software to Support SIOP Success?
No, you don’t need financial planning and analysis software to support SIOP success. Some ERP software options have robust financial planning capabilities whereas the rest will minimally provide data that can be used in Excel or with a separate financial planning software. Many clients already have add-on software modules to support financial planning, or they have set up business intelligence to support financial planning and analysis. Alternatively, they could utilize S&OP software analytic capabilities.

The Bottom Line on SIOP Software
If you research SIOP software, you’ll find several high-powered solutions rise to the top. However, in most instances, these SIOP software options will include demand planning, supply planning, advanced planning, financial planning, and related BI analytics. Thus, if you need one or more of these options or want to take your processes to the next level, it could make sense to pursue SIOP software. On the other hand, we’ve yet to find a situation where SIOP software was required to implement SIOP and gain substantial results. It is far more likely you’ll need a forecasting software or business intelligence/ reporting and analytics software to supplement your ERP system and support SIOP than anything else near-term.

Different SIOP software options have different strengths in supporting different types businesses such as high volume consumer products companies to highly configured-to-order (CTO) and engineered-to-order (ETO) environments. There are also SIOP software options which are better known for strong demand planning functionality, strong financial planning and analysis capabilities, etc. Typically, these software options will only make sense for larger companies because the implementation cost can be substantial.

For the vast majority of companies, substantial progress and dramatic results can be achieved by implementing a SIOP process, using the existing ERP system and related data. In certain situations, a peripheral software such as forecasting and/or BI would add value although will not hinder progress. However, for the right situation and company, a SIOP software can add substantial value and increase sustainability. Thus, of course, the bottom line is that “it depends”.

Data & People: Priorities for Success
Although SIOP-specific software isn’t required to roll out a SIOP process, data is critical. Thus, focusing efforts on cleansing, connecting and consolidating data should be a priority. In addition, focusing attention on your SIOP team will prove invaluable. The most successful SIOP projects have engaged teams, strong leaders, involved sponsors, and they are supported by data analysts/ technical experts. Start by paying attention to your talent and results will follow.

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Managing Increased Complexity with High OTIF & Efficiencies Using Technology

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If there is one thing in common with every client (big or small) in the current business environment which is characterized by significant volatility and uncertainty, it is the increased level of complexity of supply chains. As the old saying goes, you are only as strong as your weakest link in your supply chain! That has proven true and has led to unfettered complications in successfully navigating the current supply chain environment. In fact, it is why we are have been focused on helping clients become “the strongest link in your supply chain”.

Customers do not care about the complexities of our supply chains. They want the “right” products delivered at the “right” place at the “right” time at the “right” price. In fact, during this volatile post/emerging from pandemic timeframe, customers are laser focused on which suppliers can provide solid delivery performance as measured by high levels of OTIF (on-time-in-full) and a superior customer experience. They will give volume to customers that can deliver!

On the other hand, companies are laser focused on increasing operational efficiencies so that they can deliver to customer expectations while meeting profit objectives. Because of the significant level of supply chain disruptions and increased money supply, costs are escalating. Companies want to limit the price increases they have to pass on to customers as they will lose the business if substantially more expensive than competitors without a commensurate increase in product quality or service. Thus, there is an increased interest in increasing efficiencies, automation, and “doing more with less”.

Utilizing ERP to Improve Service & Decrease Costs

Almost every client has an ERP system; however. ERP systems perform the transactions required to support taking orders, purchasing materials, planning production, picking and shipping product, handling returns, and invoicing customers. NOT every client has a modern ERP system. In today’s world of global, complex supply chains and increasing customer requirements, advanced functionality is needed to support customers without adding armies of people to support the processes. Additionally, modern ERP systems provide additional opportunities to automate, digitize, predict what needs focus (example: predictive maintenance vs. preventative maintenance), and they enable the collection, assimilation and analysis of data for decision-making.

Performing a quick assessment of your business needs as compared with your system functionality and capabilities is a great place to start. When evaluating whether an ERP upgrade is needed to support customer and profit objectives, we recommend starting with a comprehensive yet directionally correct assessment of business process requirements. For example, when working with a control panel manufacturer, we quickly determined that their current ERP system would not meet their growth plans. Not only were they struggling with multiple add-on software options that didn’t seamlessly connect, resulting in double keying and a hodgepodge of data, but they also needed advanced functionality with customer relationship management (CRM), configure-to-order (CTO) and engineer-to-order (ETO) and related customer interfaces, and advanced reporting and analytics. Thus, an upgrade was required.

Therefore, we started a deep dive of business requirements to select the appropriate software. We talked through and observed the business process requirements that would support sales and customer relationship management, engineering design, order entry, configure-to-order, production planning, purchasing, operations, shipping, invoicing, accounting, quality control, data management, and reporting/ data analysis. Based on that, we documented business requirements and, most importantly, identified the critical success factors that were unique to their industry, company, specialized process, and /or unique system requirement. Armed with this data, we were able to develop a request for proposal, demo ERP systems, compare pricing, and decide upon the best fit system to meet their objectives for the best return on investment.

Utilizing Other Technologies to Increase OTIF, Reduce Costs & Inventory

In addition to utilizing an ERP system, to meet the increasingly complex customer requirements without adding overhead, other technologies will add value. Similarly to evaluating business requirements for ERP systems, start by evaluating your needs to support customer and profitability objectives. Some of the technologies required to support success in the current volatile and uncertain business environment are as follows:

• CRM (customer relationship management) software to proactively manage customers and potential leads
• Forecasting software to forecast customer demand
• Advanced planning software to go beyond traditional MRP and simple planning systems to better navigate complex supply chains
• Warehouse management software (WMS) and warehouse execution system (WES) to increase warehouse efficiencies and achieve fulfillment objectives
• Transportation management software (TMS) to optimize transportation planning and freight costs, lead times and service objectives
• Predictive maintenance systems (using artificial intelligence and internet of things (IoT) to predict maintenance needs to target resources
• Manufacturing execution systems (MES) to monitor manufacturing performance and tied to machines with IoT
• E-commerce systems to support B2C and robust B2B effectiveness
• Business intelligence systems (BI) to analyze data and consider what if scenarios
• Predictive analytics to take BI and data to the next level
• Blockchain although this type of software remains in an R&D phase for the majority of businesses
• Additive manufacturing/ 3D printing to print products on the fly
• Digital twins, robots, drones, RFID, autonomous vehicles, virtual reality, and more

The key is not to get caught up in fads. Start with your business requirements and determine the “right” place to invest to support your business objectives where the efforts and investment will support critical customer requirements and/or provide a significant return on investment.

Turn Data into Insights

Data is especially essential to driving OTIF and efficiency improvements. Simply tracking information in your ERP system and related technologies is not enough. It is more important to use your data to evaluate progress towards objectives and make directionally correct decisions to move the business forward. The key is to turn data into insights.

When your data analysis is achieving directionally correct results, it will make sense to take it to the next level with dashboards and slicing and dicing ability with a business intelligence solution. Once you can slice and dice data and have a dashboard available with the push of a button, consider moving on to advanced data topics such as predictive analytics. Instead of solely using data for decision-making, you can take it to the next level and predict your future so you can get ahead of the competition.

The Bottom Line

To succeed in these volatile and uncertain times, there is no doubt you’ll need a modern ERP system and related technologies to automate, digitize, meet customer expectations, accomplish more with less, and make directionally correct decisions rapidly by turning data into insights. Don’t go overboard and do everything and accomplish nothing, but get started on your journey with an assessment of your needs immediately before your competition passes you by.

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Achieving Customer Growth by Turning Data into Insights

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One issue of significant importance during the current volatile times that was also key during previous periods (aggressive growth prior to the pandemic, the downturn of the Great Recession, etc.) is the critical importance of providing a superior customer experience. It is evergreen for companies that want to grow and succeed. This metric is measured in various ways including OTIF (on-time-in-full), OTD (on-time-delivery), lead times, perfect order (no errors/ quality issues from order to invoice), easy returns, and more.

During periods of volatility, customer service becomes more challenging because customer requirements constantly change and evolve, and supply can also change and evolve. Thus, a SIOP/ S&OP (Sales and Operations Planning) process becomes essential to keep up with these changes and proactively adjust sales forecasts, production strategies, supply plans, inventory strategies, etc. If SIOP/ S&OP were cookie cutter, every client would have it in place. Instead, it should be tailored to each company’s unique situation, objectives, people, processes, systems, and data.

Data is a particularly key element for SIOP/ S&OP because cleansing, connecting, consolidating, checking, and charting data is frequently not nearly as easy as it appears. If not done properly, you will make decisions based on incorrect data. Perfection isn’t required or even encouraged; however, directionally correct results are of paramount importance. For example, an industrial manufacturing client wanted to forecast long lead-time material purchases. Unfortunately, their sales quotes (forecasts) were in one system, and their sales orders, manufacturing, and engineering specs were in a different system. The two did not connect. Additionally, there were several data integrity issues and no field in common to connect the two systems. Yet, it was critical to look into the future to avoid critical supply disruptions. They quickly started down a path to get directionally correct data for analysis and decision-making.

Cleansing Data

Every client has an overload of data. The key is whether the data is directionally correct in supporting decision-making. One of the first steps is to cleanse the data. Every client believes their data is reasonably correct until the reports compiled show strange results. Unfortunately, the key is not to overreact and cleanse every piece of data 100% before proceeding as that will likely put you WAY behind your competition. Instead, use the pareto principle. Start with the data that is most meaningful to your decision. Work with broad groups of products and cleanse with directionally correct updates. This is where the saying “garbage in, garbage out” comes into play. If you don’t cleanse your data, all you will achieve is getting garbage quicker. For example, the industrial manufacturing client had to clean up their master records (starting by focusing on the 20% that drove 80% of the volume) to make sense of their data. It would have taken years to fully cleanse data, but it took weeks to start with a pilot set of items and cleanse critical fields.

Connecting & Consolidating Data

Once your data is cleansed, it is likely you’ll have to connect your data from multiple sources, tables, or databases. It is also far more complex than it appears. If you don’t join the data properly, it will appear correct but you’ll get inaccurate results. Bringing a data analyst or systems analyst into the mix to assist in connecting data properly will go a long way. This is often the single largest client issue. For example, the industrial manufacturer had to develop a link between the two data bases so that they could successfully connect the records.

Checking

Certainly, once you’ve consolidated data into one source or report, you would check and validate the accuracy. This is also an often overlooked yet critical step. Clients frequently spend days developing reports to get a result that doesn’t add up. Because they get so lost in the data and it took a long time to develop, they immediately share these incorrect results proudly. For example, the industrial manufacturing client spent many hours developing a purchase report. However, the results didn’t add up to a number that made sense. Upon further review, it turned out that one of the processes put into place to dig out the appropriate dollars didn’t add up in terms of the quantities. They changed the report design, and the results became directionally correct.

Charting

The final step is to turn an overload of data into an easy-to-understand chart that provides immediate insights. These charts are incorporated into a SIOP/ S&OP process to quickly assess the situation and trend, and the discussion will lead to the evaluation of options and decisions. For example, the industrial manufacturing client was able to make reasonable assumptions and purchase ahead for long lead-time materials months before getting the details squared away by seeing the percentages by material type in a pie chart, and then making educated assumptions when placing orders.

Turn Data Into Insights

By following the process of cleansing, connecting, consolidating, checking and charting data, the industrial manufacturing client was able to get ahead of its competition because it had materials available for production once the increased level of sales quotes were turned into sales orders and engineering specifications were completed. They were able to turn data into insights and achieve record sales during a time when companies struggled with supply chain disruptions because they placed orders for long lead-time materials proactively (in addition to other proactive steps).

When your data analysis is achieving directionally correct results, it will make sense to take it to the next level with dashboards and slicing and dicing ability with a business intelligence solution. Once you can slice and dice data and have a dashboard available with the push of a button, consider moving on to advanced data topics such as predictive analytics. Instead of solely using data for decision-making, you can take it to the next level and predict your future to get ahead of pack.

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Achieving Customer Growth by Turning Data into Insights

The post Cleansing, Connecting & Consolidating Data to Support SIOP / S&OP and a Superior Customer Experience appeared first on LMA-Consulting Group, a supply chain consulting firm.

Every successful client is experiencing rapid growth and changing customer requirements. To support this growth in a scalable, profitable manner, turning data into insights is of paramount importance.

Data Overload

Every client has an overload of data. Whether using a modern ERP system or struggling with a complex maze of manual spreadsheets, the one item in common is an abundance of data. We have worked with clients with archaic ERP systems, but so long as we can extract data, progress can be made. On the other hand, we have worked with clients with Tier 1 ERP systems such as SAP or Oracle, but if they cannot get data out of their systems, the client is in a worse situation than the one with an archaic ERP system. Every manufacturer has products, defines how to produce those products (whether captured in someone’s head, in spreadsheets, or via an ERP system), has customers, receives orders, purchases from suppliers and so on. Each of those transactions and associated data is stored somewhere.

Data and related transactions adds up quickly. If you think about your typical day, you receive an overload of data before you even arrive at work. Your phone gives you the latest news and alerts. The news provides additional insights into key events. You drive by billboards and listen to the radio or talk with people on your way to work. You receive automated reports in your inbox. You most likely receive thousands of inputs before even arriving at work. Its no wonder we are overloaded! Since the pandemic might have cut out your drive, you might have replaced it with a walk or workout although you are still receiving data via the radio, a podcast or on the phone. To make matters worse, we employ people to run reports and track metrics on spreadsheets. Every time corporate, a Board member or a customer asks a question, another metric is created. Soon, we employ loads of people to publish data that no one uses to make decisions. How do we throw a line to save ourselves from drowning in data?

Take Stock of Your Data

Collect your data. It is likely to be an eye opening exercise. Take stock of standard reports your ERP system provides. Find out which reports are run frequently, and ask those people what they do with the information. Find out if the reports have to be massaged or adjusted to provide useful information. What has to be changed and why? Take a survey of the metrics your organization is collecting, tracking, or publishing. Ask who is using the metrics and what decisions are made based on the information.

In addition to understanding the volume and use of data, check into your data accuracy. Can folks make directionally correct decisions with your data? Or are there several exceptions that have to be discussed before taking action? If someone not intimately familiar with the data evaluated the report or dashboard, could he/she make a decision?

Reduce the Number of Reports to the Meaningful

We have not yet met a client that wasn’t collecting too much data. It is easy to get too ambitious and lose track of what is meaningful. Ask who would notice if the reports weren’t completed for a week? Go talk to that person and find out why. If no one knows or has a compelling reason to review the report, turn it off or tell the person compiling the information to stop compiling it for the next week or month. See if anyone asks about it.

Attend the meetings where data is discussed. Are people arguing about data or having meaningful discussions about what to do based on the data? If they are debating the accuracy, get the group together to develop ONE report that everyone agrees upon to illustrate the data. Eliminate the rest. For example, a building products manufacturer had several nuances to how they calculated OTIF (on-time-in-full), and so the team would debate the way the data was captured at each meeting instead of acting upon the data. We took a step back and aligned on the meaning of fields, how the data was captured and used, and we consolidated several reports into one cross-functional process to collect and analyze a single source of data. Although it certainly wasn’t the only reason, having meaningful reporting supported key decisions and actions which led to an increase in OTIF by 30%.

Turn Data Into Insights

Simply reducing the number of reports isn’t enough. It is essential to make the information meaningful for decision-making. Understand your sources of data. Connect the data. Cleanse the data. And turn data into insights with dashboards, data models or simply by retrieving the appropriate data for decision-making. It sounds much easier to do than it is in reality. For example, an aerospace client captured open orders and shipment data. Because they selected the data by the order creation date instead of the shipped date, the reports didn’t contain the correct information and didn’t reconcile to the invoicing data. Additionally, because they didn’t have their customer segregated in a key field they used to pull the report, the records that were blank didn’t get captured. Both were easy fixes but poor decisions were being made until the data was reconciled and cleansed. On the other hand, once the data was directionally-correct, they used it to determine the machine capabilities, capacities and staffing required to support their growth plans so they could get in front of their demand.

In another client, they had a proactive executive team for a small, rapidly growing building products company. They tracked potential sales leads, probability of success, sales history by geography and much more in their CRM system. Thus, they knew they needed to focus efforts on a key product line in the northeast because sales were lower than expected. By having this key information at their fingertips, they could target their sales efforts on the customers, products, and locations that would make a meaningful difference to their growth plans. They were recognized as the fastest growing company for several years in a row due to the expert ability to turn data into insights and take appropriate action.

You can turn data into insights no matter what systems you have supporting your business. It is far more important to have the appropriate processes and to focus people’s attention on how to dig into data and use it to make meaningful decisions. With that said, if you can support your data efforts with a business intelligence solution, you will gain a leg up on the competition. The great news is that BI tools are scalable; start small and scale up with complexity as it makes sense to support your business. Once you can slice and dice data and have dashboard available with the push of a button, consider moving on to advanced data topics such as predictive analytics. Instead of solely using data for decision-making, you can take it to the next level and predict your future to get ahead of pack.

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Thriving Post-Pandemic: Turning Data into Insights

The post Achieving Customer Growth by Turning Data Into Insights appeared first on LMA-Consulting Group, a supply chain consulting firm.

Every successful client is experiencing rapid growth and changing customer requirements. To support this growth in a scalable, profitable manner, a modern ERP system is not preferred; it is a base requirement.

Why Has Modern ERP Become Essential

Pre-COVID, although preferred, it was less essential in supporting significant improvement and enabling customer loyalty. It is always achievable to better utilize an ERP system (even in the worst of situations), and although this fact remains true, it is no longer providing a BIG enough step up and the flexible customization required to scale fast and efficiently enough to meet changing customer needs while maximizing EBITDA.

According to KPMG, for the majority of U.S. CEOs, the pandemic has meant an acceleration of digital transformation by months or even years. During an Inland Empire Economic Partnership Board meeting recently, it was announced that research shows that technology has accelerated by 7 years. Although there are several technologies considered a priority, modernizing and upgrading ERP is a cornerstone launchpad for growth. Clients and colleagues are seeing the critical importance of not only having a central database for performing business transactions but also one that enables a superior customer experience.

What a Modern ERP System Do For You

ERP systems provide a solid infrastructure which will support scalable, profitable growth. Taking orders, deciding what to purchase, planning what to produce, tracking operational progress, storing inventory, shipping orders, invoicing the customer and tracking costs should be commonplace in ERP. These systems should also allow for the automation and integration of business processes that support business growth and profitability. Modern ERP systems typically support the vast majority of business processes and allow for reporting and analysis of these business processes and transactions whereas legacy ERP frequently stop short at supporting the full needs of businesses in today’s business environment. Turning data into insights has also become critical.

Expanding Capabilities with Related Technologies

For example, a mid-market manufacturer had to upgrade because their system didn’t support credit cards or inter facility transfers. Although upgrading was a significant undertaking, they gained not only these foundational requirements, but they also were able to better track and manage inventory, understand costs and analyze margins after upgrading their ERP system. After ironing out go-live issues, they had an upgraded base and could expand with CRM (customer relationship management) capabilities as well as B2B/ B2C and e-commerce functionality so that they could grow the business successfully.

In another manufacturer, they had a highly customized ERP system that supported their current needs expertly; however, it didn’t support scalable growth. It was also highly dependent on programmers with specialized knowledge. This risk became evident when their top programmer tragically died in an accident. Although they were able to make it beyond that situation, they knew they had to upgrade their infrastructure to support their aggressive growth goals. Since the executives wanted to minimize risk, they started with accounting to strengthen their base, expanded with reporting/ business intelligence to gain insights for growing the business and then upgraded the base. By taking this approach, they also gained insights into data issues to address upfront to ensure success down-the-line. After upgrading to a modern ERP base, they planned to accelerate success by further automating operations to gain efficiencies and customer responsiveness.

Advantage Beyond a Solid Infrastructure

Modern ERP offers advantages beyond providing a solid infrastructure for growth. These types of systems have advanced reporting and dashboard capabilities (business intelligence) built into the system. Some offer an artificial intelligence component with predictive analytics as well; however, simply having the ability to slice and dice data to make decisions can support profitable growth. These systems also have extensions for IoT applications such as predictive maintenance, customer portals and e-commerce, and automation and robotics. There is significant investment into future technologies so that the software stays ahead of the changing needs of the business.

Although it might be tempting to jump to the latest exciting technology and skip the ERP upgrade, don’t be tempted by shiny objects. It is akin to focusing on window dressings when the walls are not yet in place. The most successful executives have a scalable infrastructure that supports the execution of their strategy. Start by making sure you have a modern ERP system that will support your business objectives. 

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Selecting and Implementing an ERP System

The post Achieving Customer Loyalty with Modern ERP & Related Technologies appeared first on LMA-Consulting Group, a supply chain consulting firm.

The pandemic has spurred on the need to work smarter, not harder. In our Brushware article, the Digital Transformation Fueled with Business Intelligence, we talk about the critical importance of making meaningful decisions with data. As discussed in the SIOP client success story, data was a key driver of SIOP results. The key was in understanding data, the sources of data, cleansing data, connecting data, utilizing data, predicting with data and more.

Since the pandemic (although largely pre-pandemic as well), EVERY single client’s situation and path forward had some relation to data and business intelligence. As discussed in a client panel at a global consulting conference, the use of data is strategic. The Global CIO of Abbott talked about turning data into insights. That is exactly what successful clients are doing! For example, another client took at look ahead to evaluate storage needs to get ahead of the supply chain surge and secure additional warehouse space while also reevaluating their sourcing data and deciding to reshore/ near-shore 70% of their production within the next year. Another client analyzed data and decided which items and/or customers to prioritize during the post-pandemic surge so that they maximize customer value and bottom line results.

From the technical side, we have been working with clients to create data models to support this type of analysis as well as evaluating and selecting business intelligence software as well as other data-rich software options (forecasting, SIOP, CRM, etc.). There is NO need to wait for technology solutions unless you’d like to be left in the dust. Start digging into your data and look for meaningful insights for decision-making and strategy setting.

As we are famous for saying to clients, don’t worry about perfection; directional analysis is the way to go. It is better to start moving in the right direction than to sit on the sidelines crunching data. After almost 17 years of consulting, it is absolutely clear that analysis paralysis can create confusion and leads to changes in leadership whereas the leader willing to absorb directional insights and make decisions thrives.

From a process side, there is no doubt about it that you should jump into data. There is more data available than at any time in history; in fact, there is too much data. Clients end up with information overload and do nothing. Stay calm. Think logically. Access whether your conclusions make sense, tweak as needed and move forward. If there is another thing all clients have in common it is that they get so buried in data that it can convey entirely incorrect conclusions and everyone misses it because they are so focused on data instead of common sense. Before publishing data insights, review from a common sense point-of-view. You’ll leapfrog the competition with a few powerful insights instead of a mountain of information that may or may not make sense.

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The Digital Transformation Fueled with Business Intelligence

The post Thriving Post-Pandemic: Turning Data Into Insights appeared first on LMA-Consulting Group, a supply chain consulting firm.

According to McKinsey surveys of global Supply Chain leaders (May 15-May 22, 2020, n=60), 85% struggled with insufficient digital technologies in the supply chain. One of the key digital technologies is business intelligence (BI) and analytics. According to Tableau, the projected return on investment of BI in a 3-year period is 127%. Clients and colleagues are seeing the importance of adopting BI and predictive analytics to proactively manage the company and make critical decisions. Are you on a roadmap to adopting BI?

A recent Google-commissioned study by IDG showed that the role of data analytics and intelligent solutions will be important to helping businesses separate from their competition. Insights from data will be crucial in carving out winners in the post pandemic era. BI was gaining in popularity prior to the pandemic, but it skyrocketed during COVID as companies realized they had to get insights to get ahead of the curve. For example, they needed to figure out the answers to questions such as how customers’ buying behaviors are changing and what types of new products and services will best serve their most profitable customers.  

For example, a client had unprecedented demand coming down the pike and wanted to better forecast sales so that they could prepare for the surge. The issue is that they had multiple systems and data sources that didn’t connect to one another. Sales used one source, and Operations used a different source. Although their business is custom and engineered-to-order, we found predictable patterns in their historical sales, and we discovered that their quotes could be data mined to capture key information that would be instrumental in preparing their operations and extended supply chain.

However, to extract the information and connect the data to be able to gain insights to make directionally correct decisions, a significant deep dive into data was required. The client worked for months to delve into business processes to understand how to cleanse the data, connect the data, fill in data gaps and create a repeatable and sustainable process to manage the data. Of course, although centered on data; the key to success was working with the people to understand what was relevant and how to account for key conditions and build them into the data model. Instead of waiting for perfection, the client started to utilize the directionally correct information to order long lead-time materials, to plan capacity and to evaluate offloading opportunities to get a jump on critical decisions.

In this situation, the client started with a simple BI solution as time was of the essence. They created dashboards and visualizations to better align Sales with Operations and demand with supply as part of their Sales, Inventory and Operations Planning (SIOP) process. While building the data model, the client started to document the data maps and data integrity process disciplines required to ensure sustainability. This resulted in a BI roadmap to create a business analytics and intelligence platform to grow sales and scale the business successfully.

BI was a priority prior to the pandemic; in the post-pandemic, it is has transitioned from a priority to critical and essential to survival. According to 451 Research, the ability of business leaders to quickly use data from operational applications to make strategic decisions and deliver on strategic outcomes will rapidly be seen not just as a potential competitive differentiator, but also as a fundamental requirement and strategic imperative. Yet BI alone isn’t enough. According to Gartner, 75% of enterprises will shift from piloting to operationalizing artificial intelligence (AI). Predictive analytics will become the norm. If you don’t yet have a roadmap, jump in the fast lane, and make sure you are in control of the car.

As originally published in Brushware Magazine on September-October 2021

The post The Digital Transformation Fueled with Business Intelligence appeared first on LMA-Consulting Group, a supply chain consulting firm.