Overcoming Challenges and Building a Competitive Advantage with Effective Implementations
Most of us recognize the significant impact a supply chain planning and optimization (SCP&O) solution can have on an organization’s bottom line. Strategic network design models, tactical planning, and other SCP&O tools can quickly become a source of sustainable competitive advantage.
However, as with most high-reward projects, SCP&O implementations come with risks. A failed implementation is one of the greatest dangers. These failures occur far more often than they should, even though we rarely hear about them unless through rumors or personal experience. When they happen, they tend to be frustrating, expensive, and—most importantly—avoidable missed opportunities.
There are many reasons SCP&O implementations fail, some of which may be beyond the control of those involved. However, two common and preventable causes are poor-quality solutions and systems that are overly complex or time-consuming to operate.
The first two tasks of any successful SCP&O project are critical: (1) defining the project’s scope and (2) selecting the software solution that fits that scope. When both are done correctly, the project’s chances of success are excellent. Miss one—or both—and you’re in for a headache.
Below, we offer a basic roadmap to help define the scope of SCP&O projects. In a second post, we’ll tackle the issue of software selection. While no approach is foolproof, this one has served us well across more than 200 projects over 25 years. It can be applied to all SCP&O challenges, from strategic to operational, from simple Excel-based models to complex, fully integrated applications.
Defining the Scope: The Foundation of Success
Every SCP&O project is born from a decision to address a specific need or solve a particular problem. Its success hinges on how effective (quality) and efficient (speed) it is in fulfilling that goal.
The starting point for every project should be the same: a workshop session to confirm the purpose, clearly define the problem, and based on that understanding, outline the project’s scope.
There are two primary aspects to any SCP&O project’s scope:
There are two primary aspects to any SCP&O project’s scope:
- What the system must do (problem definition and model specification)
- How it will do it (system and functional specification)
The “What” drives the “How,” so it must come first. Both are crucial for a successful project. For example:
- If the model can’t produce quality solutions, it won’t matter how smooth the user interface looks or how impressive the BI module is.
- If it takes days to build and solve a new scenario, the quality of the solutions becomes irrelevant.
Key Steps for Effective Scope Definition
1. Clarify the Objective
Start by confirming the main objective of the application (e.g., identifying the optimal network design, generating tactical planning solutions, scheduling weekly production, etc.). This objective will shape the model’s dimensions and characteristics, as well as the mathematical approach that best fits.
2. Avoid Mixing Different Objectives
Mixing multiple objectives within the same application, especially those that address different planning horizons, is a common pitfall. Just as you wouldn’t serve beef chili alongside crème brûlée, keep different types of SCP&O problems separate. Each objective deserves its own focus.
3. Don’t Rush into Software Selection
After defining the objective, the temptation to start evaluating software solutions is strong. Resist this urge! First, focus on defining what you need without letting external influences—such as software features—skew your scope.
4. Define the Business Problem
Clearly define the problem the system is supposed to solve. This involves understanding:
- The type of solution required (e.g., network flow, production schedule, replenishment plan)
- The objective function (e.g., costs, margins, KPIs)
- Physical assets involved.
- Planning horizon and time buckets
- Business rules and operational restrictions
5. Balance Detail with Complexity
When defining the problem, avoid overloading the model with excessive detail. While an intricate model might seem like it reflects reality more accurately, it may be too complex to implement, maintain, and use. Instead, strike a balance between the level of detail necessary for quality solutions and manageable complexity. This balance is crucial to project success.
6. Functional Specifications: Focus on Efficiency
Functional specifications should include features that maximize user productivity. Many SCP&O implementations fail because it takes too long to build, solve, and analyze a scenario. For example:
- Automate procedures that generate the entire dataset for a new scenario with a single click.
- Include a data integrity check to flag inconsistencies.
- Incorporate case management and scenario comparison tools.
- Provide the ability to override both scenario data and the system-generated solution.
7. Take Control of the Data
SCP&O applications require massive amounts of input data, from costs and forecasts to capacities and demand. Ensure that you import raw data and build automated procedures within the system to process and transform it. This avoids errors caused by external data manipulations.
8. Prepare for the Inevitable
No matter how thoroughly you define the scope, something will be missed. Whether it’s a business rule, operational restriction, or functional feature, adjustments will be necessary. As the project progresses or as your business evolves, you’ll need a system that is flexible enough to adapt.
By following these steps to define the scope of your SCP&O project, you will lay a strong foundation for success. In our next post, we’ll explore how to choose the right software solution—one that offers the flexibility to adapt as your needs evolve.
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If you’re prepared to transform your supply chain and avoid the pitfalls of SCP&O implementations, contact us today to learn how our solutions can help you achieve your objectives efficiently and effectively. Let's work together to create a sustainable competitive advantage for your organization!
