Category: System Pragmatist

Blockchain, IoT, AI, Big Data. Will Anything Stick?

November 11th, 2019

Client Question
Should I really invest time and resources into technologies I don’t know will pay back?

For example, there is a lot of conversation about the value (or lack thereof) of blockchain, IoT, AI and more. This concern continues to arise and is on every executive’s mind. They do not want to be left in the dust “holding the bag” (old and slow) while their competitors race by. On the other hand, they do not want to dump all sorts of money into technology that might not prove effective in their industry. And, in some cases, what they could invest would be a drop in the bucket. It would be like trying to refill the Pacific Ocean with a pail. Remember that fabulous song by Harry Belafonte “There’s a Hole in the Bucket“?

My colleague Diane Garcia and I set out to find the latest answer to this question at the Association for Supply Chain Management International Conference. There were several panels and presentations on each of these topics, along with several exhibitors talking about the latest and greatest technology integrations.

The Answer
Undoubtedly, there is a lot of noise about these technologies. According to Gartner, AI augmentation will generate $2.9 trillion in business value and recover $6.2 billion hours of work productivity. So, it is easy to see why AI is gaining investment with the large companies and with leaders of large organizations.

I love this quote from Harvard Business Review, “Over the next decade, AI won’t replace managers, but managers who use AI will replace those who don’t.” That about sums it up! We need to at least be aware so that we can make good decisions when it comes to these technologies.

As it relates to AI, according to McKinsey Quarterly, across all functions, respondents report that the most significant benefits come from adopting AI in manufacturing! Coming in second is risk with supply chain management just behind in third place. So, if you are in manufacturing, you cannot afford not to at least consider the opportunities. Do you need to do this on your own? NO! We are seeing small companies come together to share resources and invest jointly to drive scale with results (and so they can compete with the large companies). There are also groups that facilitate this type of collaboration. At the most digitized companies, the adoption of AI capabilities is greater including machine learning, virtual agents, robotic process automation, computer vision and more.

According to Forrester, 90% plan greater investments in data and according to MIT Sloan, 85% view AI as a strategic priority. These two technologies cross over and seem to have the upper hand with the most immediately applicable technology.

With that said, there were even more sessions about blockchain and whether it was hype or hope. The bottom line on blockchain is that it is a real opportunity for certain industries such as the food industry (related to food safety).  It is still in early stages and will require a consortium of companies to come together to bring to reality.

According to a leader from FedEx, whether big or small, no one company will be successful on its own. Yet all the “big guys” are interested and participating. Stay tuned to see where it goes. Last but not least, IoT is integrated into many conversations about big data, AI, autonomous vehicles and more because it connects technologies. In manufacturing, IoT is connecting machines and data for predictive maintenance and the possibilities abound.

The bottom line: pay attention but resist exploring technology in isolation. Learn to collaborate.

Food For Thought
As much as these technologies should be on your radar, don’t get carried away and forget your fundamentals.

Do you have a scalable ERP system to support your business growth and profitability? If not, start there!

Do you have reporting and business intelligence systems so that you can slice and dice information to make instantaneous, informed decisions as key customer questions or business opportunities arise? If not, start there!

How about a simple CRM solution? Certainly in the Amazon Effect era, we must pay attention to customers.

Did you like this article?  Continue reading on this topic:

What is Ahead for Technology?
AI, Robots, IoT, Blockchain, Hike!
Systems Pragmatist



Should I Upgrade Now or Later?

October 10th, 2019

A Client Question
Since we have a simple reorder point system largely in place and we plan to focus on an ERP upgrade in the coming year, should we continue to roll out MRP (material requirements planning) and DRP (distribution requirements planning) or should we just put our efforts into the new ERP system?

In this case, there is still much of the planning process that is done manually. However, a manual process could be good or bad. Employees forced to perform manual processes learn the process in detail yet they might not understand why they are doing what they are doing. Would there be a larger benefit in learning the process in the current system and then re-learning in the new one or vice-versa? After all, resources are limited and the people performing these roles understand key customer requirements in detail. How should we best utilize their time for maximum benefit?

The Answer
In this case, resources are limited. So, the key question becomes how to best leverage the planners to meet customer expectations while getting ready to support the future. Since the simple reorder point works but only to a degree (since they cannot see their bill of materials explosion) in this case, the rest has to be manually calculated. When looking at a configure-to-order situation across multiple sites not connected by DRP, inventory disappears and the complexity of planning materials increases. Also, unfortunately, the only resource that gains an understanding of MRP / DRP concepts is the material planner. The production planners remain unclear as to how these concepts apply. So, it makes sense to roll out the concepts in the current system so that the team gains exposure to how it works. This understanding will prove valuable in implementing the new system, and most importantly, if the material planners do not have to spend countless hours manually calculating numbers, they can provide better service to customers, as well as contribute valuable input in setting up the new system for success.

Food For Thought
Although the MPS/ MRP module of ERP systems can be valuable in improving service and reducing inventory, they do not always make sense. Take a step back to look at the complexities in your planning process. Have you overbuilt the process? We also find that simplifying creates substantial improvement for almost every client. Perhaps you should simplify rather than add complexity, even if you already own the system or your key resources think complexity is needed. At least 80% of the time, we simplify to some degree.  We might take what seems like a step back to simplify in order to take a giant leap forward.

If you are interested in running your situation by us, contact us.

Did you like this article?  Continue reading on this topic:

Which Inventory Planning Method is Best?
Systems Pragmatist



Is there an ROI on a Forecasting System?

September 12th, 2019

A Client Question
Since forecasting can deliver significant benefits with increased levels of service, inventory turnover and margin improvement, the question that inevitably arises is whether it makes sense to purchase a forecasting or demand planning system. Of course, the answer is: “It depends”.

In one client situation, goods were manufactured in Mexico and purchased from Asia. Key customers were large retail outlets. Demand seemed to change daily.  Yet, lead times were in the months if the ‘right’ stock wasn’t in the ‘right’ place at the ‘right’ time. Of course, they could cover some small changes by adding freight costs but that isn’t a recipe for profit. Improving the forecast would improve their success. So, the question turned to whether a system would have a ROI.

The Answer
In their case, they could achieve a rapid return on investment by using a forecasting system. However, let me say upfront that more often than not, I do not recommend a system. It completely depends on whether it will drive the appropriate level of improvement and associated results or not. In this case, we could easily drive dramatic forecast accuracy improvement since we started out at such a low level of accuracy due to the business environment, industry and key customers. The people understood the importance of the providing forecast feedback and although the key customers didn’t have “good” forecasts to provide, they could provide data we could analyze. In these types of situations, we are able to reduce inventory by a minimum of 20%.  It should be noted, though, that results can be far greater.

Food For Thought
Although forecasting systems can be a great idea to drive service, inventory and margin improvement, they do not always provide a return. Take a step back to understand your industry from a forecasting point-of-view:

  • Is demand constantly changing?
  • Are you supporting small numbers of customer/location points with less than 25 items or is it 100 fold?
  • Are you able to gain key customer input and/or point-of-sale data?
  • Do you have anyone familiar with demand planning and forecasting to be able to make sense of what a system is telling you?
  • And, last but definitely not least, have you found the appropriate scale for your forecasting system?

Trying to kill a fly with an assault rifle is overkill. If you are interested in running your situation by us, contact us.

Did you like this article?  Continue reading on this topic:
The Strategic Benefit of SIOP
Are You Ready for a Systems Transformation?
Systems Pragmatist



Is CRM Valuable?

July 30th, 2019

A Client Question
When clients decide to upgrade ERP, they also look at CRM (customer relationship management) because it makes sense to align the technology infrastructure into a common platform that will be fully integrated and scalable. However, what if it isn’t part of an ERP project? When does it make sense to jump into the CRM world? One client asked us just this question.

The Answer
In their case, they could achieve a powerful return on investment with CRM. It provided the tools and technology that would strengthen their relationship with their current customers, as well as help them expand sales with current customers and create a pipeline of new customers. Specifically, when meeting with customers, the sales reps gained insights into customer preferences and ways to strengthen the relationship. If they captured those ideas into CRM on the spot, the next person who interacted with that customer could see the notes and tailor the conversation. These seemingly small preferences can go a long way!

In terms of expanding business, they needed robust sales reporting that would tell them if they were falling off in a particular area or if they sold one product without its complimentary product so that the sales rep could follow up. Last but not least, they wanted a way to track potential new customers and expansions of business. For example, if a reseller was opening a new facility, they wanted to track it in CRM so that everyone had access to the timing, forecast, and other critical information. Also, since it was a collaborative sales environment, they wanted a way to track potential new customers and where they were in the sales cycle so that they could forecast future sales and the likelihood of it occurring. Sales forecasts were the 80/20 of success in this client because it was in a high growth mode where cash forecasting is of critical importance.

 A simple CRM solution fit the bill. A few years later, they were ready to upgrade their ERP infrastructure. At that time, they had the base CRM disciplines functioning and so it was an easy transition to a fully integrated system with CRM functionality. This client has been recognized multiple times for its substantial growth and success.

Food For Thought
Although CRM systems can be a great idea (as it was in our client’s case), if your sales and support teams aren’t ready to enter at least the key data, you’ve just bought an Audi that sits in your garage.

Start implementing process disciplines early. Enter information about your customers that will be handy at a later date.

Start tracking key meetings and prospects. Are you able to make good decisions from what you are tracking? If not, wait!

Aggressively push to start tracking vital information about your customers, even if you put it in Outlook or a spreadsheet to start. Soon you’ll be ready for a simple CRM solution, followed by more powerful ones as you get used to driving your car on city streets, you’ll be ready to brave the freeways.

If you are interested in running your situation by us, contact us.

Did you like this article?  Continue reading on this topic:

Obsession with Your Customer
A Systems Checkup


When Is It Time to Upgrade?

July 5th, 2019

A Client Question
A client didn’t feel prepared to launch into an ERP system upgrade as they had just bought the business and had invested significant funds into the transition.  Yet, this client was also starting to worry about scalability and the risk associated with old technology. After all, this old technology was directly supporting their day-to-day business and customer experience. Although the CEO was reluctant, he agreed to an assessment of his ERP system and readiness.

The Answer
In their case, they needed to upgrade to modernize their technology infrastructure and gain additional functionality that is required to support their business growth and meet current standards. However, we found a way to make small key improvements to their ancient system to support enough progress to ‘buy time’ for the teams to gain an understanding of process disciplines required to support a successful upgrade. It also gave them time to educate the workforce.

During the next year, significant efforts were made to roll out process improvements and system functionality to standardize functions such as pricing and raw material ordering. About a year into the process, we “hit a wall” in terms of the ERP capabilities with critical functionality considered a “must” in supporting the business. Thus, we were prepared to make a quick selection of an ERP system and partner and eventually gained corporate alignment to pursue the upgrade to support continued growth and profitability.

Food For Thought
We are often asked to look at ERP systems that clients think they should throw out.  It turns out that that were perfectly fine and scalable, just poorly implemented.  We usually aren’t asked to look at ERP systems on their last leg where we had to make a strong case to executives to even look at the topic. And whether a new system was needed or not, the organization might not be prepared. Determining whether there is time to prepare or whether you should follow a rapid preparation route can be tricky. There are typically risks on both sides, whether you move too slow or too fast. Take time to assess what makes sense in your case. Be careful of ‘shark’ salespeople as there are tons in this field. It is quite confusing so that even well-intentioned executives and salespeople can mislead organizations. If you are interested in running your situation by us, contact us.

Did you like this article?  Continue reading on this topic:

ERP Selection: Why It Has Become a Strategic Priority