Is Shiny New Technology the Answer for Supply Chain and Procurement…or the Rest of the Business?
I have been to a few international webinars and online conferences around the digitisation of Procurement. There is much talk of Artificial Intelligence, Robotics, Predictive Analytics and Machine learning. Business Intelligence which has been the buzzword for decades in this space, is starting to sprout ‘grey hairs’ and being seen to have the same relevance as a CD.
The decision to implement new technology in a business is normally lies at the intersection of Value and Implementation Complexity per Fig 1 below:
In making this decision it is important to understand that the maturity of the current processes will determine the ability of the organisation to implement increasingly complex technology. This realisation can save companies a fortunate in both time and money. Yet this advise is seldomly observed and the effective use of roles like Business Analysts are the first people to be left out of the implementation project.
Technology is still being seen as a magical wand that will be the end to challenges within operations within a business and is automatically going to iron out its problems. In reality any software installed into an area with immature processes and procedures and a lack of discipline around these, is set to be a disaster of an implementation.
In the context of Procurement and Supply Chain it is particularly important to understand the linkage between Policy, Procedure and Risk. In automating these processes, it is important to ensure that this is being done on a solid basis and that the stake holders all have bought into this automation and that it is not done with a silo mentality. Secondly these processes must have been evaluated against the company’s governance criteria.
I have seen many implementations fail as the business has failed to realise the importance of mature processes and an appetite to be disciplined around working according to these processes. Some organisations have a similar ‘magical wand’ approach to ISO, believing that it will magically fix their issues. This is where procurement can play a critical role through forming good relations with IT and Operations especially, to add value to the process by being part of the specification team for the solution where possible, to provide insight upfront.
Culture eats strategy for breakfast,lunch and dinner! Should the culture of an organisation be one that operates in a laissez-faire way, where process and procedures are concerned, this must be rectified before the EXCO signs off any implementation project.
I am a huge fan of technology and love shiny new gadgets but take a very sober approach when it comes to the implementation technology, especially where the intent is to create efficiencies and cost savings in a business.
I believe that the following questions need to be answered while planning any software implementation:
- How mature are our Policies, Processes and Procedures?
- How disciplined/ effective is our workforce in carrying out these Policies, Processes and Procedures?
- How difficult will the implementation be vs the cost savings projected? What is the ROI?
- What are the risks of getting this implementation wrong?
- How well have we vetted the suppliers? Have we been to sites where they have both successful and unsuccessful implementations?
- Can the company afford the disruption the implementation will bring?
- Which solution will require the least customisation?
Technology is one of the biggest CAPEX investments a company will make and the procurement of the correct solution is a very important process. Before looking into Software as a Service (SaaS), it is important to ensure that the foundation solid.
GrowthSmiths has a team of seasoned professionals who are eager to help solve the challenges you have in your Value Chain (Procurement, Demand, Supply Chain & Logistics). We also have an experienced Information Technology team.
This article was written by Kurt Parker.
Find Kurt's service here: https://thegrowthsmiths.com/collections/team-of-experts/products/procurement-supply-chain-management
Great insights Kurt!
I have seen this so often – the business (or government department / municipality) has major problems but the answer being thrown around is “the new system will solve these problems” – only for extensive capital investments being made with very poor returns. The reason? Because the basics were not in place. If the people operating the systems do not follow the basic policies, processes and procedures, it is highly unlikely that the system will magically resolve the issues in the business.