Now before we get started, we do want to acknowledge the fact that supply chains are complex systems. These are complex systems that have complex processes, and they have increasing complexity. With all the challenges that we have come across in supply chain planning, there is no denying that there is more of a call for streamlining and maximizing efficiency than ever before. However, we have found that most of the relationships between supply chain processes and corporate performance metrics are nonlinear.
An evolving process
Over the last three decades, there have been a number of different technology vendors. Many of them have fallen to the wayside, never to return. However, supply chain planning continues to be of vital importance to people across all industries. It is more critical to drive corporate performance, because organizations grow more complex than ever before. There are three different barriers that remain through the evolution of the technologies, these three barriers will need to be overcome in order to maximize your ROI in supply chain planning.
Barrier #1 – The use of excel
One of the issues with supply chain planning is the fact that many people still rely solely on the traditional Excel spreadsheet. What many owners and supervisors are not aware of, is the fact that the complex supply chain environment that exists today has outgrown the program, especially due to the limitations of the Excel spreadsheet to relay the complex supply chain environment. Because we are no longer dealing with individuals but with entire groups as planning teams, the use of an Excel spreadsheet is not possible if you want to share and collaborate with larger organizations. Simply put, if you want to able to optimize your ROI, you will need to think a bit beyond a standard spreadsheet.
Barrier #2 – The reward systems
Oftentimes we will watch as organizations rewards the urgent rather than the important. It is important that planners have time to actually plan. When companies build effective planning organizations, the use of the technologies drives the greatest value. Leadership is vitally important if you want to generate an effective environment that will maximize supply chain planning investments.
Barrier #3 – The acceptance of optimization
For many companies, it is uncomfortable to use optimization. It feels uncomfortable for them to realize that they are outsourcing some of their decision-making process. Because of that, most companies are hesitant to accept the output from planning systems and are slow to trust advanced optimization. However, it is important to note that the right type of optimization can lead to a great number of benefits, but only if the company itself is in fact ready for those changes.
What this means for companies
If the technologies are deployed correctly, the right leadership support is present, change management issues are tackled, and the organization is in place, the Return on Investment (ROI) for supply chain planning investments can be an impressive 7 to 12 months. This means that you can have your investment back in little more than a year.
In fact, studies show that a greater ROI is possible if companies utilize an industry-specific solution. In fact, even greater ROI opportunities are present if the company is willing to use newer forms of network design technologies to enable the modeling of the variability and velocity within end-to-end networks.
Simply put, if you are hoping to improve your company’s bottom line, an investment in supply chain planning is going to pay for itself within a relatively short time – provided of course that you have the available resources to your disposal and are willing to embrace change as it comes your way.