The balance between functionality and ease of integration
Automation of supply chain processes where it will improve efficiency or cost effectiveness is critical for today’s global businesses. However, as we have worked with our customers to determine how and when to roll out automation, we advise our customers that it is just as important to balance powerful functionality with the cost and effort of integration. While it might be ideal to implement all available functionality, in some cases the costs in time or money mean a more simplified solution would be the best choice to meet your specific business needs.
The right functionality at the right location and right time
In order to ensure the best return on your investment, it is crucial to understand the outcomes you can expect from any functionality. Very complex integration scenarios may require custom functionality, leading to increased initial costs and higher ongoing support and upgrade costs. In order to approach the best balance between functionality and ease of integration, and therefore, the best ROI, it’s important to consider these factors:
· Supported functionality: Determine whether the functionality included in available solutions actually fits within the company’s current IT environment. For example, you may be paying for mobile device functionality that you may never use because it is not acceptable from an IT security perspective.
· Usage (the 80/20 Rule): Often the majority of users (80%) use only a small amount of functionality (20%) and often in different areas. Before making the commitment to build new functionality with complex integration consider how it will affect the majority of your users. If most actually only need very simple functionality, consider whether it is really worthwhile to roll out additional functionality to the remaining 20%.
· Global locations: Implementing functionality globally can increase the complexity exponentially as various regions can have different technology infrastructures, regional business units may use different ERPs, and there may be regional differences in workflows and compliance. Consider which locations handle the majority of the processes that will be automated and focus there. Automating those key locations may be sufficient.
· Platform requirements: Company divisions may be using different hardware platforms or ERP systems. Implementing across all divisions will either require standardization of platforms or increased complexity in the implementation. It may make more sense to bring individual divisions online one at a time to minimize the complexity of each phase of the installation.
· Training requirements: Each layer of complexity requires additional training, sometimes for users, but primarily for administrators. In an installation with multiple ERPs using tools such as Web Methods or Informatics to align data into data tables that mimic a database before integrating with a supplier collaboration solution, training would be required for admins at each level of integration.
· Phased implementation: To simplify a complex implementation, break down the process. Develop a pilot installation and test it on a beta site or user base to trouble shoot all integration issues before implementing the entire solution. Another option is to integrate all the functionality on a few systems and expand as needed.
One of our largest customers has used a variety of these strategies in their implementation. They have multiple divisions split over many geographic areas with a variety of ERPs. They have added a division or two each year over the last five years. At each step in the process, they analyze the ROI expected from adding a new division and have found that the increased savings from the additional automation is entirely worth the complexity of the rollout.
A strategic approach
There may be some processes or instances it never makes monetary sense to automate. In other cases there is point before which automation is not cost effective and a point after which it is. As you develop your automation plan, assess your current processes to set some key milestones:
· Evaluate the existing volume of work in critical areas, the time and costs associated with handling these areas manually, and determine the point at which the improved efficiency that comes with automating outweighs the costs.
· Determine areas where accuracy is critical and yet difficult to achieve and the point at which the need for accuracy makes automation worthwhile.
· Review regulatory requirements and compliance risks to determine the point at which potential fines and fees for mistakes outweigh the costs of automating.
Assessing your supply chain and the balance you must strike between the available functionality and the complexity and costs associated is not a one-time project. What might be “nice to have” functionality today could easily become “must have” tomorrow. Keeping the key milestones you have established in view will help ensure that you are making the right decisions at the right time.
Our eBook, 5 Key Criteria for Setting the Right Level of Supply Chain Collaboration, provides great pointers for analyzing your supply chain’s functionality and needs. It’s a great first step to finding balance between functionality and ease of integration for your company.