SUPPLY CHAIN ​​MANAGEMENT SOFTWARE – PART 2

Continuing the article presented in the previous edition, some results of the research carried out by the ILOS Institute on the current stage of implementation of Supply Chain Management (SCM) software in Brazil will be presented. The objective of the research was to analyze the implantation processes and identify the aspects that may or may not help in the success of these implantations.

The survey was conducted through face-to-face interviews with those responsible for implementing the supply chain modules in their companies. A total of 62 companies were contacted, of which only 13 had at least one of the systems considered in the survey. The interviews and subsequent analysis were carried out based on these 13 companies.

It is noteworthy that, within the methodology used in the research, only the main suppliers of SCM systems were considered: SAP, Manugistics, I2, CAPS-BAAN and Synquest. This delimitation was defined based on the premise that, although there are numerous systems with similar functionalities, only these have most of the modules that make up a comprehensive system.

The article is divided into three parts associated with the theoretical model of implantation presented in the previous article. Initially the process of choosing the tool is analyzed, later the implementation process is analyzed and, ending the article, the levels of satisfaction with the systems are raised.

Tool choice

At this stage of the research, we sought to identify and analyze the process by which, once the need for an SCM tool is defined, the supplier is chosen. Thus, three aspects were addressed: the degree of formalization of the selection process, the criteria used for the definition and the evaluated suppliers. These three aspects will be discussed below.

Selection process

With regard to this aspect, an attempt was made to assess the degree of formalization of the process and how this formalization may have affected the outcome of the implementation. A process in which the companies' needs were clearly defined, in which more than one supplier was evaluated, and finally, in which the choice was based on tangible criteria, was considered formalized.

Although, at first, the possibilities for selection took place through a formalized process or an informal one, the interviews pointed to the need to create a third possibility: that of a worldwide license. The worldwide license is characterized by cases in which multinational companies define a global strategy for implementing a certain system. In this case, the Brazilian subsidiary does not carry out a selection process, being restricted to implementing the software defined by the parent company. Figure 1 shows the proportion, in the sample, considering the three aforementioned possibilities.

 

The analysis of figure 1 shows that the selection procedure through worldwide licenses is quite representative. This can be explained by the high value of the necessary investment that involves this type of implementation, which restricts its potential customers to large companies, many of which are multinationals.

Although a formalized process does not guarantee a successful implementation, the adoption of an informal process increases the chances of project failure. This is due to the fact that many times the informal processes are restricted only to the departments that want to use the tools, not having a great commitment, and consequently demand, from the companies' management. When this occurs, the implementation processes end up bumping into strong organizational barriers.

Criteria used in defining the supplier

Respondents were asked to, from a pre-established list of criteria, indicate, in descending order of relevance, the five main criteria used to choose the system supplier. Figure 2 presents the compilation of this score, indicating the importance attributed to each selection criterion.

Regarding Figure 2, it is interesting to analyze the three main selection criteria. The first two – trust in the supplier and integration of the solution – are associated, mainly the second, with problems already encountered by companies when implementing their integrating systems. Therefore, the importance given to integration can be seen as an alignment with the implementations already carried out in the past.

The third criterion concerns adherence to needs. That is, it is necessary that the system be compatible with existing systems. However, the search for better integration should not sacrifice the suitability of the tool. A good example are companies that, despite having SAP's R/3 integrator system, choose a SCM software other than APO, also from SAP.

Excluding the first three criteria, another important observation concerns the relatively low importance given to the cost of the tool. This can be explained by the significant number of companies that implemented worldwide licenses, therefore not needing to pay for the licenses, incurring only the implementation cost.

Finally, it should also be noted the low levels of importance attributed to the criteria of friendliness – often associated with the fact that the person responsible for the choice is not a future user of the system – and the total implementation time.

Evaluated suppliers

The formal selection processes, and sometimes also the informal ones, are characterized by the evaluation of more than one possible supplier. Figure 3 shows the intersection of the number of times each supplier was evaluated with the number of effective implementations of each one.

It is noted that the suppliers present different behavior with regard to the Evaluations versus Implementations relationship. i2, despite having a large share of the world market, was a supplier to only one company. Its great worldwide fame helps to explain the significant number of companies that evaluated its product, without necessarily implementing it.

Manugistics stands out as the supplier with the highest number of implementations, having been chosen in six of the seven selection processes in which it was considered.

SAP's APO is characterized by being a system that is only implemented by companies that already have R/3, and is not even evaluated by companies with other integrating systems.

Both CAPS-BAAN and Synquest are also closely associated with the companies that own their integrator systems (despite not being the same supplier, Synquest has a high degree of integration with the BPCS). However this association is not as strong as with APO.
Implementation Process

With regard to implementation, we sought to identify the main modules being used, as well as to analyze the characteristics of each implementation process in order to identify the critical success factors. The following aspects were evaluated: Implemented modules, composition of the implantation team, implantation time and problems found throughout this process.
Implemented Modules

Figure 4 shows the percentage of companies in which each type of SCM software module was implemented, with some occurrences of companies that implemented more than one module.

It is noted that the production planning module is the one with the highest number of occurrences, being observed twice as much as in the second place - inventory management. Based on this, it can be assumed that production planning is a very frequent problem and the main source of implementation of SCM software,

Throughout the interviews, it was identified that the modules related to transport activities, or the network structure are usually implemented in companies that have specific problems in these areas. This observation explains its low levels of deployment.

Implementation team composition

It was considered that the implementation team can be composed of three types of professionals: employees of the company itself, employees of the software supplier company and consultants of the integrator company. Any company involved in the implementation other than the client company (which will use the tool) or the supplier was considered as an integrator company. Usually this role is performed by large consultancies.

Figure 5 shows the composition of the implementation team for each of the thirteen interviewed companies.

It is possible to note from the graph that there are no standards regarding which types of professionals should compose the team, and the sizing of the same. We will now explore some examples to demonstrate how the composition of the team can determine the degree of success of the project.

Companies 1 and 3 are both multinationals that implemented the software through worldwide licenses and after their headquarters. In this way, they have an international team, formed by employees of the company itself, specialized in the implementation of the software in the various units of the same. The existence of this team not only makes hiring an integrator unnecessary, but also ensures a smoother implementation, especially in cases where there is a standard planning process in all the company's units.

In the case of company 2, the implementation was delegated to a team basically formed by an integrator, without the formal participation of any employee of the company itself. The result was an implementation completed on time, but which in the end did not adhere to the company's needs. This lack of adherence, caused by the lack of participation of company employees, ended up generating dissatisfaction with the software, which is consequently being underutilized.

In the case of company 8, despite the fact that the implementation took place only through an integrator, it was successful. This is due to the fact that it was a worldwide implementation, carried out by a team with experience in other similar projects, abroad, in the same company.

Deployment time

With the objective of analyzing the implementation time of a SCM software, not only the time spent in the implementation itself was considered, but also the time used in the steps of tool selection and need identification. In this way, you can have a view of the total time of this type of project.

It was not possible to gather this information from all respondents – only 8 were able to inform us of the deadlines. This information can be seen in figure 6.

We will analyze each step in isolation. With regard to the need identification stage, while some companies point to this stage only as a milestone, a specific month, others consider it more lasting. In fact, when the stages last longer (companies 1 and 3), they are generally associated with broader projects, such as, for example, the restructuring of the logistics area, in which the implementation of SCM software is one of the resulting activities. Even in cases where they are not part of a larger project, there are cases in which a long process of identifying needs is associated with the analysis of a specific problem, which should be supported by the new system.

In general, the implementation processes considered successful have a greater needs identification phase than those that failed. We attribute this to the fact that a more detailed analysis of the problem that the software will deal with makes it clearer which are the main objectives, and which activities should be focused.

With regard to the selection time, this is greatly affected by worldwide licenses (where there is no selection process) and by systems integration prioritization strategies, in which case one opts for the SCM software from the same ERP supplier and that one more time there is virtually no selection process.

Despite not guaranteeing the success of the implementation, the processes with slightly longer selection times resulted in choices considered right by the companies, mainly with regard to the adherence of the tool to the needs of the business.

Regarding the implementation time, the variations are due to the different degrees of complexity of the projects, including in this aspect companies that implemented the software in more than one site – the case of company 5.

Main problems encountered

In order to identify the main problems found during the implementation process, the interviewees were presented with a pre-defined series of possible problems and asked to list, in descending order, the 5 main ones. The compilation of this information is shown in Figure 7.

The two most cited aspects will be discussed below, cultural problems and process remodeling, as well as the qualification of hired personnel.

Cultural Problems: It constitutes the main problem, having been mentioned by practically all the interviewees. The reason for this is the fact that the implementation of this type of system invariably changes the way in which certain decisions are made. This causes them to awaken two types of cultural barriers:

• Resistance to change, that is, the non-use of the tool because it was considered that the old way was better and that the new system does not meet all needs.
• Sensation of loss of power, or even the risk of dismissal, on the part of some employees due to tasks previously performed manually, now being performed directly by the system.

Regarding the second topic, what actually happens is a change in the work profile, which can move from operational activities to analysis activities. A direct consequence of this is the need for training programs, so that employees are able to fully operate the new system. These training programs alone are already alternatives to reduce barriers to implementation.

Process redesign: The second most problematic aspect, the need to remodel processes is often not foreseen in implementations. Its importance lies in the fact that SCM software brings much more elaborate analysis methodologies, which often do not fit in the previous processes. One aspect that usually generates changes is the need for information that was not worked on until then, which in a way is related to the third problem in the ranking, that of obtaining data.

Qualification of the hired personnel: Despite not being one of the most critical aspects, there were frequent criticisms of the qualification of the personnel hired for the implementation, whether from consultants or even from suppliers. The low level of knowledge of the installers with regard to the software was mentioned more than once, with the perception of the interviewees that “the whole team learned and got to know the system throughout the project”. This is probably related to the fact that these are relatively recent systems, with few implementations here in Brazil and, consequently, with few people with experience.

Degree of satisfaction with the tool

With the objective of capturing the level of satisfaction of the interviewees with the tool, a series of aspects were presented and they were asked to inform each one, in relation to the expectations at the beginning of the implementation project, one among the four alternatives: very dissatisfied, dissatisfied , satisfied or very dissatisfied. The results can be seen in figure 8.

An interesting characteristic of this graph is that the questions with which the companies are satisfied are those referring to the software's functionalities – analytical capacity, quantity and quality of information, adherence to needs – that is, which have little relationship with the implementation process. On the other hand, the aspects that generate dissatisfaction are associated with the implementation process or after-sales (in the case of added services).

The integration of systems to ERPs presents a high degree of satisfaction, which is quite relevant since this characteristic was one of the main criteria for choosing the tools.

Another aspect to be analyzed is related to the cost of the process. The cost aspect, which encompasses only the cost of licenses, shows neither satisfaction nor dissatisfaction, that is, exactly what was expected. However, the total investment, which encompasses not only the license, but also the entire implementation cost, appears as the aspect of greatest dissatisfaction, indicating that values ​​often exceed the initial forecast.

In many cases, the additional cost incurred during deployment is associated with longer-than-expected projects. This characteristic is in line with the high degree of dissatisfaction also obtained in terms of implementation time.

Conclusion

The research results show that the implementation process of an SCM software has a high degree of complexity as well as numerous aspects that must be worked on in order to obtain a successful implementation (team composition, supplier selection process, internal training , etc).

This high complexity has resulted in projects systematically running out of time and spending more than the initial budgets. However, despite the investment having exceeded expectations, about 44% of respondents say that the return on investment for the project as a whole was greater or much greater than expected, and 34% consider it to be equal to what was expected.

This satisfaction with the return is also observed in relation to the performance of the software after its implementation, for which only 18% of respondents consider it worse or much worse than expected, and that 55% consider it equal to expected.

Based on everything that has been seen, it can be concluded that, despite the numerous problems that may be encountered during the process of implementing an SCM software, and the costs are often higher than expected, companies are still satisfied. with the tools and getting feedback.

This indicates that the movement towards the implementation of these systems in Brazil tends to become increasingly stronger, even with decreasing degrees of difficulties due to this first phase of implementation and the lessons learned from them.

REFERENCES

KAHL, Steven J., 1999, ”What's the Value of Supply Chain Software?”, Supply Chain Management Review.

KANAKAMEDALA, Kishore, RAMSDELL, Glenn, SRIVATSAN, Vats, 2003, ”Getting Supply Chain Software Rigrht”, The Mckinsey Quartely, Number 1

SIMCHI-LEVI, David, KAMINSKY, Philip, SIMCHI-LEVI, Edith, 1999, Designing and Managing the Supply Chain: Concepts, Strategies, and Cases, Irwin/McGraw-Hill

STADLER, Hartmut, KILGER, Christoph, 2000, Supply Chain Management and Advanced Planning, Concepts, Models, Software and Case Studies, Springer, Berlin

Anthony, RN (1965) Planning and control systems: A framework for analysis, Cambridge/Mass