Building the Supply Chain Software Business Case
In supply chain management, analytics play a significant role. Evidence shows that analytics can contribute to improving effectiveness, efficiency and even profitability for companies across different industries.
Stakeholders across the business should be encouraged to invest more and take more notice of analytics initiatives and must be kept aware of the benefits they are getting from the visibility of key performance metrics. Tracking and reporting via supply chain software helps procurement professionals seek extra technology or talent investment alongside building more efficient and effective strategic supplier bases.
Alongside the pure performance metrics, the impact of supply chain software on overall business operations and major supply chain KPIs must also be demonstrated.
We understand it may be tough to provide a simple cause and effect analysis of a technology platform to beneficial outcomes to the business, but it can be done. If monitored and measured over time we’ve seen our customers prove the pivotal step changes in company performance.
One important aspect is that technology platforms like SourceDogg give your internal audiences and stakeholders access to see these achievements and compare them against other departmental goals (e.g. liquidity management.) All too often, once implemented, the initial goals from a digital transformation can be lost in the day to day busy work.
Supply chain analytics leaders must communicate the challenges they currently face and the potential benefits of their initiatives and technology implementation for the business.
If you cannot predictively prove the commercial benefits these changes provide to the organisation, you may not be able to set up a new system or project. We must also ensure that your stakeholders are completely aware of the impact of your newfound technology implementation on their performance too.
The four major advantages of supply chain software are explored below to help businesses demonstrate their ROI. These are financial improvement, supply chain development, process optimization, supplier continual improvement, and feedback.
1. Financial Improvement
One of the most important and resonant indicators for demonstrating the success of new software initiatives are financial improvements due to informed decision making. These are the KPI’s addressed during board discussions and they provide leadership stakeholders with the greatest, provable, tangible and immediate advantages. Financial improvements can increase market share, bring in revenue, decrease working capital and improved return on assets (ROA).
It is sometimes difficult for many supply chain professionals to directly correlate the financial rewards of their technology platform projects. Some of the financial gains are by-products rather than gains in specific supplier price reductions or margins, such as mitigated risk, better supplier performance or an increased focus on process – leading to the elimination of non-value-adding stages.
However, supply chain leaders should indicate even in these circumstances that implementing a software solution, at a minimum, has contributed toward the financial benefits. They can also attempt to decouple the effect of a supply chain software platform by, for example, assessing the resulting financial performance before and after deployment.
2. Supply Chain Development
Improved performance metrics in the supply chain.
There is, of course, a substantial overlap between financial and supply chain metrics of companies that may be examined to measure the impact of a data clarity and supplier performance software solution.
Procurement leaders should nevertheless consider the supply chain metrics category separately since some metrics are essential to the operations or procurement department but are perhaps not so commercially apparent for the rest of the group. To deliver more reliable service to their clients, supply chain focused companies strive to reduce order disruption. To that end, the supply chain team may also be collaborating with suppliers to improve insight and minimise risk, which affects another important supply chain metric: supplier lead time.
Forecast accuracy is yet another non-financial supply chain measure. This may be a great example of the advantages of employing advanced and powerful data-driven software in demand forecasting.
Although greater accuracy should ideally lead to better customer fulfilment — and hence better financial metrics – the accuracy or error measure is a useful indicator of supply chain success. Resource utilisation (productivity), changeovers, production schedule adjustments, and inventory turns are all similar indicators.
3. Process Optimization
Fast, intelligent decision-making.
Supply chain software should deliver gains in how data is used within the business for evidence-based, insightful decision making. The team may compare the impact of the software platform on the number of hours required to develop a report, preparing for a business review meeting or audit.
The team should be able to clearly conclude that the outcome of a supply chain software implementation includes higher team productivity. More than this, however, it should unlock the ability within the team to maximise people performance and use the human resource more beneficially. Interpreting and analysing the reports to draw conclusions and ideate improvements rather than spending time laboriously collating the data.
4. Supplier Continuous Improvement and Feedback
Enhancing the analytical influence on the overall business
This set of benefits is directly aligned with process optimisation as we’ve hinted at above in terms of enabling the team to make better and more informed decisions.
The massive benefit of implementing a supply chain software solution for many stakeholders across the business is if it only takes only hours vs days for insightful analytics to be presented.
Not only is the output of the system invaluable for developing a more effective supply chain, but the internal customers benefit too as there will be increased efficiency and collaboration of the supply chain team.
Digital transformation within any organisation is a long-term and ongoing project that encompasses technology as a foundation but involves and has a positive impact upon both people and processes, which in turn unlocks productivity and profitability. This is realised through cost-saving through efficiency and the effectiveness of closer and more connected supplier relationships.
We know first-hand just how powerful our clients have found the benefits of implementing supply chain software across these 4 key areas.