SC Planning Platform Selection Best Practice - a Risky Decision?
Following a previous article on early stage planning maturity and technology business cases, here's our take on how to think about selecting planning platforms based the collective wisdom of many members over multiple discussions. I'd like to emphasise that we're not proponents of any particular approaches or technologies.
Contents
- How to shortlist vendors?
- Focus on critical capabilities by planning maturity level & horizons
- Four general types of planning platforms - pros and cons
- Member experience of recent implementations
How to shortlist vendors
It is common for those considering investment into planning platforms to start with the Gartner Magic Quadrant to shortlist potential vendors. It is also quite intuitive to focus on the top right ‘Leaders’ box and figure that it might be safer to shortlist from among those options as choosing a Challenger, Visionary or Niche Player might require additional justification and, therefore, carry higher reputational risk.
The Magic Quadrant focuses on the vendor, not the product or its capabilities. As of April 2022, there were 22 vendors listed although we are aware of many more vendors who either have their own technology platform or provide a specialised implementation service for one or more technology platforms as the main contracting party.
These 22 vendors are placed in one of the four boxes which are formed by two axes or criteria:
- Completeness of vision: the degree of alignment with Gartner’s view of future requirements development (i.e. future-proofed) e.g. Leaders & Visionaries are highly aligned with Gartner’s view, Challengers and Niche Players are not?
- Ability to execute: the vendor’s organisational delivery capability, for example, taking into account client support structure and track record e.g. Challengers & Leaders have a high ability to executive whereas niche players and visionaries may successfully focus on a particular segment but don’t have as broad scale?
Focus on critical capabilities
Through our best practice sharing discussions, we have heard members that have started by considering ‘Leader’ planning platforms because they represent ‘best in class’ and so match the company’s planning maturity aspirations.
The capabilities are indeed first class but some members have realised that one or more parts of their organisation are not yet ready to adapt to these platforms and so at least some of the potential benefit from the investment may not be realised. This could also risk confidence in future transformation efforts.
An alternative approach may be to walk (or crawl) before trying to run by aligning platform options according to your general level of planning maturity.
Priority capabilities by maturity level
1: Limited process integration within supply chain functions (e.g. planning, warehousing, distribution)
> Demand forecasting / planning
2: Established process integration within supply chain functions
> Demand and supply planning
3: Cross-functional process integration beyond supply chain (e.g. including commercial, finance, production & procurement)
> Cross-functional enterprise planning to support S&OP / IBP (and S&OE)
4: External collaboration with Tier 1 partners (i.e. suppliers and customers)
> Multi-enterprise / collaborative planning
5: End-to-end / multi-tier external collaboration?
> Advanced analytics, decision support / predictive analytics & automation
Priority capabilities by planning horizon
Long-term (>18 months)
Medium-term i.e. S&OP/IBP (3-24 months)
Demand forecasting & planning
Short-term i.e. S&OE (0-3 months)
General / cross-horizon
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Other key selection criteria:
‘Best in class’ or end-to-end planning platforms align planning decisions at different levels of granularity, across different time horizons and across the end-to-end (i.e. multi-echelon) supply chain.
Four general platform types and their typical pros and cons
Although there can be, of course, exceptions for any given planning platform, the pros and cons of each type generally tend to be:
1. 'Dedicated platforms'
2. 'Flexible platforms'
3. 'Integrated with ERP platforms'
4. 'Off-the-shelf (OTS) platforms'
With thanks to Tim Kroezen who came up with this schema, planning platforms may be categorised into four different types:
Dedicated: fully focused and designed for supply chain optimisation. Dedicated platforms typically have state-of-the art capability and substantial ongoing investment into research and development. Often, they are structured around industry verticals and so can leverage the collective experience and best practices from similar businesses. Although this can offer some 'plug and play' templates that can help improve current processes, this may be offset by greater complexity leading to longer implementations;
Flexible: platforms that are able to support planning but are more flexible in terms of their design and configuration. Limited applications like proofs of concepts can be implemented relatively quickly and then be progressively expanded to deliver a very high level of capability, comparable to dedicated platforms. The comparatively 'blank canvas' approach offers high customisability although there often isn't as much in terms of out-of-the-box templates so tend to work well for organisations with well defined and mature processes;
Integrated ERP: most ERP systems have planning modules which may not match dedicated platforms for capability or be as flexible but usually (but not always) should be easier to implement as they require less data cleansing and integration work;
Off-the-shelf: allow for little or no?customisation?and typically offer less capability than dedicated platforms but, if data is available, tend to be faster to implement at lower cost.
Which platform type?
Of course, there’s no simple, failsafe answer but judging from the choices made by members over the last few years, it is possible to discern a pattern based on the following factors:
Planning maturity / capability needs: as highlighted above, platforms with greater capability and expense ought to have a commensurate degree of maturity to get the most from the investment. At lower levels of maturity, there is less risk associated with taking smaller steps with simpler but easier to adopt technology. Higher levels of planning maturity are also associated with more advanced capabilities such as multi-enterprise collaboration;
'Change momentum': this is really a grouping of several factors:
Data quality & complexity: in general, the better the current quality of data, the more likely that any type of planning platform choice will be successful but this is rarely the case so the question is what to do if current data quality is poor? Similarly, off-the-shelf and ERP-based platforms are less likely to be able to handle complex data sets. Member experience has clearly shown that the amount of data work should not be underestimated so, given this, the choice seems to come down to how much work is involved and how likely it is that you might have to do that work all over again if, a few years down the road, you want to move to a different platform.
Member experience of recent planning platform implementations
The key points below reflect contributions from multiple discussion participants and have been anonymised and edited to adhere to our 'Chatham House Rule' policy.
- A recurrent theme: the?‘soft’ challenges?around ownership, buy-in, behavioural change and adherence are often the trickiest;
- A common assumption is that sticking with an?incumbent technology provider?should make transition and integration easier but that often not the case, even though some incumbents seem to be overly relying on this assumption;
- It was noted that?some ‘next gen’ platforms seem more mature than others, including some of the bigger names. This is often notable by whether or not the vendor is able and?willing to perform a live demo using sample customer data?and the extent to which capability is already built or on the development roadmap;
- Multiple platforms are being used?for different aspects of planning and, generally, they serve their purpose well, often supported by some in-house developed solutions. However, the?interfaces between those systems is a persistent challenge?which makes getting reliable output a real challenge;
- For those with experience of ‘next-gen’ tools, there has?clearly been an improvement in forecasting capability, not least as a collaborative platform where commercial and planning can come together to enrich the forecast;
- There is?still a role for more traditional, univariate statistical models?to play, particularly for some demand profiles;
- Business units who already had a good grasp of price and promo data have seen much bigger improvements than those without demand driver intelligence;
- Lessons learned on implementation include that it?pays to have a clear PMO structure?and different main roles with ‘super users’ training the trainers, data scientists improving the algorithms and innovative approaches and the planning analysts who run the routines, identify and handle the exceptions and outliers;
- ‘Next-gen’ platforms have certainly helped improve and embed best practice planning processes but?leadership is critical?to that and, also, the perception of it being a business / IBP process and not just a ‘supply chain thing’.
Our plug:
We run regular sessions - both offline and in-person - for groups of similar supply chains who are tackling the same challenges. Many are for practitioners only with no commercial involvement or influence. Others have invited subject matter experts including from carefully selected solution provider organisations whose capabilities and expertise match the focus and goals of participants.