I don’t know about you, but cosmetic product advertisements that claim proven results like “25% softer skin” have always seemed strange to me. On the one hand, how does one measure the softness of the skin — are there machines to measure softness? And on the other hand, what does this average of 25% mean for each individual? That, on people with young skin that’s already soft, the improvement will be only 2%, whereas the old, tanned skin of others will become 43.5% softer?
Usually, there is an asterisk next to the 25% which refers to a small print description of the experimental conditions and the undisputed scientific organization that conducted the study.
But the real question people want to know is: What would this product do to my own skin? Do I need softer skin, and by how much? What is my expectation of results? Am I worth it?
If you are interested in supply chain solutions and browse through the editors’ websites, promises of results flourish: N% times less out-of-stock, X% less inventory, Y% more service, Z% less stress — and, sure, why not 32% more softness?
I will admit that the DD Tech website is no exception to this rule.
How do you find your way through this jungle of promises? If you have a little experience in operations, it is likely that you will look at these figures with a smile on your face, especially since you are equipped with the most important skill for a supply chain leader: a critical mind.
For those of us who have been working in supply chain for some time, these promises are not new. They were the promises of ERP, APS, DRP, MEIO, control towers and other digital platforms over the past decades.
Given the promises made since the 90s and the massive investments made by companies, there is no doubt today that our supply chains are extremely efficient, agile, resilient, and that their daily life and strategic planning are not based on a multitude of Excel tables, is it?
Hum.
Calculating ROI
Why do we need this type of promise? Simply because adopting a solution and running a project represents an investment, and we need to justify this investment to our stakeholders, with a business case. If we have proven results in other companies, preferably similar to ours, we can more easily win the decision.
Of course, these statistics, even if based on facts, do not mean much and cannot be transposed to your company. Another customer of the solution had a 60% service rate and went up to 90%. That’s great, but maybe a lot of the ground could have been covered without the miracle solution, and since your current fill rate is 92%, will it help you get past the 95% mark?
Validating the Potential
One advantage of the Demand Driven approach is that we can partially simulate, before any deployment, what the process would have looked like in your company, by replaying historical demand data. These results should always be taken with caution — replaying the game after the fact is not a perfect reflection of real life — but this approach already gives you an idea, and allows you to better understand the demand signals to which you are exposed.
Moreover, it is quite easy and inexpensive to set up a pilot on a given perimeter — a factory, a flow — and to observe the results obtained in a few months, which will reassure you and will help to convince you internally. However, this approach takes time and may not be adapted to your needs.
It’s the Process That Matters
The business results achieved are always the consequence of a process. If you want to improve results, of course, you must measure them, but don’t focus on the results themselves. Instead, focus on the processes that generate those results, rather than jumping on a solution that seems attractive.
Posing the problem and identifying the key levers for improvement will help you sort things out — a reminder to Six Sigma enthusiasts is the definition phase, which is the most important. Step back, zoom out, and try to identify what really matters, what is likely to move you forward.
Identify the key principles that your processes and tools must meet. For example, in my personal experience of thirty years of operational experience, one of the most important principles is to operate in a real demand-driven pull flow whenever possible.
The Company’s Teams Make the Result
In the end, it is the women and men on your teams that will make your supply chain smoother and deliver results. Many promising systems have failed because teams don’t trust or don’t understand what’s going on in the black box, or perceive the system as too complex.
It is difficult to integrate those factors into a business case, although it is undoubtedly the main criterion for success.
So, when evaluating solutions that will help your teams improve business performance, pay attention to a few key points:
- Are the operating principles relevant, clear, and easily understood?
- Are the screens uncluttered, simple, and attractive?
- Can routine decisions be automated easily and confidently?
- Can we focus directly on the exceptions?
- Do we gain cross-functional visibility?
- Are we improving collaboration?
- Do we cover most of the needs on the same tool?
- Will the solution grow with us and accompany us in our next challenges?
If you answer yes, the results should be assured…
