16 SCS:PLANNING SYSTEMS
may not be.“Increasingly clients are aware that they might
not get all of the benefits that they had originally set out to
do by implementing ERP and APS alone,” says Platt. “To
get the benefits of those tools you need to optimise and fill
in the parameters you are using; there is very little point in
migrating the data that you’ve got today into a new tool,
you’ll pretty much get the same result.”
Overall, there has been a lot more interest in inventory
optimisation in the past few years. Careful work and
analysis needs to go into determining the optimum
reorder point for a product based on Economic Order
Quantity principles, ensuring that it’s both economic in
terms of handling costs and at an appropriate frequency
for that product segment. “With high value products you
might replenish more often than you would with low
value products, because you don’t want to be having to
bear the costs of delivery for those low value products,”
he says. “Optimisation and segmentation of products and
using some of the optimisation tools that are out there
has been a hot topic for the last few years.”
This type of analysis doesn’t necessarily come with a
large system implementation, it is about analysing data
and feeding that information back. In this way, it lends
itself to optimisation modelling as a service. Last year
IBM opened an innovation centre in Beijing specifically
to do this type of work as an outsourced service.
Understanding
For those looking to invest in specialist planning
software it’s important to fully understand your own
needs first. Carol Thomas, operations director at supply
chain software selection consultant, Hughenden, points
out the importance of knowing exactly what you want
from a planning software solution and what processes
you want to support before setting out to acquire one.
“If you simply apply modern software to your existing
processes you will get exactly what you had before, but a
lot faster. Software and technology will not improve your
processes, it will only accelerate them, and if you have
bad processes in the first place modern technology will
only make things worse,” says Thomas. “Modern software
quite frequently gives you an optimisation capability that
most people have never dreamed of, and if you are not
very careful about how you specify what you want, you
end up with a degree of capability that you are incapable
NOVEMBER 2008 SUPPLY CHAIN STANDARD
www.supplychainstandard.com
of handling. You need to understand what you want.”
Hughenden tends to use a workshop environment to
get to the bottom of what is required, as forecasters can
often be asking for one thing and demand planners
something else. Defining the functional requirements
needed and ranking them in terms of importance is
essential and, as Thomas points out, “always choose
software that can grow with you”.
Expensive
Thomas gives some examples of key questions to ask
yourself: how frequently do you need to re-plan? How
frequently do you need to re-forecast? How often does
your business change? How many times may you want to
change your distribution network? Are you likely to
consolidate warehouses? Are you pushing into the Far
East? And if you haven’t got answers for these questions,
going out and buying a piece of software is going to be
an expensive disappointment.
Of course, there is also the perennial question: do you
want best-of-breed or do you want a one-stop-shop? “If
you are an organisation that is doing constant
For the big solutions you need to be
a big player. There are solutions out
there that are still very affordable
to the small to medium enterprise,
but the big optimisation solutions
are really targeted at companies
that have got manufacturing in
various countries around the world
and they are looking for balance, to
see local sourcing vs delivery cost,
and doubtless, some of them will
now be factoring green issues into
their optimisation engine.
acquisitions, you might do better with a best-of-breed
that has the capability to link into any number of ERP
systems. It depends on company policy,” she says.
Like David Platt of IBM, Carol Thomas identifies the
growing significance of supply chain optimisation – “with
the number of products, the rapidly changing markets
and the mass customisation that is going on, they
[manufacturers] really need these tools; they need the big
optimisation engines,” she says.
So what size of company is going for these large
optimisation solutions? “From our experience those with
a turnover of in excess of £200 million,” says Thomas.
“For the big solutions you need to be a big player. There
are solutions out there that are still very affordable to the
small to medium enterprise, but the big optimisation
solutions are really targeted at companies that have got
manufacturing in various countries around the world
and they are looking for balance, to see local sourcing vs
delivery cost, and doubtless, some of them will now be
factoring green issues into their optimisation engines.”
When it comes to the interplay between forecasting
and planning, Thomas has some clear ideas on which
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