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One of the occupational hazards of my job is responding to RFPs—Request for Proposals.  So often I am not convinced that prospects understand what they are getting themselves into by upgrading their systems and performing the necessary implementation tasks successfully.  To provide a professional service it is essential for me to learn and understand the challenges client companies face, and the competitive environment they operate in.  The corporation’s choice too often is to maintain the status quo, or lose market share and business to more aggressive competitors.  Retaining your status as the leading, most successful, creative, cost-effective, and innovative company, providing excellent customer service and highest quality in your market, is what aught be paramount.  And so too should be ensuring a sustainable supply chain.

For the record, I do not believe that I sell software per se.  I sell solutions—and as my business tag line states “Simple Solutions to Complex Problems®.  I facilitate implementing business solutions with a goal to improve operations through the use of my software offerings.  Tools that help client companies increase sales, improve productivity of all resources, improve communication and increase profitability.

To explain a recent experience, let me start at the beginning.

Several months ago I responded to an RFI—Request for Information.  I must have addressed that in a professional manner as I was requested to demonstrate our solution.  Then a week ago I learned that I made the short list, and now the prospect is looking for more detailed information.  In this situation the prospect is working with a consulting company to help them to assess their needs and to help find a solution that best meets their requirements.  I should say at the outset, that too often in my experience, the consulting company has identified a preferred vendor because of an ongoing relationship they have with the software provider.  That makes sense to me.  If the consultant’s favorite software solution is the product that gets the nod, then the consultants are likely familiar with the product and are able to earn additional consulting, training, and implementation revenue.  It is pretty much an “I scratch your back, and you scratch mine” business relationship with software vendors.  The software company gets a sale and the consultant’s generate additional revenue.  A win-win situation.  However the consultants must be seen by the prospect to be seen as impartial.  To perform their due diligence for their client, the consultants cast a wide net for potential software providers.  It would be more professional for the consultants to declare up front that they have this symbiotic business relationship.

What troubled me with this exercise is that the consultants had done an incredibly thorough job of documenting all the existing processes down to the schedule of when certain transactions took place.  This was a situation where the prospect required both a Demand Planning (forecasting, replenishment, and distribution planning) and an Advanced Planning and Scheduling (APS—factory planning solution).  It was an ideal fit for our product and services.  The consultant called on us through the RFP to prove that we had all the capability within our solution that this prospect needed for their current business processes.

To me a professional approach is to lay out a plan of how the new solution would work once the prospect had incorporated business processes to support a more sophisticated Supply Chain Management (SCM) solution.  It did occur to me that this experience was totally lacking by the consultant and he (in this case) was singularly incapable of speculating what a robust and responsive solution might look like.  By trying to automate a current business process that does not work, results in chaos at the speed of light, and buys the prospect very little.

I was concerned that nowhere in the documentation had the company or consultant identified any goals to improve operating performance, and consequently no current and proposed metrics were provided.  I look for current percentage on-time deliveries to customers, within an industry acceptable tolerance.  What level of customer service are they striving for?  What are current and planned inventory turns?  What is current and proposed on time deliveries from suppliers?  By what percentage would the company aim to increase total revenue, and over what period?  A 5-year annual goal?  What is current and proposed profitability?  Restated: Implementing a new system is not a walk in the park.  If you cannot cost-justify the project, and through a significant amount of education and training, benefit sell everyone from the chief executive to all in the user community, you will not affect the behavioral change needed, and secure the management leadership required, to have the implementation be an unbridled success and implemented within the agreed upon project schedule.

Allow me explain a few RFP requirements and you decide for yourself.  Currently the prospect uses a combination of Excel and Access to provide forecasts generated from recent history.  This data is extracted from their ERP (Enterprise Resource Planning) system.  The prospect manipulates this data via Access routines.  The RFP called for our solution to provide percentage splits as they migrate from high level aggregate planning to low level detail planning.  Recognize that with a short term Excel forecast they are likely to get greater forecast accuracy at the aggregate level, a true statement, but the real need is to massage those numbers manually to derive demand at the level of detail required to execute the operational plan.  With our solution if you had a detailed 3-year history by day, we could use the many algorithms to select the best forecast, and generate a more accurate rate of demand.  Then too we can show data at any level of aggregation through demand segmentation, provided we configure the solution to the prospects needs.  The prospect is promotion driven and the requirement called for additional manual tweaking to help with this sporadic level of demand, versus using standard planning features and function in a well-designed and functionally rich solution.  Proration was required to start at an aggregated monthly level item, and to disaggregate down to weeks, and further down to customer and category, and then to days.  What is so crazy to me is that this is function we have built into our solution, but was not called for in the RFP, other than to emulate their cumbersome process.  Most importantly was the need to provide daily manual overrides, which we can do, but this should be on an exception basis and not a standard operating procedure.

Next the RFP called for a complex method to populate international distribution centers.  I cannot fathom why standard demand pull logic using DRP (Distribution Requirements Logic) could not simply be applied.  The lead time to replenish is known, the inventory levels are updated daily, safety stock or safety time numbers could be factored to cover uncertainty of demand.  Here we recommend using safety time, a variable safety stock taking seasonality into account.  Since this prospect is a food company, with very high seasonal peaks, one might imagine that regular non-seasonal demands are higher over the weekend when most people grocery shop.

The RFP did not clarify the linkage from distribution and demand planning to APS production planning.  Our expectation is that Planned Orders from the Demand Planning MRP (Material Requirements Planning) logic would be input to APS.  Here a number of business rules were identified such as optimum run size, case quantities, shelf life, days of finished goods, etc.  Product type was linked to production lines and requirements called for minimal change-overs.  Seasonality required a formula change to allow for longer runs.  Where the RFP got confusing was the need to net requirements based on finished goods inventory.  This is valid but is a function of the replenishment aspect of Demand Planning, and as a result of the projected shortages, a requested production order is planned within the APS solution.  Stating the obvious, due to poor planning systems in place at the prospect today, this is likely part of their expediting need currently.  Bottle neck work centers were identified, but this becomes obvious once the APS does its planning and scheduling taking constraints into account.  You either have the capacity, or you don’t.  You either have material or you don’t.  The RFP required a “push” forward scheduling function.  We provide that, but under normal circumstances it is not the recommended strategy.  The APS solution begins its process based on the required delivery date, and back schedules to load capacity provided there is available capacity and materials.  In a worst case scenario, if the prospect does not have capacity and capacity cannot be increased through working overtime, or materials are not available and cannot be expedited from the supplier, or an alternate supplier, then forward scheduling logic is used, and sales must immediately inform the customer when the new delivery date can be expected.  I will not discuss the concept of order entry based on Available to Promise (ATP).

Planning for this prospect is limited to an 11 days planning horizon.  Why not go out a year, or more?  Just because your current procedures restrict you to this short window, why handicap yourselves with a new solution that locks you into your current planning time frame?  How long does it take to acquire new facilities or capital equipment?  Surely if you can plan a year or two into the future this will support management to plan for additional capital investments more effectively.  Since the current system is cumbersome, planning for seasonality is a problem.  And this prospect has a few very seasonal peaks at Easter and Christmas, plus a few other public holidays.

Planning suppliers is another short term activity.  This is generally done on a weekly basis with a daily call off for delivery.  I wonder if suppliers could be more efficient if they had a schedule going out at least 12 months, updated at least weekly, and could see the seasonal peaks, even if they intuitively knew when those occurred through experience.  The good news about this RFP is that they identified some of their current planning short comings.

The way a solution such as ours functions is to take a feed from an ERP system, provide planning and scheduling at a greater level of detail than is generally available in an ERP system, and send the results back to the ERP system.  A closed loop approach.  In most situations this process is done daily, sometimes multiple times a day, and rarely on a weekly cycle.  We have seen the weekly cycle used when the prospect has come off a monthly planning cycle.  However once they feel comfortable planning in weeks, we have them migrate to daily planning.  Realistically customer orders come in daily, and often changes to those orders could also be made daily as supply and demand changes impact the customer’s operations.  That said, under no circumstances would I ever expect that the prospect’s user community to perform double duty by updating data in the ERP system and again within our solution.  Strange as it may seem, this was a requirement in the RPF.

The RFP called for a multi-level Bill of Material (BOM), no problem, but then to provide function in our solution that is part of the ERP system, such as copying and mass replacing BOMs.  These requirements called for a long list of function that I will not bore you with.  They needed operations and routings, all standard features in our solution.  Again the need to copy routings whereas these should already be present in the ERP.  If, by the way, neither BOMs, Operations, nor Routings are not part of the ERP, then we provide another method outside of our standard solution to support the prospect with this function.

My preferred method of interacting with prospects is to visit, learn firsthand what business challenges they face, and present a possible solution in person and in writing.  I need to understand where they see they can get financial benefits and what the ROI (Return on Investment) might be if they install our solution successfully.  I am looking for the prospect to believe they can increase their customer service levels through on-time deliveries inside of a competitive situation.  I look to see that this can be achieved with drastically reduced inventory investment and the corollary of increased inventory turns.  I look for a significant increase in productivity of all resources, and if the prospect cannot realize an increase in profitability, then the exercise is a total waste of time, money, and effort.

Being hamstrung by a consultant, the gate keeper of the project, who has not necessarily walked this path multiple times, handicaps the prospect in getting the best possible solution for their business.  In this situation I walked away from submitting

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