Supply chain system rollouts present challenges

• Data exchange problems 
• Who drives the project?
• ‘Scope creep’

As businesses grow – whether organically or through acquisition – attention naturally tends to focus on the benefits of simplifying, integrating or unifying management and supply-chain software across the various sites.

Those benefits may turn out to be considerable, but any move to simplify systems is unlikely to be a smooth process. In fact, the challenges may outweigh the potential positives.

At software supplier Sanderson, Chris Buckham, general manager for food and drink, says: “Centralisation is a nice idea, but the different sites in a group will often manufacture different products, and will typically have optimised their production and processes around that.”

As a specialist provider to the food and drink sector, Sanderson is understandably keen to steer a path away from non-specialist competitors.

While pulling disparate elements within your business together may appear, on the face of it, to be a logical objective, only an expert in the sector can judge whether it really makes sense, the company argues.

“It’s tempting to go to mainstream enterprise resource planning [ERP] suppliers, which will always tell you their systems will do everything,” Buckham warns. “But they don’t necessarily have a grasp of the detail specific to food and drink.”

Clearly, there needs to be a focus on the tangible, quantifiable benefits that any simplification or standardisation process would deliver. Sanderson turns this round and asks what business ‘pain points’ need addressing.

The ‘handshake’ between multi-level systems may be one of those critical points. Management and process software supplier CSB-System points out that in the worst cases, the use of different parallel systems will require the manual copying of data from one to the other, with all the inefficiency and risks to accuracy that this entails.

Data exchange problems (back to top)

But, even where data is exchanged automatically between systems, this may still not be a seamless solution.

“Where data exchange is daily, for example through overnight updates from factory systems to financial accounting, then speed is obviously compromised,” says CSB’s UK and Ireland sales manager Matthew Simpson.

“Where data is exchanged between systems more frequently, but not in real time, then doubt about the accuracy of data often creeps in: ‘Is this my stock now, or has it changed in the last hour?”

Buckham says: “The benefits of standardisation can be many and varied, from reducing stock and turning it round more quickly to group-wide purchasing and a more efficient back office.

“But what really gets the food industry excited are areas such as reduced wastage, recipe management and greater consistency.”

‘Pain points’ for specific companies may also include the management of seasonality and transport-related issues, including missed delivery slots.

In most cases, Buckham says, payback will be within the first year, although a full ERP system will sometimes be implemented in phases, with the most urgent requirements met first.

When it comes to stock visibility, warehouse management systems (WMS) have a prime role to play.

Chess Logistics Technology has supplied its Empirica WMS system to chilled foods maker Winterbotham Darby, which originally installed it in 2008 and extended it over the past few years to its Deli Solutions and Alatoni sites.

According to Chess, the customer wanted to keep its processes as simple as possible, despite the fact that each site had a unique set of requirements when it came to WMS.

By allowing higher-level ERP and planning and forecasting systems access to its improved stock visibility, Empirica was able to boost overall stock availability for Winterbotham Darby’s customers.

Mark Wilkinson, a supply chain consultant at WMS supplier Indigo Software, says: “Surprisingly large [food] manufacturers have often struggled with inconsistent warehouse processes across their different sites.”

He again points to limited stock visibility and the impacts on efficiency arising from this lack of consistency.

Indigo is working with one unnamed 15-site manufacturer to implement group-wide traceability. “Once fully live, the system will enable them to track everything, from where each batch of ingredients was sourced to the provenance of all meats entering the supply chain, giving them a full audit trail of exactly which items were used in a particular batch of finished product, as well as their storage conditions,” says Wilkinson.

But have multi-site manufacturers really ‘struggled’, and should we be so surprised that they have carried on with disparate WMS systems, in some cases for many years?

“People’s minds only really tend to be focused once profitability becomes an issue. If you are generating good profits, why change your systems? If you have anything approaching a good system, you’ll need a very good reason to change it,” argues Alex Mills, marketing director at Chess Alex Mills .

Anyone making that change will have to be pretty confident that the new, standardised system will do a better job than the legacy system it replaces, he says.

That can be difficult, given that WMS has tended to become quite commoditised over time, with most recent products – for example – interfacing with ERP and other higher-level systems.

Who drives the project? (back to top)

There can be more questionable explanations for sticking to the status quo. “You also have to say, there is no vested interest quite like the vested interest of the IT guy,” says Mills. “It quite often tends to be a case of the tail wagging the dog.”

Then again, having the IT department on-side may not always be a positive sign, either. Of software implementation generally, Sanderson points out that the success or otherwise of a project will often depend on which part of the business is driving it.

“It may be operationally-driven, commercially-driven or IT-driven,” says Buckham. “If it’s driven by the IT department, it may turn out to be a vanity project – which means that it may fail.”

Like WMS, quality control software has to interface with ERP and other enterprise-level systems.

At InfinityQS, chief operating officer Doug Fair talks about the central importance of net content monitoring to ensure regulatory compliance on the one hand and to minimise giveaway on the other.

For traceability reasons, process data has to be linked to a product code, order number, shift codes and other reference points from a higher-level system.

Fair says: “It’s more often the rule than the exception that businesses have different systems on different sites.”

One barrier to change, typically originating in the finance department, can be the argument that the value of existing software or hardware has not yet been exhausted. “And one of the most prevalent problems standing in the way of standardisation is the notion that one or another plant is unique.”

InfinityQS worked with one beverage company to install its ‘software as a service’ in a cloud-based environment across more than 100 sites.

In this case, the change has allowed the customer to move beyond the question typically linked to quality systems: Do we have a problem or not?

“What they have is a wealth of data, which is all in specification, but which can provide insights they’ve never had before,” Fair explains. “This can deliver vast improvements for the bottom line.”

A further benefit of having real-time data exchange within a single, integrated ERP system, says CSB, is that this is a necessary precondition for creating the much-discussed ‘smart factory’ (or Industry 4.0), rather than simply running an automated factory.

“With greater connectivity between different data streams, processes and physical machines, it’s possible to take automation to a higher level, and further improve production planning and warehousing operations,” says Simpson.

‘Scope creep’ (back to top)

Of course, how long it takes before a new system is fully functional, and indeed how many of the pre-assessed benefits actually materialise, will depend on a number of factors.

Regarding speed-of-implementation, Buckham explains: “You have a plan, but the client will change their mind, operational people will decide they want something different. It may come from middle management. If you don’t have good governance, you can get this kind of ‘scope creep’.”

At CSB, Simpson says: “We ensure the transition goes smoothly by formulating a really accurate and comprehensive ‘concept’ document. This maps out in great detail all process steps, sequences, tasks, data flow and the interaction between sites.”

The overall success of the project is likely to depend on the commitment and buy-in of all stakeholders within the customer’s business, he states. “Often, legacy systems and practices have been ongoing for a long time, and people tend to be both resistant to change and reluctant to share their personal knowledge of processes on the shopfloor.”

It is quite common, says CSB, for supervisors and managers to be unaware of details in production or warehouse practices that may appear insignificant to operators, but which will have to be taken into account in any successful software system.

As Simpson puts it: “WMS and ERP systems need to accurately reflect what is physically happening in the warehouse, the factory – and the business as a whole.”