Today's most successful businesses believe that if they are not moving ahead, they are falling behind. Is your business watching, or are you participating?
Today's senior executives are facing more complex business challenges than have any generation before them. Recent world events have created a new sense of urgency: Economic uncertainty, employee layoffs, labor strikes, reduction in capital expenditures and the residues of war have all contributed to executives searching for new and creative ways to adapt to surprises and a constantly evolving competitive landscape.
No industry segment has felt this more than the core manufacturing and distribution organizations that serve as the backbone of our economy. In an effort to be fiscally responsible, many companies shut down all internal information technology (IT) and business process initiatives in order to control overhead spending, only to see revenues continue to decline and margins continue to shrink.
But successful manufacturing companies are re-committing themselves to value-based IT initiatives. They are driving real business improvements, increasing operational efficiencies and building a strong foundation for future growth as the economy turns around.
However, there are significant differences between these technology projects and those of a few years ago.
While just a few short years ago a return on investment (ROI) was considered to be a nice benefit, today substantial and measurable ROI has become an essential criterion for almost all business initiatives. To be supported, an undertaking must increase revenue, decrease expenses or raise asset value. Return on investment is expected to be clearly identified in a compelling business case prior to a project being approved, and it is often the gauge of project success — a critical factor when executives are putting their careers on the line.
One way that many companies approach measuring ROI is through the use of strategic opportunity assessments. Company challenges are evaluated carefully for potential business impact and then plotted against two specific criteria to help prioritize them. One criterion is value to the organization if an improvement in the area is realized. The second is ease of implementing the recommended change.
In considering potential initiatives this way, organizations can identify and agree upon which opportunities will have the greatest overall impact to the business and which can be realized in the shortest amount of time. This allows the business to go after low hanging fruit and drive quick results that will help support and fund subsequent projects.
Tied directly to these ROI-based initiatives, a very positive trend that many companies are adopting is shorter, less disruptive technology projects with more clearly defined project scopes. By approaching projects this way, organizations can minimize distractions to their businesses. Rather than attacking problems that can take the better part of a year before results are seen, companies are attacking issues where improvements can be realized in three to four months.
This is achieved by narrowly defining project scopes that address very specific business needs. For example, it is quite common now to see a company optimize forecasting, address inventory visibility or optimize transportation modeling with a specific piece of technology functionality, rather than utilizing entire application suites.
Another advantage to smaller projects is that the project teams can be limited to only those business users who are directly impacted by usage of the new tool. This causes minimal disruption to the rest of the business.
Collaborative Demand Planning
Another common theme among corporations is a movement away from internally focused production planning initiatives toward more collaborative demand planning initiatives. Companies have been forced to accept the fact that by addressing production planning improvements without increasing forecasting accuracy they were simply becoming more proficient at building the wrong items.