Selecting and implementing a new supply chain solution is a risky career move for any supply chain manager. The wrong solution can cost the company millions and cost the manager their job. In my last post, I talked about why a proof of concept (POC) is a good alternative to using an RFI as the basis for your supply chain software selection. I suggested a POC as a way to “try before you buy” and mitigate the risks of choosing a supply chain planning solution that doesn’t fit your organization or live up to its marketing materials.
You may be smirking right now wondering about the validity of a supply chain software company singing the praises of a POC. The truth is, with a major software selection, both the customer and the vendor are deeply invested in the process. An efficient, well-structured, and fair approach to determining fit and value serves both parties.
In this post, I’ll dig deeper into how to run a successful proof of concept. But first, let’s recap what a proof of concept is. Like a pilot project, a POC leverages your data, but it is conducted by the software vendor on their own software–before your purchasing decision. The POC allows the organization to model how the software will help them reach their goals without the time and expense of an actual implementation. Because the POC is a more cost-effective approach to gathering evidence, it should be conducted before the final selection is made.
Tips for how to run a successful software proof of concept:
- Let your business objectives shape the scenario you want to model. Engaging in a supply chain proof of concept helps you focus on the challenges you want to solve instead of the features of a product. For example, let’s say excess inventory is an issue, but you want to ensure whatever solution you choose doesn’t impact your service levels. Choose SKUs for your proof of concept that align to the goals you want to achieve.
- Choose SKUs with variability. Supply chain variability is something almost every organization needs to deal with, so it makes sense to choose SKUs that exhibit variability in both supply and demand. To derive the most value from your proof of concept, you may even want to select a portfolio of products with different demand and supply issues.
- Include a sufficient number of SKUs. Not every supply chain vendor has the capability to do a proof of concept. Many of those who do limit it to one or two SKUs. We’ve found that the proof of concept doesn’t serve the objective with such a small data set. We encourage our customers to choose thousands of SKUs over a network of locations to make sure the proof of concept is representative of their business/planning scenario.
- Make sure you’re using clean data in your proof of concept. All successful implementations begin with an evaluation of data quality. A proof of concept is no different. If your data isn’t accurate or complete, the insights you get from your proof of concept will be limited.Many of our customers find that the proof-of-concept stage presents an excellent opportunity to examine their data and gain a better understanding of how much effort will be required to implement the software successfully. During the proof of concept, you may decide to make some assumptions for unknown/unavailable, e.g., lead times for various vendors, but knowing these assumptions can help you evaluate worst-case scenarios.
- Evaluate your vendor as well as the software. During most of the sales process, you’re engaging with salespeople. These individuals may be completely trustworthy, but most of them have never been involved in an implementation. A proof of concept provides an excellent opportunity to evaluate how easy the vendor will be to work with during an implementation and rollout.
But remember, collaboration is a two-way street. A proof of concept is also an opportunity to evaluate how well your internal team works with a potential vendor and each other. We’ve seen individuals replaced on a customers’ project team because, although they had the right expertise, they weren’t great team players.
Four weeks to reduce risk, gain confidence
Supply chain software selections can take months. A proof of concept can protect your investment in time as well as your future technology investment. To help your supply chain planning project stay on schedule, we can often conduct a proof of concept in as little as four weeks, even when the scenario involves tens of thousands of SKUs.
Occasionally a software selection team will run multiple POCs, one for every vendor on their shortlist. Of course, not every vendor offers a POC option, but those that do display a greater confidence in their solution.
If you’d like to learn more, reach out to us. Our advisors would be happy to discuss your supply chain planning challenges and whether a supply chain planning proof of concept is right for your business.