Selecting a complex software solution that meets the unique needs of your business and works the way your people work can be a challenging undertaking. You need to plan diligently. The experiences of many companies make it clear that planning and goal-setting for the new business management solution should incorporate several critical steps. On This PagePlan your projectSeveral scenarios from the vast business area of distribution showcase how you can take the pulse of current business conditions and set goals for what you want to accomplish. Each scenario features several success criteria that enable you to compare your business’s current state with its future goals. As you begin planning the project of selecting a business management solution, you have a multitude of details to consider. Here is a rough planning outline to help keep your process manageable. Tools you can use: Download the planning calendar document on the right; this calendar worksheet will help you set timelines and keep the project on track. The main steps in your planning process are to:   Define a focus area
Identify key people Conduct preliminary research Establish a budget Design a selection process Set timelines
Define a focus areaYour first decision is whether to focus on one key business area, such as distribution, or several. Although you can define this later, it makes the process much easier if you make this decision at the beginning. | | Business scenario 
| Rajesh Patel talks to a few fellow executives at Northwind Traders as well as some of his peers in other companies—the people he usually consults when he needs to make an important decision. Northwind Traders decides to focus initially on distribution and supply chain management because they touch on all other business areas and directly impact the company's customers and business partners. |
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Identify key peopleIdentify the key people who will help choose your business management solution, and inform them of your intentions. This group should include: | • | Key business decision makers in your organization | | • | Technical experts in your organization | | • | Any of your experienced peers in other businesses—people you can go to for advice, especially if they have already implemented a similar solution in their own organization |
From this group of people, form a steering committee. The steering committee drives the process forward and communicates with other members of the group as needed. Ideally, the steering committee includes stakeholders from the technical and the business side of the organization. | | Business scenario 
| The management group at Northwind Traders is quite small, and almost all of the executives work out of the Bellingham location. It only takes a few e-mail messages and telephone exchanges to set up the steering committee for the software selection project. Its members are Rajesh Patel, the VP of sales (who also heads the group), Jill Shrader, the CFO, Ray Chow, the COO, Doris Hartwig, the IT director, and a few of their direct reports. The company's chief executive officer (CEO), Paula Bento, wants a regular report on the group's activities and has a voice in final decisions. |
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Conduct preliminary researchThe steering committee guides the initial research and business analysis. | • | Take inventory of all current and relevant issues affecting the business area you’re focusing on. Use the scenario approach to take stock and prioritize issues. | | • | Take inventory of your current business software, hardware, and any known concerns associated with them. Do you need to resolve any of these concerns before you proceed? | | • | Identify the “deal breakers” that you must take into account during your research and analysis. Is your company obligated to use a certain operating system, software technology, or vendor, for example? |
| | Business scenario 
| The steering committee invites a few subject matter experts to drive the research. Rajesh Patel and Ray Chow, the VP of sales and the COO, commit to taking stock of issues in distribution. Doris Hartwig, the IT director, prepares a detailed inventory of software and hardware. As she begins this task, she realizes again how many disparate, older software systems are in use at Northwind Traders. The company is not committed to a certain platform or vendor however; it just wants to get the best possible result from its investment. They want a software solution that meets their unique business needs, and one that people will be comfortable working with and will make their jobs easier. |
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Establish a budgetThe steering committee determines the budget for both the selection process and the solution itself. Using its analysis of needs and issues, the steering committee needs to determine what the cost of these issues is for the company in terms of lost revenue, poor productivity, low return on investment, and so on. Once stakeholders understand these costs, they can quantify the expense the company is willing to commit to enhance its operation. | | Business scenario
| It's hard to measure all factors involved, but Northwind Traders has several hard numbers it can use in planning. For example, the company spends $150,000 US annually on misdirected or lost shipments that it must replace. Product shortages in the warehouses mean that approximately $200,000 US worth of customer orders per year cannot be filled. The steering committee estimates that streamlined business processes and improved employee productivity and efficiency can save the company as much as $800,000 US annually. After a few discussions and additional research, the group decides that $250,000 US is a reasonable budget for the costs of the software selection process and its installation and implementation. |
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Design a selection processIf your company uses a request-for-proposal (RFP) approach to vendor selection, the steering committee can identify and research possible vendors and create an RFP for the project. Tools you can use: Download the RFP worksheet (see upper right column of this page) to help you create requests for proposals. If your company doesn't use RFPs, the steering committee should design a process that best suits the company’s business needs. You should prepare a detailed checklist so vendor evaluation is complete and consistent across all vendors. Tools you can use: Download the sample vendor checklist (see upper right column of this page) to help you prepare. You need to discuss and define a range of criteria, including: | • | Vendor choice: What do you expect from the vendor? Do you want them to have certain delivery capabilities, for example? Some businesses prefer to work with vendors that are similar to them in vision and size. You might decide that you want a single vendor for software, implementation, and support. Or you might require different vendors for these components of your business software project. Establish this clearly, and make sure all steering committee members and stakeholders know what the criteria for vendor consideration are. | | • | Extensibility: Your plan is to focus initially on certain areas of the business. If you think that later you will need to extend your software solution to meet other needs, identify those potential needs now. Your vendor candidates should be able to meet your extensibility requirements. | | • | Financial arrangements: There might be company policies and strong convictions pertaining to software licensing models and payment. Software vendors offer many different options for licensing, invoicing, and financing software and services. If your company wants to firmly establish the financial terms for engaging a vendor, it should do so now. | | • | Vendor appropriateness: How do you determine if the vendor and solution is a good match for your specific business needs? Do you want to talk to other customers who’ve used the same vendor and solution? Should you visit their site? Do you want to see a demo of the product? What about doing a pilot study with a small number of users? If a vendor's solution meets your technical and business needs, but they don't appear to have a good roadmap for the product going forward, do you still want to consider them? You should set up these parameters as completely as possible before you get in touch with vendors. |
This might also be a convenient time to restructure the steering committee. You might find that, going forward, you need less, more, or different participants than the ones involved up to this point. | | Business scenario
| The Northwind Traders steering committee decides that they prefer a single vendor, even if the vendor will need to pull in additional resources (to provide training and testing, for example). And distribution won't be the end of the effort; the solution will need to be extended later to address manufacturing and financial management. They want the vendor to at least offer a financing option, even if they won’t use it right away. They also agree that their new software vendor needs to demonstrate clear understanding of the company's business issues, have existing customers in the same industry and with similar concerns, and be a stable organization that will be in business for many years. |
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Set timelinesAs with all projects, you need to set a schedule or your selection process could drag on. Set firm timelines for the critical milestones in the project. Milestones might include: | • | Decide on which business area to focus | | • | Create a potential vendor list | | • | Create and broadcast an RFP | | • | Send out RFPs and receive responses | | • | Create a short list of vendors | | • | Conclude vendor interviews | | • | Talk to or visit vendor's customers | | • | Choose a vendor |
Tools you can use: You can download the planning calendar document (see upper right column of this page) to help you establish a working schedule. | | Business scenario 
| Northwind Traders sets up a planning calendar, starting with the first steering committee meeting in week one. Allowing for holidays and vacations, the company anticipates completing the project within six months. |
Review business scenariosMake sure you enlist the support of the right decision makers and key influencers in your organization. Some of the people in these important roles may not be aware that your current business management technology is lacking in some areas, or they may not be aware of how a new solution can benefit them personally. Tools you can use: Download the project team roles worksheet (see upper right column of this page) for an overview of key business roles and talking points to consider as you engage with key decision makers. Each of the distribution sample scenarios below lists important criteria you can use to evaluate your operation's productivity and efficiency. As you review them, you might think of other scenarios and criteria that may be relevant to your business. Tools you can use: You can download the scenario worksheet (see upper right column of this page) to assess your specific business situations, begin planning, and take action. Overall criteria: Defining the basics Inventory management: Transforming a cost center into a revenue generator Warehouse management: Making goods available Sales and customer service: Translating business goals into productive relationships Order management: Satisfying customer needs efficiently and profitably
Overall criteria: Defining the basicsThe business management software tools you use today produce certain values for your business. Are you happy with those values? How well are they supporting your business objectives? What would you like to accomplish if you were to introduce a new distribution management solution? Here are some very basic criteria that matter to businesses. (Note current values, if available, and determine your goal for where you would like to be.) Ease of use |
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| Integration with other business software |
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| Integration of modules within the business management solution |
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| Training required (IT and non-IT staff) |
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| Implementation time |
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| IT support overhead (cost, labor hours) |
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| Time to accomplish return on investment |
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| Adaptability and extensibility of solution |
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| Employee productivity |
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| Cost as percentage of annual technology spending |
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| Daily operation requirements (cost, labor hours) |
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| Ability to accommodate international requirements (currencies, languages) |
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| Number of simultaneous users |
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| | Business scenario
| The Northwind Traders steering committee agrees that setting goals for these criteria would help keep the implementation of a new business management solution on track and result in tangible business benefits. Everybody in the group has lived more than once through expensive, disruptive software changes that resulted in negligible improvements to their organization's financial results, productivity, and ability to innovate. The consensus is that if the steering committee cannot identify a compelling solution with measurable benefits, Northwind Traders will have to continue with the technologies it uses now and formulate a different, likely more expensive, upgrade plan. |
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Inventory management: Transforming a cost center into a revenue generatorAs long as your inventory moves in response to customer demand, it drives revenue. Stagnant inventory merely ties up capital. You need accurate inventory reporting and flexible, lean inventory management to maintain the productivity of inventory investment. With a distribution management solution, you can keep inventory profitably moving from your warehouse to customers. (Note current values, if available, and determine your goal for where you would like to be.) Average turnaround time |
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| Active inventory as a percentage of total inventory |
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| Dead inventory as a percentage of total inventory |
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| Inventory accuracy |
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| Full audit trail details for each item |
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| Ability to accommodate multiple bin/stocking locations |
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| Availability of real-time, available to promise (ATP) information |
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| Shipping costs as percentage of operating budget |
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| Multiple units of measure (and conversion) |
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| Ability to support additional inventory items |
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| Easy management of pricing changes |
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| Optimal stocking levels set and maintained |
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| | Business scenario
| The Northwind Traders steering committee has a conference call with the company's inventory, purchasing, sales, shipping, and warehouse managers to list these criteria for inventory management. Participants readily describe problems with inaccurate inventory, out-of-stock items, dead inventory, and the lack of auditing ability for item and cost histories. One of the company's customers already has threatened to take their business elsewhere if Northwind Traders cannot ensure that it has the required items in stock in the quantities needed, so it can make and ship products on time. Rajesh Patel and his sales group are particularly interested in being able to make realistic commitments to customers. CFO Shrader points out the high costs of shipping as well as dead and slow-moving inventory. |
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Warehouse management: Making goods availableWarehouse facilities and processes need to be as efficient and streamlined as possible to support your growing business and its customers. You want to maintain optimal staffing levels and use all available space to keep workflows at an even pace. With warehouse staff not always in possession of strong computer and software skills, your warehouse management solution needs to be intuitive, easy to use, and highly practical. (Note current values, if available, and determine your goals for where you would like to be.) Productivity of quality assurance |
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| Accuracy of order picking |
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| Ability to consolidate picking lists or routes |
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| Average monthly labor hours or person shifts needed in warehouse |
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| Productivity of receiving |
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| Ability to build pallets |
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| Ability to optimize space usage |
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| Efficiency of warehouse transfers |
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| Number of warehouse and distribution locations supported |
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| Ease of managing multiple warehouse locations |
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| Packing productivity |
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| Ability to manage product kits efficiently |
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| Northwind Traders warehouse managers in Bellingham and San Luis Obispo often find it difficult to exchange warehouse-related information and documents, but they agree that warehouse management is inefficient and costly. For example, the company's Bellingham location makes a measuring device that needs several parts stocked at the San Luis Obispo location, but it always takes a phone call to make sure these parts are available and initiate a transfer. Both warehouses operate shifts around the clock. The night shift completes the order picking, putting away of goods, and packing that is not done by the end of the day. The COO and CFO, as well as the harried warehouse managers, would like to see warehouse operations streamlined to work without the night shift as a result of improved productivity in how workers can perform their tasks. |
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Sales and customer service: Translating business goals into productive relationshipsSales and service are at the forefront of creating the revenue that keeps you in business. To customers, they are also the face of your company. You want your sales and service team to provide excellent service levels and increase the sales volume. Do they have all the tools they need to succeed? Are they satisfying customers, generating a steady stream of repeat and referral business? A distribution management solution can help you maximize the effectiveness of sales and service teams. (Note current values, if available, and determine your goal for where you would like to be.) Sales results to goals |
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| Accuracy of sales forecasting |
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| Customer returns as a percentage of total orders |
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| Customer rebates as a percentage of monthly customer revenue |
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| Ability to calculate sales commissions |
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| Percentage of single-call resolutions in customer service |
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| Average order size |
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| Repeat business as percentage of revenue from customers |
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| Number of transactions possible per hour |
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| Average monthly sales by salesperson |
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| Individual sales performance to quota |
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| Referral business from existing customers as percentage of revenue |
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| | Business scenario 
| Sales performance is the single most important factor in determining Northwind’s success and competitiveness. Sales VP Patel can proudly point out that sales revenue has increased over the last 14 quarters. However, customer returns have also gone up—mostly as a result of uneven product quality, poor availability of the company's flagship products—and customer retention is waning. While the sales team usually meets quarterly goals, Patel knows he could set more ambitious goals if sales associates had better access to inventory, shipping, and order status information, so they could resolve customer issues more effectively and increase customer loyalty. With current inefficient operations, Northwind is often the stop-gap company for customers who order more regularly from the competition. The numbers for repeat business and referrals are much lower than what Patel expects. Sales staff is unhappy, resulting in turnover. Clearly, a new technology infrastructure could help make the sales team more effective and boost customer retention. |
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Order management: Satisfying customer needs efficiently and profitablyEfficient, cost-effective, and dependable order management executes on the commitments made by the sales and service departments on behalf of your company. A strong distribution management solution maintains high productivity and consistency in workflows and, at the same time, enables flexibility when customer and business needs demand it. (Note current values, if available, and determine your goals for where you would like to be.) Order entering accuracy |
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| Average time needed for order entry and processing |
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| Ease and efficiency of changing existing orders |
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| Average time to complete large orders |
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| Ability to customize payment terms |
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| Order management and status is available when back office systems are down |
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| Real-time availability information at hand |
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| Customers and sales can configure and modify ordered products |
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| Order and status entry is available to sales and service professionals |
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| Secure credit-card processing |
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| Ability to give shipping transit time by destination and carrier |
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| Ability to set up repeat, blanket, and standing orders |
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| | Business scenario 
| Not many customers complain, but the people who work at Northwind Traders know that their company is not known for its ease of doing business. Inside sales associates, for example, can’t answer simple customer questions about order status or shipping times—or modify product specifications and payment terms—without researching and calling back the customer. It can take several days for completed orders to show up in the company's current system. During this time, order status information is almost impossible to obtain. In addition, errors in order entry result in wrong shipments, late shipments of corrected orders, and customer dissatisfaction. Customers within the 15 major accounts that generate almost 70 percent of Northwind Traders business are clamoring for a way to look up order and payment information themselves. |
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