August 07, 2020
Identifying and solving the right problems is one of the most important things you can do to free up your business for acceleration and growth. Companies often see technology as a means to solve their problems or make their lives more comfortable. While technology can indeed do this, there is often more that needs unpacking before implementing a technology-based solution. In this post, we talk about why just focusing on technology is not always the answer.
Whether your company is implementing new technology, getting better use out of the technologies you already have, or streamlining a workflow, you have an opportunity to unlock productivity gains and decrease friction with your employees, customers, and partners. None of that matters, however, if you are not using technology to solve the right problems.
For this post, we will use the following hypothetical example:
Your e-Commerce business is having issues with inventory forecasting and product sales velocity, and as a result, you want to look at replacing your Inventory Management System (IMS).
Before diving into the IMS software world, let’s use this three-step process to break this problem down:
- Start with what is not working.
- Work backward to frame up the problem.
- Think outside the tech.
Start With What is Not Working
Using our example above - what’s not working well? Let’s ask a few more exploratory questions that get into specifics:
- Is our e-Commerce platform capturing the right data from our sales?
- Are our sales channels providing us enough information or the correct information post-sale?
- Is our IMS unable to handle inbound purchase orders (POs)?
- Can our IMS pull sales velocity by product variant AND by sales channel?
- Can our IMS vertically integrate enough with our product logistics (shipping and receiving)?
- Do we need to use several other disparate technology platforms to give us a full picture?
Answering these questions will help us understand the gaps in the current process. Remember, this is likely to be an iterative process, and your understanding and framing of the problem at hand may change as you dig into each area and uncover new information.
Work Backward to Frame Up the Problem
Working backward to frame up the problem requires that you know what a good state is. You have to be clear on what you want to happen and layout your requirements accordingly. Using our e-Commerce example, let’s state what we want:
To accurately and predictably forecast inventory by product variant and by all sales channels in one view.
OK! Now that we have a clearer vision of what we need, we can ask additional questions and probe deeper into the problem areas. Looking back at our first set of questions, we may find a combination of issues:
- Our IMS is unable to handle inbound POs, causing us to change data in the system in a reactive mode manually
- One of our sales channels does not give our IMS a sales velocity at the product variant level based on how we use it
Both of these issues are throwing off our inventory metrics, and now we can explore further. Here is where it’s important to understand the difference between technology/system limitations vs. the limitations of our existing business processes. We may indeed find that our IMS has no workaround for inbound POs (system limitation). We may also see that our sales channel cannot show sales velocity by product due to how we group and sell products (process limitation).
Changing a backend technology system that costs us money is not as scary as changing out a frontend process tied to sales.
We need further analysis of our sales channel, but this also raises the stakes of our problem finding mission. Changing a backend technology system that costs us money is not as scary as changing out a frontend process tied to sales. While this can be scarier, we are getting closer! We can now ask deeper, business process questions about how we use that sales channel and what it means to us:
- How profitable is this sales channel compared to our other sales channels?
- Can we afford to lose or change this channel at this point?
Our analysis may find that the sales channel makes up a sizeable portion of our revenue. We need that sales channel, and we need those existing, profitable methods of selling on that channel. Now that we have data to back that up, we can focus on how to better optimize this business process since it is so essential to the business.
Think Outside the Tech
Now that we know about our business process constraints, we can look at what we can do from a process and technology standpoint to make this business process better.
Here are three business process enablers:
Use What You Have
Knowing the problem you need to solve, let’s look at the other technology platforms you already have. Here are a few options to consider:
- Leverage your existing Kanban and workflow system (i.e., Trello (referral link)) to better track PO tracking and shipping data.
- Ask your suppliers if they integrate into your preferred workflow system to stay closer to real-time sync on issues and delays.
- Get the raw data from the sales channel that does not integrate well with your IMS and do manual forecasting with the rest of your IMS data in Excel/Sheets.
Make Someone Accountable
While not always possible in the early days of a startup to have a dedicated to a single function, having one or more people accountable for owning your important business processes is always a good idea.
In this example, having someone be accountable for tracking all inbound POs and reviewing inventory stock-out reports from the raw data you gathered above. Make sure they line of sight into all parts of the business that rely on this information (i.e., warehousing, marketing, design, etc.).
Get Everyone on the Same Page
Never underestimate the importance of communication. The two biggest issues with communication are:
- The assumption that it has happened.
- The assumption that it was understood as intended.
Use the two steps above and create a Slack channel dedicated to inventory stock-outs and inbound POs. Invite all teams and people into the channel and communicate how people should use it and share data. This level of communication will help keep everyone informed and in sync about what is important.
What This Gets Us
We went from trying to replace our IMS platform to better understanding our underlying process issues. We’re still on the same technology system. Yet, we’ve been able to work around what we believed to be technical shortcomings by implementing procedural steps, accountability, and using existing technology for a business process that had none before.
Our requirements have gotten much more focused on our business needs and reduce the field of potential platforms that can support this. We may also be interested in solving some of our original pain points, but we know that if it cannot address our base requirements, everyone should keep on looking.
Most of this example had very little to do with technology, but about supporting our business processes and goals (hence the title of the post). Had we not broken this problem down, we could have easily replaced our IMS technology with a different platform and ended up in the same position. We would have wasted that money and been more frustrated.
Technology is a business enabler, not a means to an end. Without starting with the problem you are trying to solve, you can waste time and money. Find out how Fraction Consulting can help you tackle your technology and business challenges today!