Dick’s focus areas include Manufacturing Industries Strategies and Best Practices; Supplier Selection Process, Supplier Performance Management, and Operational Excellence Solutions, Oil & Gas, Refining, Chemicals, and other Process Industries; Advanced Software and Systems Technologies such as APC, Optimization, PIMs, and DCS. Dick is responsible for covering advanced software business on a worldwide basis. In addition, he provides leadership for support of ARC’s Manufacturing Advisory Service team and clients.
Technology Evaluation and Selection can be a Challenging Task
Owner/operators frequently ask ARC Advisory Group for advice about selecting both technology and technology suppliers. With the current Digital Transformation trend in full speed ahead mode, technology evaluation and selection can be a challenging task. If executed properly, not only will you be on the path to Digitally Transform your operations but will have solid business value as a driving force.
Supplier Selection vs. Technology Selection
While supplier selection and technology selection often go hand in hand, it’s important to keep in mind that they are not one and the same. Certainly, whenever capital outlays are involved, choosing the right technology for your business requirements and specific applications is important, but choosing the right supplier to provide that technology and associated support is even more so. Technology is a business tool, but a major supplier is a business partner. The technology user and technology supplier must share a mutual sense of trust and, ideally, a certain degree of commitment to ensuring each other’s business continuity.
The Business Comes First
In years past, it was not unusual for manufacturers and other industrial organizations to make technology selection decisions based on relatively esoteric technical points such as the speed of the processor, specific operating system utilized, resolution of the HMI, and/or network bandwidth for a system. In today’s Digital Transformation era, it is even more important to be careful not to be overly influenced by the latest technology.
In other cases, technology selections were made on the basis of supplier familiarity and comfort levels. Have we done business with this supplier before? Did they deliver on their promises? How good was the post-sale support? Are they easy to work with? Are their prices competitive? And so on…
While these are all valid points that must be addressed to some degree at some point in the technology/supplier selection process, it’s important to remember that the business comes first. Technology supplier decisions, particularly if associated with capital projects, must align with a company’s business processes and manufacturing strategy, work to solve specific business issues, and be justifiable from a business perspective.
What Are the Business Issues?
The first step is to identify the business issue or issues that must be addressed. Is it loss of production due to unreliable equipment or systems? Rapidly increasing maintenance costs? Problems with product quality or consistency? Production bottlenecks? High energy or raw material costs? A shortage of workers with the appropriate skillsets? Regulatory reporting or other compliance issues? While Digital Transformation technology can help solve all the above business issues — and many others — the business issues must be identified in advance, agreed upon internally, and clearly reflected in the selection criteria.
Before creating the selection criteria for the technology requirements and supplier short list, it can be useful to garnering a general understanding of the available approaches early on in the process. This can save owner-operators a lot of time and effort and avoid potential missteps later on.
Supplier selection is a team process. The team should have a good understanding of the issues, a sense of urgency, balanced judgment, critical technical knowledge, and the respect of peers and management alike. Team members should be chosen not only as decisions makers, but also as the ‘doers’ that will ultimately follow through on the decisions made.
The team should represent a good balance between technology-focused members and business-focused members. It’s also important that all potential stakeholders are represented. For example, for a networked automation system, plant engineering, process engineering, operations, and IT would all have to be represented in some manner.
The most challenging aspect of any technology evaluation and supplier selection process is making sure that the selected supplier’s solutions are a good fit for the established business needs. As a result, the selection team must have a deep understanding of these needs and agree to their relative importance in the context of the organization’s current and future operating environment. This can be a monumental, time-consuming task; and one fraught with confrontation, opinion, and emotion.
Once the specific criteria have been defined agreed upon by the entire team, it’s important to evaluate the relative importance of each criteria, since not all criteria are equally important. The team needs to manage the criteria weighting separately from the supplier ranking. However, the two will have to be combined at the end of the process.
Ideally, once a decision has been made, the selection team should be able to readily document how the decision was made, including the selection criteria utilized and the relative weighting given to each criterion.
So what’s the best way for manufacturers and other industrial organizations to select new technology and technology suppliers? ARC believes that a consistent, structured approach is best. One that aligns selection team members; helps establish consensus on priorities; takes personal biases out of the process to the greatest possible degree; treats all potential suppliers fairly and consistently; makes it easier for team members to collect, organize, and access associated documentation; documents the entire process; and keeps the ultimate business goals in full view.
Building on this, ARC introduced a formalized program of supplier selection tools and services. We designed these to reduce the time and effort required for industrial organizations – large or small — to make informed, impartial, fact-based, and well-documented technology supplier evaluations and selections based on real business requirements.
About ARC Advisory Group (www.arcweb.com): Founded in 1986, ARC Advisory Group is a Boston based leading technology research and advisory firm for industry and infrastructure.
For further information or to provide feedback on this article, please contact RPaira@arcweb.com
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