If you have been doing any reading of supply chain literature, possibly the most confusing area in supply chain management is determining which, if any, supply chain software solution will be best for your company. A challenge in the technology space that compounds the problem is the use of hundreds of buzzwords that often make it hard for people to decipher exactly what is being offered. Significant confusion results, especially when the same term is adopted by different companies and it has a different definition or variation in each.
Another confusing factor is the current argument over which type of supply chain solution provider makes the most sense: "best-of-breed" versus "supply chain suite" versus enterprise resource planning (ERP) solutions with supply chain functionality. There have been countless articles and white papers arguing the merits of each. But after all the reading and research, are you more confident or just more confused?
This article is intended not to choose a "winner" out of the three types, but rather to offer some key points to evaluate what might be the best option for your company, as well as to provide insight on some of the factors in the decision-making process before identifying specific solution providers.
Setting the Stage: Operational Functionality Addressed in Supply Chain Software
Before taking a look at the types of software companies, the following is a list of some of the supply chain "point solutions," or specific functionalities, that might be included in the various software options:
- Procurement Solutions — aid in the selection and buying process of indirect and direct materials. Might include auctions or links to online catalogs to improve purchasing efficiency
- Demand Management — forecasting and inventory management at an operational level (hourly, daily or weekly planning)
- Warehouse Management Systems (WMS) — scheduling and management of product, personnel and equipment within distribution centers
- Transportation Management Systems (TMS) — help in most efficient routing, scheduling, vehicle utilization and carrier selection
- Supply Chain Event Management (SCEM) — also can be referred to as supply chain visibility. These solutions focus on tracking and tracing of products across various supply chains both in transit and in distribution facilities
(Note: More strategic software solutions like network strategy analysis and multi-echelon inventory planning are not covered in this article. Such software is more analytical and would be performed on a periodic basis, e.g. monthly or yearly. This piece focuses on those solutions that would help make decisions on an hourly, daily or weekly basis.)
Types of Software Companies
- Supply Chain Suite
- ERP with Supply Chain Applications
Out of the hundreds of supply chain software companies across the three types, which one is the best for your company? The answer is, as always, "it depends." It depends on your current and future needs, the capabilities of your people, your current and future operations and systems environment, the capabilities of the software companies, and, of course, cost. The combination of all of these factors determines how your company might perceive the "best" value of a software solution.
System Integration: The Largest Hurdle?
A key factor in the technology arena that is often given too little attention but that causes significant problems is back-end systems integration. This is the "heavy lifting" in technology implementations. Most companies and their software suppliers misjudge this step, resulting in implementation cost overruns, significant stress within the implementing company, and animosity between the software supplier and customer. No system is easy to link to another system, but integration can be made easier and less costly. Detailed, upfront investigation into the required links and data "hooks" will identify problems in advance and allow more accurate cost and time estimates.