7. Based on your budget and timing for the solution, you might want to consider an ASP type solution where you can pay by transaction or time period, which is sometimes referred to as renting the solution or "by the drink." If you are looking at a longer term solution with many transactions, the traditional option of buying the license might make sense.
Selecting a Provider: The First Steps
The following are the steps to consider in the best-of-breed versus supply chain suite versus ERP with supply chain applications selection process:
1. If your company doesn't have an ERP solution in place:
- Look at all functionality required across the company, including financials, customer relationship management, supply chain, etc., to see if an ERP solution might make sense for you. If it does, include some of the supply chain functionality you desire in selecting the ERP solution. If the capability doesn't exist, then add best-of-breed solutions to your potential list. If you need multiple types of supply chain solutions, add supply chain suite companies to your list of potential vendors.
- If you don't have an ERP system already, it is rare that a company would buy a supply chain solution that is a part of an ERP vendor's suite. However, certain ERP supply chain solutions are starting to be configured so they can be "standalone" applications.
- If you need leading-edge functionality in a particular area, the best-of-breed solution will probably be best for you. If you need deep functionality in several supply chain areas, you should probably consider the supply chain suite because your total price for the software would be less than if you purchased individual solutions separately.
2. If you have an ERP solution in place:
- If you have implemented or definitely will implement an ERP solution and have found that you only need 60 to 80 percent of the functionality of a best-of-breed for particular supply chain solutions, you will probably be happy with the supply chain solution of the ERP vendor your company has chosen. Traditionally, the ERP players haven't put leading-edge functionality into their supply chain applications; however, this is also changing rapidly. As the ERP vendors have seen the need and importance of robust supply chain applications, significant investment has occurred to upgrade their functionality to compete with the best-of-breed and supply chain suite vendors.
In the confusing world of supply chain technology, solution selection should be easier if you enter into the decision-making process armed with some key factors to consider. This discussion covered some key issues regarding general supply chain IT decisions, and specifically the factors that will weigh in the balance when your company is trying to choose between best-of-breed versus supply chain suite versus ERP systems with supply chain applications. Remember, there isn't a single answer, but you can make your decision easier and your resulting implementation successful if you do your homework in advance.
Sidebar: How to Begin the Selection Process
Rank the following in terms of importance to your company's decision. Based on that ranking, you will be able to better decide which type of solution out of the three is best.
- Level of functionality desired in each functional area (transportation, warehousing, tracking, etc.) — Is your logistics spend significant in relation to company revenue or compared to other cost centers?
- Ease of integration
- Current hardware platform — Do you have a very experienced and sizable IT support staff?
- Current software platform
- Company risk factor — Are you a leading-edge supply chain company that implements new ideas before others (e.g. early adopter)?
- Competitive advantages of your business
- Budget availability
- Company growth plans
About the Author: Chris Norek, a founding partner of Chain Connectors, a supply chain consulting firm, has more than 15 years of experience in supply chain and logistics-related consulting across several industries. He previously was a professor of logistics and transportation at the University of Tennessee and Auburn University. More information at www.chainconnectors.com.