Supply Chain Management Software Pitfalls to Avoid

Research and experience both show that deploying supply chain management software incurs significant risk, and often fails to achieve slated objectives and payback. Fortunately, the factors cited with many failed supply chain software implementations are common, and can be mitigated. Below are the most common causes cited with failed supply chain systems.

Executive Support

Support and participation from the executive suite are crucial in order to contend with organizational changes that need to be made, the potential impact to trading partners, and the commitment in cost and resources. Senior management needs to provide active and visible executive sponsorship and be kept updated with regular schedule status reports and informed on issues that impact project deliverables or issues that could affect the relationships with trading partners. The executive team is ultimately responsible and needs to have the information to act.

Defining Requirements

One of the more important steps in the acquisition of any supply chain system is getting the business and software requirements right. With the wrong requirements, it will be expensive and may cost a few individuals their jobs. Two critical areas are key stakeholders requirements and defining a SCM model that best supports the business strategy.

Implementing Systems

Critical to a successful supply chain system implementation is a strong Project Manager with experience in SCM, team knowledge, getting commitment from the software vendors and the participation of key stakeholders.

A supply chain management software footprint impacts financial, accounting, ERP, CRM, data warehousing and business intelligence systems. Performing software customization and developing interfaces are complex and time consuming, and frequently cited causes in delayed supply chain software deployments. IT should allocate an appropriate portion of their top IT talent to these requirements and seek out experts in each area. These are not areas to be done by in-house staff who are not trained on the particular application software.

An IT issue that can cause the flow of products to grind to a halt is the bad exchange of data between trading partners. Two critical areas are EDI data and auto-identification (barcodes and RFID). Before going live, robust end-to-end (unit and regression) systems testing with partners should be completed. Once live, it will take a tremendous amount of man power to fix bad data. Not only are the operational systems compromised, but the corrupt data works its way through the system eventually affecting other legacy systems and financial reports. With adequate testing, the bad exchange of data can be mitigated.

Ongoing IT Issues

With multiple business systems, data redundancy is an issue. For example, inventory receipts will live in WMS, Inventory Management, Accounts Payable, analytical systems and planning systems. And each version of the receipts may have different characteristics and different retention periods. Without a clear set of policies and good planning, there can be significant wasted management time and effort reconciling reports with different sources for the same information.

Evolution and Future of Supply Chain Management Software

Evolution of SCM Concepts

Supply Chain Management grew out of manufacturing needs to reduce cost and inventories. Ford and Toyota were early innovators of modern day Supply Chain Management, because of their needs to replenish assembly lines with parts and materials.

Concepts and ideas of modern SCM started to build momentum in the 1950s. Many of the new concepts in SCM research were achieved by academia and business consultants.

1958 – Bullwhip Effect – Jay Forrester

1982 - Oliver and Webber came up with the term Supply Chain Management

1985 – Michael Port – Competitive Advantage – Logistics, Operations, Sales, Marketing & Service

Evolution of Supply Chain Software

Grocery retailers and Wal-Mart were early adopters of modern SCM systems. They pioneered the electronic exchange of data and flow through distribution centers. The business software they used was home grown.

During the 1980s and throughout the 1990s, enterprise software vendors started developing supply chain management systems. Their software addressed a limited number of SCM functions. The business systems were almost always standalone and required customized interfaces to other systems. Home grown systems required heavy customization to comply with new and evolving SCM requirements.

During the late 1990s and throughout the 2000s, supply chain software vendors increased their development of additional functionality and acquired other software vendors to fill out their suites of SCM products.

In the 1990s, the manufacturing software vendors started the transition from 1970s era MRP/MRP II products to Enterprise Resource Planning (ERP) software products. Throughout the 1990s and 2000s, the ERP vendors took a similar approach to SCM as the SCM exclusive vendors.

The Future of Supply Chain Management Software

AMR Research expects companies to continue their solid investments in SCM software, fueling continued growth for the software vendors.

The current market is fragmented with business software vendors addressing different areas of SCM; ERP vendors are expanding their capabilities into SCM. Gartner expects a consolidation of supply chain software vendors. Instead of a fragmented market, they believe eventually there will be a handful of vendors with fully integrated suites of SCM solutions. The remaining niche players will address very specialized industry features designed to work with full featured SCM software suites.

Future Trends in Supply Chain Software Functionality

Demand Intelligence – Software will provide better analysis for monitoring and recognizing the causal effects on demand and how to respond to changes in demand.

Integrated Planning and Execution – Changes made to a demand plan will update execution modules with new recommendations for scheduling fulfillment tasks. Execution modules will provide updates on the status of WIP that so that plans can be adjusted based on real world conditions.

Integrating with Partners – There are several areas of integration opportunities such as supplier replenished inventories driven by customer planning metrics. Other areas include systems that integrate logistics across trading partners to optimize resources.

On-Demand Supply Chains – Also called pop supply chains. WMS software will become web enabled and will be designed to support temporary distribution centers with full WMS capability without the cost of implementing systems.

SOA Architecture – This allows for easier integration of SCM software with custom applications and interfaces to other software products such as CRM, ERP and Financial systems.

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