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About the Author

Karin L. Bursa
Vice President of Marketing
Logility


Karin L. Bursa is a vice president with Logility, a provider of collaborative supply chain management solutions. Ms. Bursa has 25 years of experience in the development, support and marketing of software solutions to improve and automate enterprise-wide operations. You can follow her industry insights at www.logility.com/blog. For more information, please visit www.logility.com.


Supply Chain Comment

By Karin L. Bursa , Vice President of Marketing, Logility

May 17, 2012



ERP and Best of Breed Supply Chain – It’s About the Architecture

Should I turn to our ERP Vendor for Supply Chain or Implement a Best-of-Breed Solution?


Sound familiar? For years this debate has been a fiery one. The two parties with the most at stake are operations and IT. Most of the time the IT department defaults toward ERP handling all of the supply chain needs. "It’s just more streamlined for us." On the other hand, operations, which is where the users sit organizationally, typically leans toward the best-of-breed approach. "We need the depth and breadth of functionality best-of-breed brings."

Full disclosure – I work at a best-of-breed (BOB) supply chain solution provider. So naturally my experience has made me a bit biased. However, I have also worked for a global consulting firm which leaned more heavily on ERP and customized software which gives me a good view of both worlds. Lately, when I read analyst reports or white papers on the subject, I consistently find one important fact missing from this discussion, and it’s a big one. It’s the architecture bias of each type of application suite.

Bursa Says:

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Best-of-breed supply chain solutions help predict what will happen, given historic data and a set of market variables.
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I am not talking about .Net versus JAVA. I am talking about what purpose the software was written for; what business problems did the developers architect the software to solve? When you look at the foundational differences between BOB supply chain and ERP you can better determine which path is best for you. 

Enterprise Resource Planning (ERP) was initially meant to focus on back office business needs. Systems were designed to handle high-volume transactions such as matching purchase orders with receipts and costs, invoicing and general accounting. Later, additional front-office capabilities were added to enhance the value from ERP. The architecture of ERP lends itself to look at history, what happened as the financial system of record.

Supply chain software was developed out of a forward-looking need to help predict market demand, and produce and distribute product efficiently and cost effectively.  Best-of-breed supply chain software was designed to solve the specific business planning problems companies face. The architecture is built around planning and scenario assessments with a focus on how to optimize your network. This is a fundamentally different approach than transaction processing.

Best-of-breed supply chain solutions help predict what will happen, given historic data and a set of market variables. What do you predict future demand will look like and what impact might an external event have on your demand? The past several years has shown us what the wrong forecasts and modeling algorithms can do to global supply chains. While many of the scenarios are near impossible to predict—financial crisis, Icelandic volcano, Japanese quake and tsunami—we can still respond more effectively when such disruptions occur.


Based on a planning architecture, best-of-breed solutions enable you to plan multiple "what-if" scenarios so as soon as an indicator is triggered, you can evaluate your options and respond effectively. You have an updated plan to follow, to help guide you through the changes or challenges ahead.

I have spent a lot of time with companies and research firms discussing this topic. Often it comes back to ROI and time-to-value. An interesting observation is that supply chain modules from ERP providers are frequently no more integrated with their own financial, inventory and order management modules than leveraging a best-of-breed provider. In most cases, the implementation of supply chain from an ERP provider presents a higher total cost of ownership (TCO) instead of the lower TCO promised in the sales cycle.

While ERP systems were designed to function across an enterprise, this is simply not the case for a surprising majority of companies, especially those that have grown thru mergers and acquisitions. Often, there are multiple instances of different ERP systems. To connect these disparate systems has been a headache, a well-documented migraine for some. ERP implementations represent big projects for consultants and set similar expectations for ERP supply chain initiatives as well.

The architecture of BOB supply chain software was developed with the understanding that the planning solutions would complement the ERP (transaction) backbone. Integration should be straight forward. Vendors have invested considerable effort to develop integration that simplifies and reduces implementation effort. For example, most Logility Supply Chain Planning implementations take less than 9 months. The architectural difference between the two approaches has a direct impact on TCO and we’re not even talking about the additional value that comes from functional depth and "what-if" scenario analysis.


Final Thoughts

The question now to you is—what do you want to achieve with your supply chain? Is it a tactical, transaction based supply chain or do you have a supply chain that must meet the changing needs of a dynamic marketplace? Today’s supply chain software helps establish a competitive advantage and has become a source of differentiation for many companies. These are flexible, nimble supply chains which can react to external events and proactively sense and respond to unexpected future events, to help keep you 2 steps ahead of the market.

 


Recent Feedback

Great article. I am a little suprised not to see BNSF in the mix while I understand their financial mode/operation is a little different. 

That would only give a complete perspective with all the players in the pool.


Srihari
Senior Consultant
Infosys
May, 22 2016

Surprised to see Home Depot fall off the list; thought they were winning with Sync?


Mike O'Brien
Senior editor
Access Intelligence
May, 26 2016

Using the right tool for the right job has always been a best practice and one of the reasons, we feel, that RFID has never taken off in the DC as exponentially as pundits have been forecasting since 2006. While these results may seem surprising to those solely focused on barcode scanning, the adoption of multi-modal technologies in the DC makes perfect sense for greater worker efficiency and productivity.


Julie Leonard
Marketing Director
Inovity
Jun, 27 2016

The IoT Platform in this year's (2016) Hype Cycle is on the ascending side, entering the "Peak of Inflated Expectation" area. How does this compare to the IoT positions of the previous years, which have already peaked in 2015? Isn't this contradicting in itself?

Editor's Note: 

You are right, Internet of Things (IoT) was at the top of the Garter new technology hype curve not long ago. As you noted, however, this time the placement was for “IoT Platforms,” a category of software tools from a good number of vendors to manage connectivity, data communications and more with IoT-enabled devices in the field.

So, this is different fro IoT generally, though a company deploying connected things obviously needs some kind of platform – hoe grown or acquired – to manage those functions.

Why IoT generically is not on the curve this year I wondered myself.

 

 


Carsten Baumann
Strategic Alliance Manager
Schneider Electric
Aug, 19 2016

I agree totally with Mr. Schneider.

I have always lived by "put it in writing" all my work life.  I am a firm believer of the many benefits of putting everything in writing and I try to teach it to as many people as I can.

This "putting in writing" can also be used for almost anything else.  Here are some general benefits (only some) of "putting in writing":

1. Everything is better understood between parties involved.  There are lots of people types who need something visual to improve their understanding.
2. Everyone can read to review and correct anything misunderstood.  This will ensure that all parties concerned confirm the details of the agreements as correct.  This is further enhanced by having all parties involved sign off on a hard copy or confirm via reply email.
3. Everything has a proof.  Not to belittle the element of trust among parties involved, it is always safest to have tangible proof of what was agreed on.
4. There will be a document to refer to at any time by any one who needs clarification.
5. The documentation can be useful historical data for any future endeavor.  It provides inputs for better decisions on related situations in the future.
6. This can also be compiled and used to teach future new team members.  "Learn from the past" it is said.

There are many more benefits.  Mr. Schneider is very correct about his call to "put it in writing".






Jo Ann Tudtud-Navalta
Materials Management Manager
Chong Hua Hospital, Cebu City, Philippines
Aug, 21 2016

U.S. companies are reshoring and foreign companies are investing in U.S. locations to be in close proximity to the U.S. market for customer responsiveness, flexibility, quality control, and for the positive branding of "Made in USA".

Reshoring including FDI balanced offshoring in 2015 as it did in 2014. In comparison, in 2000-2007 the U.S. lost net about 200,000 manufacturing jobs per year to offshoring. That is huge progress to celebrate!

The Reshoring Initiative Can Help. In order to help companies decide objectively to reshore manufacturing back to the U.S. or offshore, the nonprofit Reshoring Initiative's free Total Cost of Ownership Estimator can help corporations calculate the real P&L impact of reshoring or offshoring. http://www.reshorenow.org/TCO_Estimator.cfm


Sandy Montalbano
Consultant
Reshoring Initiative
Aug, 24 2016

 Good article!  I am sending this to my colleagues who work with me.  We have to keep this in mind.  Thanks!


Robert
Transportation Manager
N/A
Aug, 30 2016

SCM is all about getting the order delivered to the Customer on date/ time requested because happy Customers = Revenue. Using the right tools to do the right job is important and SCM is heavily dependent on sophisticated ERP systems to get right real data info ASP.

I've worked in a DC with more than 400,000 line items and measured the Productivity of Pickers by how many "picks" per day.

I've learned that one doesn't have to remind Germany about your EDI orders.


Ian Jansen
Mr
NHLS
Sep, 14 2016

Challenge - to build and sustain effective relationships at the level of the organizations that are responsible for effectively coordinating and colaborating in an otherwise highly competitive environment 


Don Benson
Partner
Warehouse Coach
Sep, 15 2016

Of course we all need to up our game. We need to move with the times, and always be one step ahead of what the future will bring.


Jade
Admin
Fulfillment Logistics UK Ltd
Oct, 02 2016

Thanks for the article, but I know there's a lot more to this issue than just the pay rates. Please check out my blogs on the subject at www.zipxpress.net.


Mike Dargis
President of asset-based carrier based in the Midwest
Zip Xpress Inc. (at ZipXpress.net)
Oct, 03 2016

Lora, great article! I agree that companies choose the 'safe' solution more often than not. My solution is a bolt-on for legacy ERP's and we even face challeneges of customer adoption. Most like to play it safe and choose an ERP upgrade, which is more costly, time consuming, and has lower ROI across the board. Would love to learn more about your company, we are always looking for partnerships.

Blaine
blaine.schultz@syncron.com


Blaine
Inventory Specialist
Syncron
Nov, 16 2016

This is a game changer in GE's production and prototyping.  It also has huge implications across the GE global supply chain with regard to the management of their support and spare parts network. 


Bob McIntyre
National Account Executive
DBK Concepts LLC
Nov, 21 2016
 
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