Which Supply Chain Management Software is Right for your Business?
If you’re a Business Leader, Supply Chain Manager or Logistics Executive, you’re probably all too aware of the fact that there’s an abundance of Supply Chain Management (SCM) software products available on the market today. While having so many options to choose from is definitely helpful, it can also lead to a sort of “information overload” when trying to decide which supply chain management software is right for your business. In this article, I’m going to show you the most important things to consider when choosing an SCM software solution for your business.
Question Number 1: What will you be using the Software for?
The first and most important thing to ask yourself when choosing a Supply Chain Management software is, “What will I be using the software for?” As you know, supply Chain Management is a complex process with many different aspects, ranging from planning and strategy to manufacturing and logistics. As a result, SCM software tends to fall into two categories:
1. Software applications designed to automate the planning aspects of SCM, such as: Determining the best carriers and means of transportation, getting an overview of the supply chain, and mapping out production.
2. Software applications designed to automate the execution aspects of SCM, such as: Determining product price and availability, determining alternate product logistics, and ensuring that manufacturing materials are available when needed.
So the key to choosing the supply chain solution that’s right for your business is taking some time to consider the unique needs and goals of your business. Start by asking yourself the following questions:
What’s my business objective?
Do I need a software solution to handle a specific SCM task, or am I better off with a solution that will handle all my basic SCM needs?
Will the software I choose be compatible with my existing SCM software infrastructure and that of my suppliers and partners? (I’ll talk more about this in the next section of the article)
In addition, you have to map out exactly where in the supply chain your company would benefit most from automating the supply chain process. For example, find out if there are currently any bottlenecks that are slowing down your company’s supply chain process. This step is crucial because it not only ensures that you’re maximizing the effectiveness of the software, but it also keeps you from spending money on software applications that aren’t necessary.
For example, you don’t want to spend money on software that’s perfectly equipped to handle all the planning aspects of your supply chain, when what you really need is to automate your supply chain execution process. This is why mapping out the weak points in your supply chain beforehand is crucial.
Once you’ve answered these questions, you can make a more accurate judgment of the type of software you need to accomplish your supply chain management goals.
Another thing to consider is the fact that, just like the businesses they serve, many supply chain management software providers have unique niches that they specialize in. So, a good place to start would be looking to find an SCM software provider that already has experience in your field.
Question 2: How Compatible is this Software?
The next question to ask yourself when choosing an SCM software is, “How compatible is this software?” There are actually two things to consider here. First, you have to know whether the software will be compatible with the rest of your company’s existing software. This includes not just supply chain software, but also software that supports the supply chain process, such as customer relationship management (CRM) software.
This can be an issue of in-house resistance for many companies, because employees are often accustomed to doing things a certain way, and might not be eager to implement new methods if they believe the process will be time-consuming or difficult to learn. Therefore, it’s your job to show your staff how the software will benefit them by making their jobs easier and making them more effective employees.
In addition, with any software installation there will be problems early on. No supply chain software can perfectly fit your company’s entire history, structure and operational processes. As a result, there will be an adjustment period where the new system may have to be tweaked to more accurately fit your needs. It’s important to let your staff know about this adjustment period, and that there will probably be some errors at first, but that they shouldn’t let these errors shape their overall perceptions about the value of the software, and that the errors will diminish over time.
The more confidence your employees have in the software, the more likely they are to use it consistently, and the more seamless the integration will be.
Next, and perhaps more importantly, you have to know if the software will be compatible with that of your vendors, suppliers and manufacturers.
This is probably the biggest issue that companies face when installing new SCM software. As difficult as it can be to persuade your internal staff to adopt new software and change their work methods, it can be much more complicated getting outside suppliers to do the same. Not only are outside suppliers reluctant to invest the time, money and effort involved in integrating with your software, but they may also have goals that conflict with your own.
For this reason, traditionally only large and well-established businesses have the leverage to force their suppliers to integrate. And even they often face difficulties in doing so. A well-known example of this is Wal-Mart. In their partnership with P&G, P&G was faced with the burden of responsibility for managing inventory.
But in return, for taking on this additional burden, P&G was provided with more detailed information about Wal-Mart’s customer demand. This is an example of how a powerful incentive can help make supply chain software integration more beneficial for both the company and its suppliers.
As an alternative to manually combining their existing data (for example, from Microsoft Access or Excel programs) with SCM software, many companies are also realizing the value of using enterprise resource planning (ERP) software. Because ERP software helps to bring separate existing data sources together into one application, it can serve as a single data resource for your SCM software to work from, which makes the transition and day-to-day automation that much easier.
Also, many current ERP software solutions have modules that combine the same functions as SCM software, so some companies forego SCM software altogether in favor of ERP.
However, ERP can be an expensive and difficult solution, and not every business will need that level of data integration. On the one hand, some CIOs report that they were glad that they decided to go with an ERP solution first instead of SCM, because it avoids the issue of having to pull data from many disparate sources. But others are able to manage effectively with only SCM.
So you’ll need to assess your company’s unique structure and objectives to decide which platform is better for you. As a general rule, though, if you have a larger business with a lot of data coming from different sources, you might well benefit from an ERP solution.
Question 3: How Reliable is the Software Provider?
The final question to ask when choosing an SCM software solution is, “how reliable is the software provider?” By this, I mean that you need be sure that the company you choose is going to be around in a few years, and that they’ll give you the support you need if the software needs to be repaired or upgraded, or if you need additional software installed.
Because supply chain software is so crucial to the effective functioning of your business, it’s important that you research your software providers extensively. Find out what kind of financial shape your software provider is in. Is the company taking financial losses? Are they downsizing? How long have they been around? If possible, try to get reviews from reputable sources who have experience working with the provider.
As a general rule, the longer a software provider has been in existence, and the more established they are in terms of their clientele, the more stable they are. Some additional things to take into take into consideration are the company’s reach (whether they have a local, national, or global reach), and their experience at dealing with large and complex supply chains. A supply chain software provider with a global reach and has a history of dealing with complicated supply chains is probably going to be around for a while.
Also, remember that whichever provider you choose, you should always have a backup provider who serves as a “Plan B”, so that in the unfortunate event that your primary software vendor goes under, the impact on your supply chain won’t be as severe.
Question 4: Who can Help you Decide?
In some cases, due to the complexities involved, the wisest thing you can do when choosing supply chain management software is to hire an outside consultant to help you decide which approach is best for your business needs.
The reason for this, as stated earlier, is that different industries have different supply chain needs, and a consultant can help you determine yours, based on professional analysis.
An example would be the recent Menu Foods pet food scare, where contaminated pet food had to be recalled. In this situation, the ability to track and follow contaminated goods was absolutely essential. It was literally a matter of life and death. Because they were able to trace the path that the pet food took from the manufacturing source to the supermarket aisle, officials were able to determine more precisely where in the supply chain the contamination took place. A supply chain management consultant can perform analysis that lets you know whether or not this level of tracking products is as important in your industry.
So in conclusion, there are four questions that you should ask yourself when choosing a supply chain management software solution:
What will I be using the software for? This requires getting an accurate assessment of your current and expected business needs and your goals and objectives. Decide whether you need a software solution that focuses on planning, execution, or both. Also, map out any existing weak points, such as bottlenecks, in your supply chain process that would benefit most from supply chain management software.
How compatible is this software? This means finding out beforehand whether the software you choose will easily integrate with your existing SCM and related software, as well as the software of your vendors and providers. Also, you must be prepared to persuade your in-house staff to adopt the software by showing them how this change will benefit them. Lastly, you must be prepared to make compromises with your supply chain vendors and providers so that the decision proves to be mutually beneficial choice.
How reliable is the software provider? This requires doing some research on the background of your supply chain software provider. Find out about the provider’s size, reach and financial situation (losses, downsizing, etc.). Also, try to get reviews from other sources who’ve dealt with the provider in the past. Plus, don’t forget to establish a backup software provider to shield your business in the event that your primary provider goes out of business.
Who can help me decide? This means finding out whether or not an outside supply chain management consultant might be better suited to assess your business needs than your in-house staff. Remember that sometimes an outsider will have an awareness of needs that your in-house staff takes for granted, such as product tracking needs that may be specific to your company.
Choosing the supply chain management solution that’s right for your business can seem like a daunting task, but it doesn’t have to be. While no software can completely automate your supply chain management, and no integration will be completely seamless, answering the questions I’ve outlined above will get you started off on the right track, and help ensure that the transition will be as smooth as possible.