Software Standardization and The Agile Supply Chain

We are all aware of the benefits of standardizing processes and I won’t address these obvious benefits here. What I would like to explore is the danger of going a bit too far, especially in the areas of software packages for supply chain planning. And then I will provide a vision for a better future.

Some ERP software houses are working very hard to convince manufacturing companies that their ERP packages – which are constantly expanding to fit new modules and functionalities – can be used to solve any kind of enterprise issue. Sometimes with success. Unfortunately we see again and again companies that – in the spirit of standardization – miss the opportunity to deploy excellent processes by force fitting their requirements to the limitation of the software package they happened to have installed. We have observed several times how best practice pull execution systems have been abandoned and replaced by substandard push systems on the ground that the company-wide ERP system could not “deal” with the existing best practice process.

What many companies failed (and still fail) to realize is that by implementing standardized ERP solution they are also standardizing their operational performance and kill the potential to become best-in-class supply chains. Therefore, if you are one of these companies that has – or is planning to – deploy the latest multimillion-dollar ERP solution in the hope to become best in class in supply chain management, then here is the bad news: you won’t. At most you will become average. Why? Because plenty of other companies have done the same and therefore you cannot hope to get better processes then they have. True excellence can only come from innovative and new approaches that put the process first, and the tool second, as an enabler of the process. The tool must support you in consistently execute the process in the way you want and not the other way around.

Fortunately, times are changing. There is now a new generation of supply chain leaders that start recognizing the issue. They are not satisfied about the way their expensive ERP package is limiting their ability to improve the performance of their supply chain. In today’s ever changing environment they need to have agile supply chains and they see their ERP system as a barrier to achieve that. And they are looking for creative and cheap solutions to overcome this barrier.

We all know, what form most of the time these “enhancements” and solutions looked like in the past: excel spreadsheet! But there is some good news: mini applications. They are fast to design and configure and agile to deploy. Their software-as-a-service and cloud based technology allow to deploy such solution fast and cheaply. These user-friendly mini applications allow collaborative planning, data integration and real time performance tracking on your notebook or iPhone or iPad. They exchange data with your core ERP system, which is still (and rightly so) the backbone of your company and the sole repository of master data and allow the users to complement these data with information from other sources. More and more companies are starting using these tools for anything from forecasting to resource management and continuous improvement. I strongly believe these tools will revolutionize the way companies will be managing their day-to-day business. The future looks like a stable standardized ERP backbone combined with an ecosystem of mini applications to build flexibility, adaptability and agility on top of it. This will allow companies to design innovative ways to manage their supply chains and quickly develop the IT solutions to support their processes, thus breaking free from the rigidity imposed by big, massive, inflexible ERP systems.