Are you Investing in the right Supply Chain Software?

the right supply chain investment

Let’s assume that you recently bought a brand-new house. The builders ask you to come and select the options on your new home. If you’re passionate about interior design and home decoration, the chances are, you already know exactly what you want. However, if you’re like me, you were mesmerized at the enticing options that they offered, including the Stainless Steel Two Section Solid Half Door Reach-In Refrigerator. I was very close to accepting all the fancy options until I realized two things – first, I probably won’t need such refrigerator given my eating habits, and secondly, it was much cheaper to purchase one with fewer features, yet more fitting for my personal needs.

Software vendor selection can be very similar to furnishing a new home. Some software solutions come with many enticing out-of-the-box(OOTB) functionalities, often at a higher cost. Other software may offer fewer OOTB functionalities but pride themselves in flexibility at a more affordable price. Software with many OOTB functionalities will often look very attractive since it introduces new functionalities or seems to have modules that closely describe what you’re looking for; however, perhaps the focus should not be on what the software offers, but how well it can be tailored to your specific business need.

Supply chain systems investments arise from a couple of reasons: a growing company that now requires a systematic, computerized supply chain solution or a company with established supply chain that’s looking to upgrade its capabilities.

Building a Supply Chain Practice – if your company has undergone a significant growth recently, it may be a time to consider enhancing your supply chain with a professional software. When exploring different software vendors, you may not have concrete business requirements due to the flexibility of building a new supply chain. As someone who’s building the practice, this is a good opportunity, but it can also be a dangerous situation if you do not maximize the flexibility. Your business’ strength is the flexibility, but if you compromise to the OOTB functionalities, you’re not optimizing your supply chain. Rather, you’ve compromised to the structured system that may not be ideal for your specific needs. Relying on those OOTB functionalities for supply chain ideas can be beneficial, but ultimately, focus more on what the software could offer given your explicit business needs.

Optimizing an Established Supply Chain Practice – if your company has an established supply chain practice, you’re probably comparing vendors to ensure that they can meet your business requirements. However, you often realize that the modules that you purchased don’t exactly fit your business, so you find yourself exploring modifications during the design process. Not only are you paying more on top of the additional modules that you’ve purchased, but now you’re paying to modify something that’s already been built. Since the rigid software came with concrete structures in the built-in functionality, the chances are, you’ll have to pay for even minor changes, and it’ll take longer to implement the changes.

Let’s look at a few product-specific examples

Warehouse Management System – Labels are unique for each customer, and it can change frequently based on different seasons/promotions. Major WMS vendors often come with a label template that the customer must use unless they pursue customization. Due to dynamic needs of labels, even with the customization, you need someone with extended knowledge in labels or pay for another change through the software vendor. Although the template may initially seem like an easy plug-and-play tool, you’ll soon find the need for more flexibility. However, with a more flexible WMS, you can customize and manage your own label with just a little bit of training.

Labor Management System – One of the best ways to reduce the cost on labor is to ensure that you have the right number of employees for a specific work coming in. Planning your labor based on the incoming workload can be a powerful tool if done properly. Due to its potential impact, many labor management systems are building and improving this module for the customers to reduce their labor cost.

Let’s assume that your business handles items that may vary significantly in size (furniture, auto parts), and you measure your associates’ productivity by the volume handled depending on the item size category. Given this information, you purchase a labor system that has a built-in planning module in order to plan the appropriate labor; however, it may not be until the design phase that you realize this module is not dynamic enough to look at the item category to identify their sizes and apply different rates. As a result, you have to plan your labor based on the average volume and rate (inaccurate planning), or modify the existing module to apply different rates (additional cost). On the other hand, with a more flexible labor system that may not necessarily come with a built-in labor planning module, you can build a report that calculates the labor needed based on the number of items in each category and apply different rates. In doing so, not only do you accomplish your goal at a cheaper cost, but create a more dynamic and accurate tool that can be modified without any outside support in the future.

Ideal solution doesn’t depend only on the software, but also on the SMEs…

In both examples, we can see that the flexibility enables ideal solutions when it’s entrusted with the right SMEs and their knowledge. Customers are often attracted to solutions with multiple OOTB functionalities, because they seem like handy tools to help their operations. However, with the right SME and a flexible system, you can create a more tailored tool for your operations specifically at a cheaper cost. Save on the initial cost by selecting a more flexible system, and invest it on the right SME to create tailored solutions for your supply chain!