3.11.2020 by Bill DuBois
In the first instalment of “3 reasons why best-of-breed vs. single ERP vendor isn’t a debate anymore,” we looked at the ‘80s, big hair and spandex but more importantly, we discussed the new realities of the supply chain as well as reason one of three about why we still have this discussion. You may remember we left off with thinking about big answers rather than big data.
Reason one is that there is still a perception data integration will be easier with a single vendor. This could lead to a lot of wasted time and money if the focus is on big data rather than big answers. Here are the other two big reasons for the best-of-breed vs. single ERP vendor debate.
If you’re in the supply chain, you plan demand, supply, inventory, constraints, distribution, customer and supplier relations, spare parts, and the list goes on. ERP vendors like SAP have a broad footprint of modules and capabilities that go well beyond supply chain planning into areas like HR and finance. So why would you go to a vendor that may only do a couple of these things?
The argument for best-of-breed solutions is that functional capabilities will be better because the company is focused on a smaller footprint of products. Best-of-breed solutions have been pigeonholed into delivering on one specific process. But much has changed.
Many what would be considered best-of-breed vendors now offer a host of products and applications. This isn’t much different than ERP vendors and their suite of modules. Some turn to best-of-breed thinking there are limitations on the ERP suite when it comes to solving specific business problems and that processes will need to adapt due to these functional limitations.
This may or may not be true. The one thing ERP vendors and best-of-breed suites all have in common is they will have a host of modules or applications to support specific business problems. Some are marketing the menu of modules as a platform, but peel back the onion and look for proof points, such as customer references, to validate the claims. For example, as SAP sunsets APO and migrates everything to IBP, some functionality, like production scheduling, still requires a separate server.
There has been a move to a horizontal view of the supply chain in addition to the functional view as companies transform cross-functional processes like sales and operations planning. Companies are looking to break down silos, but to meet customer expectations, manage disruptions and stay profitable, we have to go beyond silos and functional processes. Predicting demand, responding to change and making quick, confident decisions does need a platform. The platform, though, has to be a single place for the supply chain brain.
For “big answers” fast, having all of the analytics and math needed for a confident decision can’t be divided by function or module. If the analytics are in one place, you can immediately pull on one attribute and see the impact on the rest of the global network. No cascading of partial inputs through functions. Increase demand, see the impact on supply, capacity and other customers as fast as it took to read this sentence. Simulate a supply disruption and see the demands impacted faster than a customer can say “where’s my order?!”
A true supply chain planning platform will allow you to break the proverbial supply chain 4-minute mile. You simply can’t do that with a suite of modules. Sure, you’ll find some great functional planning capabilities in the market but it may not get you on the supply chain podium.
To put it bluntly, you’ll still have a slow and sluggish supply chain. With all the analytics in one place, you’ll reap the benefits of a smart supply chain. And if the platform is open and you can incorporate machine learning capabilities, this will advance the exploratory approach of the bimodal supply chain much faster than investigating new capabilities in isolation.
If you get everything from one vendor, it only makes sense that it would all look the same regardless of what function you’re responsible for. It’s understandable to think this would facilitate collaborative, cross-functional processes, and if you bring in a best-of-breed vendor, by default you wouldn’t get a common look and feel across functions and processes.
Unfortunately, it doesn’t matter who you get your tools from, there is going to be some level of disconnect as soon as you start attempting to align disparate modules to steer data-driven, collaborative, global decisions.
Even if the UI is similar to some functions, raise your hand if you or somebody you know is turning to Excel to do their supply chain analysis. It seems that after all these years and millions of dollars in ERP investments, Excel is still a popular choice because the analytics and views for decision support aren’t there.
Supply chain planning is still a team sport and as great as Excel is, it isn’t a team planning solution. The gaps in the module strategy, regardless of who you get your modules from, are even more exposed by the need to increase agility, speed and efficiencies in order to tackle the more intense challenges of meeting customer expectations, managing change and staying profitable. The symptom that something is wrong happens to be the use of Excel as a band-aid. Replicating your current excel spreadsheets and processes with a packaged solution won’t turn out much better than the Excel Band-Aid.
Like a well-gelled team, people need to come together for planning decisions as fast as they may come together on a social media platform. Except it will take a supply chain planning platform where everyone can participate in real-time to get the speed and efficiencies required today. Having some views that look similar will be of no value if what makes up the supply chain brain – all the analytics that go into planning the supply chain – aren’t in one place.
Certainly, there are other reasons to support the buying strategies of either the best-of-breed or single ERP vendor approach but who you buy from isn’t important if the solution doesn’t support the end game of delivering on a best-in-class supply chain.
The solution criteria should be around what something can do. The Aberdeen research paper, Gain a Competitive Advantage with Next-Gen Supply Chain Planning does a great job articulating these requirements: “What’s needed is a more viable option that removes the uncertainty around supply chain planning strategies and helps you get more from your existing ERP investment. A solution that can span and model multiple transaction systems.”
Aberdeen talks about the value of doing things differently and that the performance of the best-in-class companies deserves some investigation. They go on to list those attributes which include:
• Plan your entire supply chain in one synchronous model.
• Continuously and constantly balance supply and demand.
• Demand and supply planning happens in tandem with all data, processes and people, tied together in a single place.
• The impact of a change across your entire supply chain network can be seen immediately so if something throws a plan out of alignment, you can respond to change, see the impact of your response and collaborate on the best course of action.
• Teams work together toward corporate goals vs. functional goals using one data set.
A takeaway from the Aberdeen report is the need to connect data, processes and people. As Gartner’s David Willis stated back in 2016, “Big data is not the answer.” Supply chains will continue to have data lakes, data rivers and data bird ponds all over the globe. OK, data bird ponds may be a new term, but you’ll have supply chain partners of different sizes and with that comes a variety of data sources. The point is you’ll never get all global data in one place, so you need to get good at digesting multiple data sources much like the human brain can take in multiple inputs and make sense of things in seconds.
The human brain can process multiple thoughts and ideas simultaneously. A supply chain brain can immediately know that a demand increase could have an impact on revenue, margin, other customers, supply, inventory, constraints, etc. The supply chain brain or platform will have all analytics in one place. This means one platform could support a number of functional processes like demand, supply and inventory planning as well as cross-functional processes like S&OP. An open platform will also allow you to leverage emerging technologies like AI, demand sensing and machine learning to enhance the planning experience.
Imagine building out your own solutions. The platform should give you this flexibility to quickly add capabilities if you already have the expertise in house or through a partner. The supply chain will continue to change as it has in the past, so you’ll need to be able to adapt just as fast.
The supply chain starts and ends with people. And it will be human beings who will manage their way to supply chain excellence. Sure, some processes will be automated and machine learning will make things easier for the planner, but people still need to collaborate to make confident decisions. This is getting more difficult to do with a suite of modules. It’s the single supply chain planning platform or brain, as some have called it, that’s needed to support the bimodal supply chain.
So is it still important where you get your supply chain planning software? Are the actual requirements needed to help your business more important? Do we need to rethink what those requirements are?
Contact us with your thoughts and experiences.