ERPs require update to achieve extended visibility
While the complex global supply chain outpaces spreadsheet tracking methods and other traditional enterprise resource planning (ERP) solutions, automation efforts that remain focused internally rather than broadly on the extended supply chain can also barely keep up.
Lora Cecere, CEO of Supply Chain Insights, told GT Nexus, which sponsored the study:
Supply chain processes are more dependent on trading partners and interactions across the extended supply chain, but IT capabilities are largely based on electronic data interchange and spreadsheets, which is inadequate. For over 50 per cent of companies, IT spending is primarily focused on Enterprise Resource Planning, which automates processes within the single company, not the end-to-end network. This is a conundrum for the supply chain leader.
Manufacturers agree that supply chain agility is crucial for success, but most haven't yet achieved it. Ninety-seven per cent of those surveyed agreed that supply chain agility was needed, yet only 37 per cent were meeting their stated goals, the study found.
"Everyone agrees that information is good, and everyone has made investments in IT to manage information and make decisions," said Greg Johnsen, founder and chief marketing officer of GT Nexus, in an interview with EBN. "At the same time, every entity does different things, so that getting your processes aligned with your suppliers is a big task."
Further, supply chain visibility is broadly agreed upon and critical to successful partnerships, but most organisations have little faith that their ERP systems can deliver the necessary visibility across the extended supply chain. Six out of ten of those surveyed say they are confident in ERP's ability to deliver visibility within the enterprise, but only about half that number are confident when the visibility needs to extend to suppliers and customers. In fact, the performance of the extended supply chain is half of what it is within the enterprise, the study found.
"Lots of companies have made investments to get their house in order but can't talk to the neighbourhood," said Johnsen "The starkness of the gaps we found with this study surprised us. Performance dramatically drops off once you get outside the bounds of the enterprise."
A cloud-based approach, which puts information in a commonly accessible space, allows for the close collaboration and real-time information needed to enhance supply chain agility. "The new world is designed for high levels of iteration around business objects," Johnsen told us. "That's a very different model, and it changes every process that is collaborative." Shipment information, purchase orders, bills of lading, inventory reports, and more all change as they move from one partner to another.
A wholesale move to a more integrated partnership, though, stymies organisations. A better route is to make small steps in that direction. "You could tackle one part of the supply chain, one which is early in the total process, first," said Johnsen. "When you get it right, you can turn the lights on in some other part of the supply chain." For example, some organisations choose to work with suppliers to seamlessly, accurately, and efficiently deliver purchase orders, and accept, acknowledge, and ship against them.
- Hailey Lynne McKeefry