Let us suppose that you are walking by two restaurants trying to decide where to eat. The gourmet a la carte restaurant looks very appetizing. But surprisingly many people choose the buffet. The Buffet style always sounds like a good bargain for your money, but there are consequences to selecting buffet chains.
All you can eat buffet Gourmet a la carte
We need to look at supply chain software the same way.
- Only bite off what you can chew. If you focus on solving a specific problem, for example, sales and operations planning, that should be the focus of your deployment.
- Make sure that you can come back to the restaurant and order something else. You have done your due diligence in selecting the restaurant, the service was excellent and your hunger was definitely satisfied. Make sure that your supply chain software is scalable enough to support other requirements without additional integration effort.
- You may be enticed by the buffet style bargain. Your Procurement group knows that there is no such thing as a bargain buffet in a supply chain solution. You will end up paying millions of dollars in deployment services for something that you didn’t really need.
- If you take too much it is left on your plate and it spoils. Ordering just what you want or need eliminates waste, quality is usually better and you get full value.
- With buffet software you take it like it is, or pay extra if you need something changed. You need the flexibility to easily adapt the software to your business processes as they change.
- Buffets can certainly make sense to support your internal financial control requirements. There are clearly benefits to an internally integrated transaction system.
- The key question is – Does it make sense for supply chain planning?
In today’s multi-enterprise supply chain network, the reality is that you and your partners never all have the same system. Is your buffet solution really best at integrating a multi-enterprise supply network that might have your biggest contract manufacturer running a different system in their sites? The outsourcing business model continues and is expanding from its inception in high tech electronics to other industries such as pharmaceutical. This means that the number of companies requiring a multi-enterprise model across their trading partners is also growing. Shedding overhead does not mean shedding control. The pendulum has shifted from 100% OEM control to 100% outsource control and is now somewhere in the middle. Modeling your partner’s (supplier or contract manufacturer’s) decisions is critical in understanding your risks and opportunities and can only be achieved when your systems are host system agnostic.
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Tags: Supply chain management
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Agree. When we ask ourselves why those companies failed to implement system, one of the reason is they do not really understand what are the system functions can help them before system implementation. As a result, the system won’t help them much.
Yes, companies need to see value with every ‘a la carte’ choice that they make. There is no reason why a company should have to wait until the end of a multi year deployment project to see value. The important requirement is that the ‘a la carte’ deployment is based on a single platform so when you deploy the next solution it is seamlessly integrated. The next solution may be collaborating with your trading partners who are using totally different systems. So keep in mind that all of your solutions must be easily integrated, but you have the ability to deploy as required.
I think this is particularly true for large ERP systems which have been building themselves into super buffets over the last ten years. I think that we are very close to the point where some of them are ‘un-installable’ in terms of time and money – and when installed even these super buffets do not provide the critical, company specific functionality to be truly successful (but so much money has been spent that no one dares to admit to that).
I also think this is related to what I consider the myth of ‘best of breed’. I think best of breed makes sense when you are talking procedural issues but it breaks down when you get to the nuts and bolts functionality level. There is just too much individuality, even between companies in the same vertical market to think you can have common methods of doing things that will work across the board. In an effort to incorporate all of the best of breed stuff, ERP systems are becoming increasingly bloated.
The ideal ERP system of the future might be an under-frame that supports the master files with easy connections to customized transaction processing functions.
Good post.