1. Make some SCIT investments now.
Many companies have dealt with the economic storm by deferring SCIT investments. Upgrades to existing applications and infrastructure have been postponed well past end of life. And new strategic investments have been tabled. This halt in SCIT investment has generated a significant backlog that will present challenges in the coming years. Now is the time to create an IT roadmap that answers critical questions, such as: Do I upgrade my supply chain upgrades now or can SaaS applications meet my needs today? And at what point will a SaaS application meet my business needs?
2. Decide whether to replace or upgrade.
Deferring upgrades past vendor recommendations was a popular tactic even before the recession. The last few years have only reinforced this approach. Many companies are supporting mission-critical supply chain operations with system versions that are more than a bit long in the tooth.
While it may be feasible to do something about this now, the choice of what to do may not be so straightforward. If a company has been sitting on the same version too long, the level of effort and cost to upgrade may approach the cost of a full replacement. Smart organizations will grasp the situation by dealing with it as a way of becoming more competitive than a merely software upgrade.
3. Get a handle on SaaS and the Cloud.
The cost of infrastructure, perpetual licenses, support, and administration continue to hamper investment strategies as enterprises build out and upgrade SCIT applications. So the potential of SaaS and cloud computing is just as appealing in the SCIT world as it is in the rest of the enterprise computing world.
SaaS solutions are already well-established in certain SCIT applications, such as transportation management and global trade management (GTM). However, as seen with WMS over the last 10 years, vendor consolidation will be a given. Making informed decisions is imperative when selecting a SaaS partner. This ensures that companies end up on the ‘right side’ when that inevitable consolidation occurs.
Consideration of SaaS and hosting will become the new normal for most SCIT initiatives. This does not mean that on-premise will become passé. But getting a handle on the cloud, at the least, means understanding when the strategy makes sense and, at best, pulling the trigger on the company’s first SaaS selection and deployment strategy.
4. Establish the ‘Next Step’ in your WMS strategy.
Has the WMS investment paid off? Now is the time to evaluate the company’s current situation relative to its original selection objectives and develop a plan for the ‘Next Steps’. Conduct an operations and technology audit and identify the specific opportunities to leverage the benefits of the investments made to date. Many of Tompkins’ WMS clients are experiencing even larger savings from Labor Management Systems (LMS). Bottom-line business drivers for increased productivity, in addition to the reluctance to grow headcount, have resulted in a robust growth in the LMS market.
5. Find TMS solutions even more attractive.
Transportation spend is a key source of supply chain cost, yet the majority of practitioners in a recent survey neither use TMS nor have plans in place to even consider TMS deployment.
As recession recovery progresses, there will be a continued focus on productivity-efficiency improvements as well as cost containment initiatives. And TMS applications will receive higher consideration in supply chain improvement initiatives.
For TMS, vendors today are letting customers focus on key areas in which they see the greatest return (e.g., optimization of LTLs, freight audit and pay, or carrier management). It is fair to ask vendors about paying for functionality; there may be enough ROI for the first module implementation to pay for additional functionality. Also, the TMS marketplace has a relative abundance of SaaS solutions that can significantly lower the entry implementation costs for many organizations.
6. Enable SCIT through product extensibility.
When considering the right supply chain technology, include “suite vendors” in the mix, as there may be other applications that should be considered. Vendors have been known to offer very attractive pricing on secondary applications to get the sale on the primary product in question.
Also, some have been known to get creative in offering additional licenses to cover peak season demand. In many instances, there is only one best vendor for each piece of technology, but there are often compelling business reasons to use one vendor for an array of requirements when they have already demonstrated success.
7. Handle compliance mandates in an efficient manner.
Regulatory compliance already plays a prominent SCIT role in publicly traded companies and certain industries. Despite talk about deregulation and reducing the size of government, the impact of regulations on supply chain operations is going to continue to increase in many sectors.
Import and export trade regulations (see ICS below), serialization and traceability requirements, and other mandates are going to impact many supply chain operations big time. Effectively leveraging SCIT applications and resources will play a critical role in handling mandates in an efficient manner.
8. Put data to work through supply chain intelligence.
Globalization of the supply chain has meant facing dynamic challenges with increasing complexity and rapid change. And with extensive global supply chains, companies must manage vast amounts of data to transform it into both tactical-operational and strategic-competitive information.
When making smart choices related to sourcing vendors and locations, one crucial factor is to understand total delivered cost of materials, components and finished goods. In addition, each supplier’s performance needs to be evaluated on a daily basis to support negotiation of better prices, ensure timely deliveries and maintain agreed upon quality standards.
In today’s market, attempting to use spreadsheets to develop a sourcing model and calculate key factors (e.g., delivered costs, prices, delivery schedules and measure quality) is not practical, if even feasible. Thus, utilizing Business Intelligence (BI) technology supports an organization by handling the considerable data, resources and technology needed to comprehend these key sourcing factors. BI adds and improves the process an organization uses to make market-informed purchasing decisions by supporting those decisions with statistical evidence.
9. Contend with the talent gap.
IT departments have dealt with the recession like other enterprise entities – by slimming down. This has left many of them understaffed and unable to deal with the accumulation of deferred projects.
The competition to hire and retain key positions will be fierce despite what has been – until now – a buyer’s market. As one means to deal with the talent gap, companies can look at their core competencies and determine the best areas for outsourcing.
10. Keep a global perspective.
As the business world becomes more and more global and security is quickly becoming a much larger issue than it has been in the past, companies are depending a lot more on technology. This is part of the reason why the European Union (EU) is pushing paper-free trade to its member states.
In accordance with the Electronic Customs Decision, a new EU customs regulation, known as Import Control Systems (ICS), now requires advance electronic notification of Imports into EU member states (as of January 1, 2011). The introduction of ICS allows information to be exchanged between the office of first entry into the EU and subsequent entry of firms in other member states.
At the same time, companies also have the option to take advantage of GTM, which is an area that sees a great deal of return in a short time-frame, in terms of IT investment. The focus is on linkage and visibility in meeting existing service goals can often be the driving business case element, more so than establishing new goals for the entire organization
11. Close the open checkbook.
SCIT projects have been fertile grounds for time and expense vendor contracts. This is understandable given the amount of process reengineering that can be involved. But too many products overrun budget.
So will there be more fixed-price contracts? Possibly. The old way of doing business, especially on high-end projects, is certainly broken. But making fixed-price and not-to-exceed terms work is not as simple as asking vendors to include these terms in their contracts.
To be successful, they require work on both sides with clear specifications and concise scope management. Also, more and more customers will insist that their own service level language be included in support, implementation, and upgrade contracts.
Over the past couple of years, the focus of Supply Chain Information Technology (SCIT) for many enterprises has been survival. In the face of an economic category 5 storm, the top priority for most companies has been to run lean and wait out the recession. Investments have been deferred and staff has been cut. 