Supply Chain Information Technology: Creating Shareholder Value
The world of supply chain technology is more challenging than ever today, with:
The faster pace of evolving business process requirements to drive higher productivity and customer service enhancements;
Increased budget constraints;
Expensive, aging legacy software and hardware architectures.
All of these challenges can negatively impact supply chain value creation if not properly managed with an eye toward tactical efficiency, as well as an eye toward the emergence of new technologies.
From a tactical efficiency perspective, upgrades to existing supply chain execution software applications and underlying technology stacks must be addressed in the next 12-24 months. Many organizations are running supply chain applications that have seen limited to no upgrades since they were installed circa 2002-2006. During that period, many organizations continued to adapt and improve operations, leveraging as much functionality as possible out of the older supply chain technology platforms.
However, as the clock ticks on these older platforms, the cost to maintain the systems and risk of obsolesce only grows. At some point in the very near future, these organizations are going to face the prospect of a potentially expensive upgrade. The illustration below shows standard technologies being used by supply chains.
To date, supply chain application providers have consistently driven customer enhancements into baseline feature sets, leveraged new technology in software development and hardware architecture, as well as developed more robust integration strategies built out expanded suites of supply chain applications.
As a result, many of the leading supply chain execution applications are approaching functionality parity with negligible functional differences for most operations. Today, selection criteria is trending more toward underlying technology strategies and the ability of the potential client organization to leverage the broader suite of supply chain applications, as much as the traditional feature-function evaluation of the supply chain execution application itself. Companies should take time to look beyond their current supply chain execution software partner and carefully evaluate how the supply chain application providers have adapted and evolved over the last decade.
From a strategy and emerging technology perspective, one area that seems to have everyone’s attention right now is Software as a Service-based (SaaS) applications. Certain areas of the supply chain are prime candidates for the emerging trends in SaaS-based software applications.
The convergence of constrained capital, limited IT resources, and demands for higher productivity functionality create an opportunity for SaaS software application technologies to drive the value creation framework.
SaaS presents fewer barriers to deployment than traditional license-based software applications.
The advantages of SaaS include little to no upfront investment, very limited in-house IT support to integrate or provide ongoing overhead related to application support-maintenance, and quick payback compared to traditional installed-licensed software model.
As with any emerging technology, SaaS comes with its own set of challenges, including a limited feature set in the true multi-tenant SaaS model.
All customers are truly sharing the same instance of the software application and availability and security issues that the business has to overcome.
The current business focus on creating value through increased productivity and technology responsiveness will only continue moving into the future. Technology managers in supply chain must identify the appropriate short-term tactical strategies to meet immediate business needs and remain competitive in the market.
At the same time, they must be prepared to adopt and embrace emerging technologies, such as SaaS deployment models before they become outmaneuvered by their competitors in the future.
Below is a useful list of supply chain technology initiatives to increase shareholder value:
- Assess remaining legacy supply chain applications in the company’s portfolio and determine gap and business case in relation to commercial alternatives.
- Assess existing technology infrastructure (e.g., processing, integration tools and communication) and determine upgrade prioritization.
- As forecast accuracy and demand variability continue to drive significant supply chain challenges, determine if the organization’s current tools support process requirements.
- Look for opportunities to enable or enhance internal and external collaboration as a means to drive improvements in customer service.
- Evaluate the company’s current transportation strategies – TMS remains one of the smallest deployed technology solutions despite emerging low-cost, high-value opportunities for deployment in many organizations.
- Identify areas downstream where the WMS can increase productivity or accuracy opportunities, where applicable (e.g., labor management, voice-directed picking, integrated slotting management, and pre-manifested picking).
- Establish and track technology-related benchmarks against competitors (e.g., application adoption, event management, integration tool use, and visibility dashboards).
- When contemplating upgrading supply chain execution applications, perform a gap assessment of processes against the proposed upgrade functionality.
- Consider opportunities to competitively bid what have been traditional application upgrades for supply chain execution applications, especially when upgrades cannot support prevailing process requirements.
- Identify future opportunities (e.g., visibility, TMS, GTM) to pursue incremental implementation of transaction-based (SaaS) supply chain applications.
For more, download the White Paper:
Leveraging the Supply Chain for
Increased Shareholder Value
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