Good Enough is No Longer Good Enough for SCM

If you’ve been involved in a supply chain systems selection process over the past dozen years or so, you’ve likely heard the comment that a particular system, usually from one of the large ERP vendors, was “good enough” for your needs.  Their argument was that the importance of having an integrated system outweighed the fact that their systems only covered about 80 percent of user requirements. There are a whole raft of reasons why that was never true, but I’ll leave that aside because in today’s complex, consumer-driven supply chain environment, the issue is moot. Good enough, no matter which side of the argument you are on, is simply no longer good enough. Here’s why.

The good enough concept flourished during a time when business was all about efficiency. This was the era of the “push” model of supply chain where the companies that could make and push the products out the door most efficiently were the winners. This was actually the culmination of the industrial revolution where machines (automation) produced tremendous productivity improvements over what individual craftsmen previously produced.

The ultimate machine in the industrial revolution was the computer. Computers’ ability, through software programs, to increase productivity in a wide range of endeavors was enormous. Therefore, it stood to reason that companies would do everything in their power to make those computers run as smoothly as possible so they could push more products out the door. The IT leaders who controlled access to those machines became gods of the corporate world—no users dared cross them lest they become angry and stop supporting the users’ computing needs. In this context, the good enough concept—where machine needs were more important than users’ needs—is very understandable.

Then the world changed!

It all started when Bill Gates, Steve Jobs and a few of their cohorts decided that computing power, and thus access to productivity tools, shouldn’t be locked up inside those glass-walled, temperature-controlled computer room sanctums. They felt people, and their needs, were more important than the machine. Subsequent developments, including personal access to the internet, mobile devices, social networks and the-whole-world-at-your-fingertips smartphones have extended the concept of personal computing power into today’s consumer-driven, omni-channel world.

So what does all of this have to do with good enough and SCM? Plenty!

The freedom caused by everyone having computing power (and decision power) at their fingertips created a new world where the consumer is in charge, and they want what they want, when they want it, personalized for them. The old push-based era where machine efficiency was king is history. Now companies in virtually every industries are scrambling to satisfy customer needs, seamlessly across all channels. Buy online—pickup in-store; buy online—ship to home; buy in-store—ship from another store. And it’s not just retailers. Any company with direct-to-consumer shipments is impacted, as are many B2B companies whose customers display the same consumer-driven mindset.

The supply chain is the backbone of this far more complex, interconnected and always changing fulfillment process. Supply chain systems must continually evolve to support these changing and expanding requirements. Good enough will never be good enough in this environment.

Ah, but you say, the analysts tell you that ERP vendors’ WMS packages have reached functional parity with Best-of-Breed for basic warehouse capabilities. Yup, that’s right—for BASIC capabilities. That’s like saying a Ford Fiesta is as good as a Ferrari because they both can get you from point A to point B. In today’s world, where the consumer is demanding next-day or even same-day delivery for a wide range of purchases, it’s all about speed, not efficiency. SCM systems provide the ability for companies to balance these competing requirements so they can keep the customer happy, profitably. Would you trust this make-or-break process to good enough?

And I’m not saying the integration issue is no longer important—quite the opposite. It’s just that SCM-ERP integration is so old news for Best-of-Breed vendors—been there/done that. The real integration issues are integrating the many systems that enable the supply chain to effectively work as one to meet the customer’s ever-changing needs. Planning and forecasting, fulfillment and replenishment, warehouse management, labor and transportation management all must work together to ensure the right products are in the right place at the right time to meet customer needs. Those are the integration issues that are crucial for today’s much more complex, omni-channel world.

Supply chains have gone from being merely the final step in a linear, push-based production process to being central to companies’ ability to create competitive advantage by getting the right products to the right places at the right time, profitably, to satisfy ever-changing consumer demand. In this new reality, good enough is no longer good enough.

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