The correct answer to how to select supply chain management (SCM) logistics software is "it depends," said Simon...
Ellis, supply chain practice director at IDC.
What it depends on is the nature of your SCM and logistics processes, your IT infrastructure and technical skills, and, especially, budget.
Budget typically is the driving factor. "Logistics today is too cost-driven," Ellis said. "Companies are looking for cost savings wherever they can find it so cost becomes a big part of the selection. However, they are not giving enough attention to service."
Beyond cost and service, companies pay attention to what Ellis called "the networking effect of SCM," referring to integration with other systems, such as transportation management and order management. "Companies want to leverage the value of the network for SCM," he added. This means integration between systems.
Despite considerable consolidation among the SCM and logistics software players the selection of software still comes down to selecting best-of-breed point products or the big ERP packages with SCM and logistics capabilities. "This kind of decision sometimes creates tension between line of business (LOB) managers and IT," said Ellis.
The big ERP players, mainly Oracle and SAP, deliver fully-integrated SCM capabilities. Their SCM and logistics modules may lack some of the advanced bells and whistles of the best-of-breed packages but generally are good enough. The best-of-breed players, like RedPrairie or HighJump, have transcended the point product niche by assembling suites of products to compete with the integrated ERP offerings.
"It's not really about integration anymore. All the top players can integrate the functionality," said Steve Banker, supply chain management service director at ARC Advisory Group. The question more often comes down to one of procurement strategy: do you want one product from one company or products from several companies.
Features, however, still matter. Richmond, Virginia-based Richmond Cold Storage opted for HighJump because it let the company extensively reconfigure the software quickly and easily to meet special customer requests without any serious programming beyond possibly writing a few SQL calls. The software cost a bit more than others it looked at, but the ability to service customer requests fast and efficiently more than offset the higher acquisition cost.
About the author: Alan Radding researches, analyzes and writes about business and technology. His articles have appeared in The New York Times, BusinessWeek and numerous technology publications and on websites such as SearchManufacturingERP.com.