Last week, we narrowed in on how the rigidity that made ERPs stable in the past is ultimately becoming too unwieldy to keep pace with today’s’ complex order demands. But this doesn’t mean ERPs are going away anytime soon. Nor should they. When it comes to managing back-end systems of record functions like payroll or human resources, an ERP is the go-to solution.
ERP megasuites have been the backbone of business operations since before the Internet existed. In an offline, analog world, monolithic ERPs were used to facilitate linear business changes that were predictable, accurate, reliable and stable. And for many years, this solitary mode of operation was efficient. In fact, it was the only option.
But today’s suppliers need to learn to function in hybrid reality environments if they want to discover new frontiers of growth and profitability. That means they need business solutions that are agile, responsive and undeterred by risk or complexity. If you are a single or multi-site value-added 3PL or copacker doing business today, you are facing vastly different market conditions and challenges than any other vertical in the supply chain.
The next logical question in your mind might be: ‘How do I fill these gaps?’
Maybe you’ve already asked yourself this, or maybe you have a consultant who is convinced that the answer is to customize your ERP. If any of this sounds familiar, read on for the gory details, because customizing an ERP is not for the faint-hearted.
A one-size-fits-all resource management solution cannot sufficiently support the complexity of assembly, kitting and WIP management workflows with the same focus and power of a specialist, purpose-built vendor solution. When it comes to shoehorning an ERP’s capabilities to support a unique, short-run production workflow, there is a fundamental lack of fit in functionality.
Then there are the costs. ERPs are a capital expense and an operational expense. Lump sum capital expenditures have a lifetime cost calculation and a total cost of ownership, and they depreciate over time. Not only that, ERPs incur annual maintenance and service fees, ongoing consulting fees, and often additional fees for upgrades and added features.
All of this adds up to a lot of pain for everyone involved, whether you’re the CEO of a medium-sized copacker in the midwest or the Plant Manager of a division of a major European 3PL provider. The bottom line is, your needs are not being met, specifically, in the following areas.
1. Rigidity: ERPs are notoriously inflexible systems that make it challenging to meet end-users’ needs for intuitive, mobile-ready, and agile execution of new procedures and workflows.
2. Inconsistency: All unique workflows requires customization within an ERP system, making it next to impossible to achieve network-wide standardization. When internal processes don’t align, people work outside of the ERP and accelerate the deterioration of standard practices.
3. Complexity: ERP functionality is comprehensive but generic. It has to be, that’s how it was built. This makes it difficult to onboard brand customers rapidly and makes configuring and automating bi-directional integrations between brands and suppliers complex and clunky.
4. Operational Overhead: Modern labor and time-sensitive business operations have little margin for downtime, nor the resources to halt operations long enough to implement an ERP megasuite adequately. And that’s exactly what’s required if ERPs are your only option.
5. Technical Overhead: Depending on an ERP-only resource management solution puts a heavy burden on internal IT teams and shifts their focus away from keeping last-mile product customization ops running at peak performance.
It’s clear that ERP capabilities aren’t able to satisfy the needs of suppliers and brands that require cost-effective, agile, and networked ways of executing mass customization. t’s a good thing reinforcements are available
Software as a Service aka ‘cloud computing’ aka ‘SaaS’ is revolutionizing the way businesses operate. The ways that SaaS solutions enable last-mile product customization open up vast opportunities for revenue growth, cost reduction, and optimization and provide an antidote to pains that ERPs have been stretching and scrambling to address for the past decade.
Not only do specialist SaaS solutions facilitate agile operations, they are also affordable. As a monthly operational expense, SaaS solutions appreciate over time. They provide regular feature updates, improvements, and product enhancements that actually increases their value. SaaS solutions are also comparatively easy to implement, usually fully supported by the same people who built it (not some third party consulting agency), and purpose-built to solve the kinds of problems that ERPs retroactively overextend to accommodate.
As SaaS specialist vendors in all areas of supply chain management are filing the widening operational gap, and relieving the host of associated frustrations left by traditional ERPs, they are ushering in an era of last-mile product customization experts equipped with ‘bimodal capabilities’ that are leaving their competition high and dry.
See how 3PLs, contract packagers and corrugators can win by combining ERP with cloud apps
As a co-founder and leader of product strategy at Nulogy, Kevin brings a background in the full cycle of software development and consulting. Prior Nulogy, Kevin performed strategic planning and program management at Microsoft for their next-generation enterprise television services.