Written By: Matthew Baggetta
Feb. 23, 2017

Why Depending on ERPs Alone Is Your Company’s Biggest Handicap

Today’s connected consumers are driving the global supply chain with their collective demand for personalized products and experiences. One way or another, retailers, brands, and suppliers all finding themselves working together to bring mass customized products to the mass market.

The thing about mass customization demand is that it is heterogeneous–the opposite of one size fits all. As this new style of demand flows upstream to suppliers in the last-mile, the sheer complexity and magnitude of moving materials, people, needs, and events is overwhelming the decades-old ERP systems built to manage the demands of a homogenous market.

Savvy shoppers who demand personalized products and elite quality drive today’s global market dynamic. These consumers are trained to use the Internet to sort the most popular products from the duds, and to pool their experience to locate the best deals–whether they are online or in stores. This is what the rise of mass customization looks like.

From Mass Production to Mass Customization in Less than a Century

What is ‘last-mile product customization’ and why does it matter?

Services in the last-mile of product customization include any/all of the following:

> Assembling products into multi-packs/club packs, or promotional product kits
> Manual or automated product assembly and secondary packaging
> Labor solutions to manage activity spikes and meet last-minute requests
> Inventory, and production control
> Work-in-progress management

Each of these services entails coordination of people, interactions, and materials, which require planning, management, and optimization. It’s easy to see where last-mile product customization complexity comes from.

In the past half-century, the way firms in the supply chain have managed their resources and processes has transformed dramatically. In the sixties, the invention of the microchip let companies automate inventory control for the first time. Since then, technology has been the primary catalyst driving innovation, from automating production processes, to collecting and leveraging business intelligence, and ultimately, interconnecting a global network of supply chain partners.

‘Wyatt ERP’ and Wild Wild Web

By the late nineties, one technology dominated supply chain management. Enterprise Resource Planning (ERP) megasuites transformed core areas of business operations and today have grown into systems of integrated modules that effectively manage critical back-end systems of record like financial accounting and human resources.

As the Internet has matured, the social, mobile, and digital environments continue to weave themselves into everything we do. Just think about how much that smartphone in your pocket has changed how you communicate, connect, and plan your life. Slow, tedious or limited interactions are now quick, easy, and fluid. Social is the new normal–the cloud has changed every aspect of daily life, and that includes the lives of the countless people across the world who work in supply chain.

Supply chain service providers have always looked to technology to drive efficiency, quality service, and speed into their operations. Yet today, many firms find yesterday’s ERP-only solutions inadequate to fully support the velocity and agility required to deliver personalized product experiences to a modern, global market.

Brand owners are responding to this new style of demand by segmenting their markets and regionalizing offerings to attract discerning, highly motivated consumers. What does all this mean for last-mile logistics providers? It means smaller batches, shorter runs, and multi- and promotional packs. And that means more moving parts, handoffs and touch points, and a lot more complexity.

Shift Happens

It’s clear that the cloud has ignited another shift in supply chain management tech, demanding that it too become ‘social’–more collaborative, interconnected, always-on, and available in real-time. Today’s supply chain introduces business challenges that can only be solved using what Gartner calls a ‘hybrid reality‘ approach. In a hybrid reality scenario, a business adopts a combination of tools–specialist software as a service (SaaS) applications accessed from the cloud, and an ERP megasuite maintained on-premises–to gain a competitive advantage.

By 2017, Gartner forcasts that more than 70% of enterprises who’ve outgrown their ERP megasuites will turn to cloud-based software to accelerate profitability.

Emerging SaaS specialist vendors are making a huge impact on last-mile logistics providers’ bottom lines by equipping them with agile and responsive capabilities to address their dynamic and increasingly complex business problems. Agile and responsive solutions can then be iterated and refined by users over time to maximize process efficiencies. ERP solutions alone simply cannot facilitate this approach in an unpredictable hybrid reality scenario.

To learn more about why bimodal capabilities and a hybrid approach are essential to mastering mass customization, check out the first post in our series: Stop Trying to Send Texts With Your Fax Machine. Next week, our series on Last-Mile Mastery continues with: Part 2: 4 Keys To Unlock Your Company’s Hidden Growth Potential.

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