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VS BREED

ERP

BEST OF

T H E S U P P LY C H A I N D E B AT E R A G E S O N

T HE DEBATE OCCURS IN CONFERENCE
ROOMS ALL AROUND THE WORLD:
“Should we expand our ERP capability to include supply chain execution, or go with a best-of-breed provider of supply chain solutions?” The arguments are intense. There’s validity on both sides.

“We need to improve our global
supply execution. Let’s call our ERP
provider. They have some new stuff”

“Are you sure? From what I hear,
their supply chain capabilities are
‘veneer deep.’ If we are going to
win at this game, we need deep

“I don’t agree. The ERP guys have

supply chain expertise from a

come a long way, and it’s much easier

totally focused provider.”

to integrate their WMS functionality
back into our ERP.
“True, they’ve added more functions,
but I’m told the so-called integration
“Well, I am less concerned about

advantage is smoke and mirrors.”

functionality and expertise than
I am about having one throat to
choke, if there is an issue.”
“I hear you. But, we better get
this right. Or the throat you’ll be
choking is mine!”

In this debate, there is no always-right answer. Frequently, what you’ll find is that IT management comes down on the side of the ERP messaging and supply chain practitioners prefer the functionality of the best of breed. But every situation is unique, and every ERP user’s situation is different, so it pays to keep an open mind in determining which suppliers will best meet the organization’s long-term needs for supply chain execution. The best way forward is for organizations to evaluate solutions from not only their ERP supplier, but also from best-of-breed providers. That’s the only way a company can determine which solution will best deliver the most important metric of all, return on investment.

Factoid

According to ARC, the two
largest best-of-breed providers
accounted for 47.5% of WMS
revenue in North America in
2011, compared to 12.9% by
the two largest ERP providers.

WHAT’S “PARITY”?
Most large companies tend to have Enterprise Resource Planning (ERP) solutions that include financial accounting, cost accounting, Human Capital Management (HCM), Enterprise Asset Management (EAM), Environmental Health and Safety (EH&S) and a variety of other tools to help run large and complex businesses. Among the many advantages of ERP systems are that they share common databases and other characteristics across several facets of an enterprise, including a common user interface across most modules. Not surprisingly, as some companies began using ERP solutions in the warehouse, they quickly began demanding more than the rudimentary picking and inventory management features that were available in the early days of ERP systems. ERP developers responded with optional components that do a better job addressing supply chain execution requirements.

Warehouse Management Systems (WMS), on the other hand, represent the foundation of solid supply chain execution. The basic “pick, pack and ship” functionality inherent in typical WMS solutions covers about 75 percent of the functionality that most organizations need within the walls of their warehouse. You can look at these functions like accountants might look at a general ledger system. If it does nothing else, it must handle debits, credits, journal entries, accounts payable/receivable, etc.

4.1%

The average annual
revenue invested by
companies in their
ERP systems.
Source: Panorama Consulting Solutions

Typically a WMS implementation is followed by, and integrated with, other supply chain solutions, especially:
• a workforce management (WFM) system to assure that the right people are assigned to scheduled tasks. Based on engineered standards and optimal methods for performing tasks efficiently and safely, a WFM can encompass scheduling, task assignment, and performance measuring. • a transportation management system (TMS) to support improved efficiency...
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