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How to Get the Most from Your Supply Chain: SCM Reaches the Mid-market
Electronic Data Interchange is also known as :
EDI Solutions,
EDI Software,
EDI Management,
Electronic Data Interchange Solutions,
Electronic Data Interchange Transactions,
Electronic Data Interchange Tools,
Electronic Data Interchange Software,
Electronic Data Interchange Management,
EDI Mapping,
EDI Infrastructure ,
Web EDI,
EDI Outsourcing,
EDI Gateway,
EDI Compliance,
EDI Translation.
Supply Chain Challenges for the Mid-market
Forklifts are for moving inventory, not for taking out existing systems. In the past,
midsize distributors had various advantages that helped them compete against larger
competitors. They were able to adjust business practices on the ly, personalize service
for customers, and tailor their product offerings - all because they had fewer locations,
lat organization charts, and manageable order sizes.
However, meeting the mandates of an increasingly complex and global supply chain is
a baseline of doing business no matter what the organization's size. Small and medium
companies (those with annual revenues of $250 million [USD] and below) must now
look to other differentiators and process improvements to stay ahead of encroaching
competitors and to retain their customers. Mid-market companies face the same
issues as large companies, but they do not have the same resources to implement
costly, high-end, integrated suites to answer the advance of large distributors on their
territory. To survive, mid-market organizations should look for solutions that leverage
their existing investments in enterprise resource planning (ERP) infrastructures, and
augment those capabilities with enterprise-class functionality that integrates the back
office to the warehouse.
ERP has matured for mid-market companies. Size, cost, complexity, and necessary
manpower were once prohibitive, and midsized companies carved out their markets
without the help of mammoth ERP applications. As with most technologies, time,
adoption curve, and critical mass have dramatically cut the cost and increased the value
of ERP solutions. These solutions are now better, cheaper, less complex, and more
feature-rich than ever before. Big companies were the unwitting trailblazers in proving
the technologies and improving capabilities while helping drive down the cost. Now,
mid-market companies can take advantage of the investments and lessons learned of
their larger competitors - by leveraging integrated electronic data interchange (EDI)
and advanced supply chain execution capabilities alongside an existing ERP system,
organizations can realize the benefits of an enterprise-class supply chain platform to
meet the needs of both complex and simple supply chains.
A Warehouse Management System (WMS) Delivers
the Dream of Fast, Accurate Fulfillment and Inventory Tracking
Fulfillment is the cornerstone of customer retention and growth. Having the stock in the
right quantity, at the right time has a significant impact on the bottom line. Inventory,
once a mid-market company's biggest question, is no longer an unknown. Typically, it
has been difficult for a midsized organization to have a precise view of inventory targets
across all their products. Not having automated processes and real-time inventory
updates meant not knowing inventory levels. In order to grow, mid-market companies
must be able to handle more fulfillment volume, address customer-specific needs, and
leverage solutions that provide intermodal visibility and control.
While small and midsized firms do not have the volume issues that larger distributors
face, mid-market companies trying to expand should still seek more advanced
fulfillment
capabilities to help take them to the next level of growth, whether locally or globally.
Global expansion adds new dimensions and complexity to a midsized business. As an
increasing amount of inventory is imported globally, whether raw materials or
finished
goods, keeping track of that inventory becomes even more onerous and cumbersome.
In addition, growth requires overcoming additional challenges, such as balancing a
modest level of human resources without having to incur significant investments in
additional capital assets.
But by leveraging the right supply chain execution system paired with EDI capabilities on
the customer side, midsized companies can expect to see substantial improvements in
worklow optimization. Best-of-breed supply chain execution solutions provide tangible
beneits, such as increasing workforce productivity, elevating inventory accuracy, and
impacting the velocity of goods in and out of the warehouse. Mid-market organizations
can offer a broad base of products without investing in excess inventory, but at the
same time, have enough inventory on hand to fulill orders and deliver on promises.
Thus, rather than letting inventory be a cost center, best-of-breed WMSs transform
inventory into a revenue center by having it work for the distributor, with better turnover
and faster return. The result is reduced inventory holdings leading to greater revenue
growth impact through reduced order cycle times, a more eficient workforce, and highly
satisied customers.
Trading Partner Compliance within Reach
Compliance continues to present challenges for midsized companies. Chargebacks
are costing distributors both time and money. Big-box retailers continue to set stringent
requirements for order processing, shipping, receiving, and labeling - which can
substantially impact your vendor rating should you fail to comply. Midsize companies
need to improve their worklows and their transportation, shipping, and labeling
capabilities, not just to meet customer mandates, but to control costs. This is putting
intense pressure on midsized companies to ensure every item delivered to the end
point complies with those guidelines, or else suffer often severe penalties levied by
their customers.
Mid-market organizations should look to existing best-of-breed logistics solutions that
can provide the worklows required to manage retail compliance, and not merely pay
lip service to adhering to retailers' standards. In other words, a logistics solution that
offers customer-specific, compliant labeling, reporting, and other data translates into
reduced chargebacks to the distributor. A reduction in chargebacks can lead directly
to increased efficiency and revenue, and more specifically, directly to the distributor's
bottom line in cost savings. Meeting customers' standards means exceeding customer
expectations - enabling companies to outmaneuver competition and solidify customer
satisfaction.
Augmenting an existing ERP environment with a best-of-breed logistics solution can
greatly improve trading partner compliance and provide a remarkable competitive
differentiator, enabling the distributor to maintain a strong supplier relationship with
its customer. Oftentimes, the overlooked component, or glue, to the success of this
solution is the use of EDI technologies to extend the ERP into the application.
Just as ERP is no longer merely for giant companies, the cost of entry to a fully
integrated or embedded EDI solution is not as high as it used to be. Similarly, the
cost of EDI transactions is no longer as cost-prohibitive as it once was. There are
EDI solutions in the market that are ideal for global expansion and that not only scale
from a small, single warehouse environment, but to more complex multi-warehouse
environments with advanced requirements around warehouse optimization and
trading partner collaboration. Through EDI integration, mid-market companies can
experience extensive trading partner and supplier optimization. So, with a concerted
drive toward enabling technologies, distributors would be able to fulfill quickly and
accurately, and benefit from lower costs of order fulfillment operations.
So, Now What?
Leading mid-market ERP systems have now matured. ERP solutions with extended
supply chain execution capabilities have been proven to provide mid-market
businesses the following beneits: improved customer service through better
fulfillment
and managed compliance; improved margins through faster inventory turnover and
lowered inventory holding costs; and increased revenue through faster order cycle
times and higher throughput rates.
A midsized company needs to be able to cut through the confusion of the multiple
software solutions available to them, and may find it daunting to wade through all the
partnerships, vendors, and solution sets. The market is cluttered with the noise of
countless solutions, but there is no need to take out existing systems - rather, leverage
existing investments. Mid-market companies should look for solution providers that
have proven integration with their existing systems. Using their own existing platforms
as the primary point of reference, companies should look for established, proven
solution providers that have partnered together to deliver a packaged or bundled
solution. Not only does this streamline the process and help move the decision-making
process along, but it delivers a level of confidence in the solution suites that no other
arrangement could provide.
An example of this type of partnership exists between Manhattan Associates, Blue
Moon, and vSync. Currently, many Microsoft Dynamics GP users benefit from vSync's
and Blue Moon's embedded solution. The missing link for a full end-to-end ERP
and supply chain execution for mid-market companies is a leading WMS solution
that integrates with these other pieces to run and update real-time inventory data.
Manhattan Associates focuses on best-of-breed WMS, and offers an extension to
existing Microsoft Dynamics GP platforms, which bodes well for mid-market companies
that already have vSync and Microsoft Dynamics GP. Manhattan Associates' partner
strategy is to align with these supply chain Dynamics GP market leaders - namely
Blue Moon and vSync - who bring domain expertise, solution competency, and proven
integration capabilities to the Microsoft Dynamics GP platform. The combined focus of
these three GP supplementing players is indicative of how an affordable
enterprise class
supply chain solution is now attainable for the mid-market.
User Recommendations
When considering end-to-end ERP, mid-market companies should look for a best-of
breed
solution provider that focuses on smooth integration with its existing systems.
There is no need to overhaul the infrastructure. Instead, look for established,
proven solution providers that have partnered together to deliver a packaged or
bundled solution. Solutions partnerships like these can help ensure compatibility, and
real-time dataflow among all systems is indicative that all pieces are talking to each
other, ensuring smooth inventory lows, accurate inventory information, better order
fulfillment, and standards compliance.
Distributors should also look for an existing WMS solution that will help them
manage retail compliance so lost revenue in the form of chargebacks is greatly
diminished. Also, choose a best-of-breed WMS that fully automates worklows,
improves warehouse productivity, lowers labor costs by measuring ill rates and order
cycle times, and of course, answers all unknowns related to inventory. Successful
implementations should move beyond features and functions, and focus on industry
expertise, services, platforms, and integration. After all, having the right stock, in the
right quantities delivered at the right time is the key to success.
About the Authors
Wayne Thompson has over 16 years of IT experience in the private and public sectors,
with extensive expertise in opportunity analysis, go-to-market execution planning, and
software evaluations. He has led best-practice workshops for C-level executives in
Europe and North America, and negotiated software licensing agreements for Global
1000 enterprises and government agencies. Thompson advises start-up companies and
leading IT vendors in product development and marketing strategies as well as user
clients in business process analysis and software procurement.
Christina Park has nearly ten years of international IT experience in business systems,
enterprise applications, and hardware manufacturing, and has written numerous articles
covering enterprise applications.
For more information, please contact the analyst group at research@technologyevaluation.com.