Supply Chain Technology: Putting the spotlight on ERP
June 01, 2011
With the goal of digging deeper into the supply chain software space to find out how logistic professionals are currently using enterprise resource planning (ERP) systems as part of their strategy, Peerless Media’s Research Group decided to peel back the layers of this complicated segment in a survey that yielded 225 manufacturers, retailers, and distributors back in April.
Conducted on behalf of Logistics Management and Supply Chain Management Review, the Adoption of Enterprise Resource Planning (ERP) Systems and Applications survey was conducted to provide a better understanding of the adoption of ERP platforms and their solutions for supply chain and logistics applications.
Spun out from the manufacturing resources planning (MRP) systems that gained popularity in the 1980s, today’s ERPs span numerous areas of an organization including manufacturing, engineering, finance, customer service, project management, human resources, and accounting.
ERP also reaches outside of the traditional corporate boundaries to include supplier and customer systems. When this occurs, ERPs get pushed out into the supply chain—a place where giants like Oracle, PeopleSoft, and SAP have been moving toward over the last few years.
Also over the last number of years, more of those solutions have been pushed into the “cloud,” a place where users access their software online via a subscription format. The survey addressed this trend as well, focusing on whether or not logistics and supply chain professionals are moving in that direction along with their ERP vendors.
The survey also addressed the adoption of ERP systems and applications; benefits and barriers to an ERP implementation; and user satisfaction with current ERP implementations and their ERP vendors, among other key points. All respondents were involved in the evaluation and purchase decision process for IT systems, solutions and/or applications relating to supply chain and/or logistics operations.
Over the next few pages we’ll discuss the survey results with a few of the top supply chain software analysts. They’ll also give us a look at some of their own research and help us to predict the future for ERP in serving the logistics and transportation sectors.
Adopters and innovators
According to our findings, adoption rates for and interest in ERP are high. In fact, very few companies are completely untouched by the all-encompassing systems. Twenty-seven percent of shippers have a fully operational ERP in place, and another 26 percent are adding/upgrading apps to an existing system (for a total of 53 percent adoption).
With more than half of responding companies already using an ERP, another 12 percent are just now rolling out such systems, and a final segment (20 percent) are either evaluating vendors, or the solutions themselves, to figure out if the IT solution will be a valuable addition to their company operations.
But not all logistics professionals are so enamored by ERP. According to the survey, key reasons for not implementing an ERP include high capital investment; inability to visualize the benefit; and a prevailing “if it ain’t broke, don’t fix it” mentality. Other barriers to implementation include limited/overworked IT resources and concern over integration with legacy applications.
Of the supply chain applications currently in use or planning to run through our respondents ERP platforms, the top were warehouse management systems (WMS) (59 percent); supply chain planning (SCP) (42 percent); and transportation management systems (TMS) (28 percent). Over the next two years, 40 percent of respondents plan to add a WMS to their ERP, 31 percent plan to add SCP, and 25 percent will plug in a TMS.
Companies that have adopted ERP report that they’re seeing benefits like improved warehouse management, better customer service, inventory reductions, and enhanced demand forecasting. Shippers voiced further benefits that depended on whether they selected a single ERP vendor, a best-of-breed, or a hybrid approach. Those working with a single vendor, for example, cited easier implementations, less confusion and an initial, cost-effective investment.
Best of breed ERP users said flexibility and an “out of the box” integration process were among the top benefits, while hybrid users cited easy integration, ease of use, and an ability to adapt quickly to agile companies as the biggest benefits. Integration was by far the most important aspect of any ERP implementation, “but ease of use and cost efficiency also comes into play,” said one respondent.
Of the companies surveyed, 39 percent of shippers using a single ERP provider were extremely satisfied with their choice, while 28 percent were somewhat satisfied, and 13 percent were not satisfied at all. Of the best-of-breed users, 46 percent were extremely satisfied; 43 percent somewhat satisfied; and 11 percent unsatisfied. For the hybrid users, 36 percent were extremely satisfied, 55 percent somewhat, and 9 percent not at all.
When asked what their vendors could be doing better, ERP users provided direct comments like: “Have better knowledge of what the system can do;” “allow more time to integrate with other systems;” and “provide more user-friendly reporting tools.”
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