Supply Chain News

Enterprise Resource Planning Vendors Making Significant Inroads into Supply Chain Management

With the big ERP vendors invading their turf, best-of-breed SCM providers are coming up with deeper, niche-oriented solutions to help shippers manage their supply chains, our analysts discuss just how far ERP can go in this sector that’s now considered the foundation of success for digital commerce.

SAP Resources

Companies

  • Infor Supply Chain Management combines best in class solutions with industry-specific functionality, giving you the power to plan and execute your supply chain strategies faster and more profitably, from strategic and tactical planning to execution. With analytics at the core, you’ll get the…

  • JDA Software is the leading provider of end-to-end, integrated retail and supply chain planning and execution solutions for more than 4,000 customers worldwide. JDA’s unique solutions empower its clients to achieve more by optimizing costs, increasing revenue and reducing time to value so they…

  • Microsoft Dynamics is a line of familiar, adaptable enterprise resource planning (ERP) and customer relationship management (CRM) solutions designed to meet almost any business need and help your people make important business decisions confidently. Microsoft Dynamics works like and with familiar…

  • Oracle provides the most complete suite of supply chain applications, Oracle supply chain management is comprised of: value chain planning, value chain execution, product lifecycle management, advanced procurement, asset lifecycle management, order orchestration and fulfillment, and manufacturing.…

  • As market leader in enterprise application software, SAP (NYSE: SAP) helps companies of all sizes and industries run better. From back office to boardroom, warehouse to storefront, desktop to mobile device - SAP empowers people and organizations to work together more efficiently and use business insight…

  • Company Quicklook

The time when best-of-breed supply chain management (SCM) software providers could confidently say that their in-depth solutions rose above those developed by large enterprise resource planning (ERP) developers is behind us.

Over the last couple of years, ERPs have made significant inroads in SCM - often by acquiring best-of-breed providers of specialized software.

At the same time, more logistics management professionals have warmed up to the one-stop-shop approach to supply chain applications, knowing that those platforms will not only integrate well with one another but that they’ll probably also be a little cheaper.

In this article we’ll explore the continued merging of ERP and SCM applications; discuss the rapid progress vendors continue to make; explore the areas where best-of-breeds continue to reign, and then give our experts’ prognosis on just how far ERPs can go in this software sector that’s now considered the foundation of success in digital commerce.

Expanding Their Footprints
As the ERPs’ footprint in the SCM space got both wider and deeper - and as these providers move more of their applications to the Cloud - shippers have been paying attention.

“On the ERP front, we’ve seen a big shift from the old school, monolithic systems to more ‘modular’ offerings,” explains Rajeev Sinha, global logistics leader in Capgemini’s digital supply chain practice.

To round out those offerings, SAP acquired Ariba (for procurement); Oracle bought NetSuite (for Cloud), and RedPrairie JDA merger (for warehouse management systems).

“The list of acquisitions goes on and on,” says Sinha, “because that’s what the big, legacy vendors are going for.” This mass consumption has actually played out well for best-of-breed SCM providers that have dug down even deeper into their respective niches, he points out.

By fulfilling shippers’ wishes on the “modular” software front - albeit not under the same ERP umbrella - these smaller players continue to carve out a place for themselves in the market.

Mega-Suite vs. Heterogeneous
Referring to ERPs as “mega-suite” vendors, Dwight Klappich, research vice president at Gartner, says he’s seeing a growing number of shippers working these large providers’ solutions into their supply chain software strategies.

In a recent Gartner survey, for example, participants were asked to place their current application environments into one of two categories. Either they were “largely committed” to a single or primary mega-suite platform vendor (SAP, Oracle, Infor, Microsoft) or respondents were largely a heterogeneous application environment with no dominant vendor. Klappich says 62% of companies fell into the first category, with 38% using the “heterogeneous” approach.

Gartner also found that 86% of industry “leaders” are committed to ERP usage and that just 14% of leaders employ a heterogeneous strategy. By contrast, the number of “below average” shippers using mega-suite versus the heterogeneous approach was an even 50/50.

When asked how their ERPs factor in during the SCM software selection process, 53% said that they “seek the best solution,” while 47% strongly favor mega-suite options - but only if its capabilities fully meet or exceed the company’s requirements. 

Klappich says that the results are telling in that they show that the closer a logistics professional gets to the execution or operational level, the higher the interest in using the same ERP vendor for supply chain execution applications like warehouse management systems (WMS), transportation management (TMS), global trade management (GTM), and even areas like order and financial management.

The latter two have long been part of ERP, according to Klappich, while WMS and TMS weren’t necessarily integrated into full-blown ERP systems.

So, what’s driving more shippers to work with their existing ERPs instead of acquiring and implementing standalone SCM applications?

Easier integration and the ability to gain analytical insights across broader, enterprise-wide processes are all playing a part in the decision-making process.

The fact that not all shippers need full SCM applications with all of the bells and whistles that a best-of-breed option provides is another driver.

“At this point, the top ERPs have a ‘reasonable’ TMS, but they’re not best-of-breed by any stretch,” Klappich points out, using a car-buying example to show that not all shippers want or need full-blown, niche-oriented TMS.

“SAP and Oracle are comparable to the Hyundai Sonata or the Toyota Camry, both of which are solid cars,” says Klappich, “but neither has the same high-performance engines, suspensions, or performance that a BMW 7-Series delivers. However, the ERPs do a good job for a high percentage of companies - that’s why they’re growing.”

Also propelling the ERP’s growth on the SCM front is a large audience of international shippers that need to either purchase new or upgrade their existing systems. Many of those shippers lack transportation and warehousing management sophistication, Klappich notes, and some are still using manual approaches to an increasingly-complex component of the global supply chain.

“SAP, Oracle, and Infor are positioned better than most of the best-of-breeds to exploit this level of international growth,” says Klappich, who recently spoke with the logistics manager at a large, Asia-based tire manufacturer that was still using manual warehouse management processes.

“It was literally coming from paper, with no systems whatsoever. For a company like this, the ERP vendor is good enough. In fact, it probably offers more features and functions than many of those international firms even want or need.”

Going Into The Cloud
In assessing the propensity to use an ERP versus a best-of-breed SCM application, Gartner’s recent survey also looked at shippers’ plans for buying, replacing or upgrading applications to the Cloud in the near future.

TMS and WMS both made the list, with 54% of shippers either already using TMS in the Cloud or “highly likely” or “likely” to make that move soon.

On the WMS side, 48% of companies said that they’re either likely, highly likely or already using that particular application in the Cloud.

Klappich says that the ERPs are responding to shippers’ demand for Cloud-based systems, and says they’ve taken this request very seriously. “I often jokingly say that they all just jumped right into the deep end of the pool,” says Klappich. “It’s ‘Cloud first’ right now as all vendors are pushing this software delivery method hard.”

In terms of applications, TMS continues to reign as the top Cloud-based SCM application, with WMS slowly taking a similar direction. “WMS isn’t really ‘there’ yet,” says Klappich, “but we’re anticipating that it will become a [major] Cloud player sometime soon.”

A few years ago, for example, Gartner projected that about 40% of WMS implementations would be Cloud-based by now - a level it has yet to achieve. “TMS is several years ahead of WMS in terms of Cloud-based applications,” says Klappich, “but WMS is starting to catch up quite rapidly.” 

Steve Banker, vice president of supply chain management at ARC Advisory Services in Boston, says that Tier 1 shippers (i.e., those with over $1 billion in revenues) remain “reluctant” to embrace the Cloud, while other suppliers say that all their customers are moving to the Cloud. “At the same time, we’re also hearing that Cloud solutions have been key to suppliers growing their revenues rapidly in traditionally challenging emerging markets,” he adds.

Calling Cloud solutions “truly standard, off-the-shelf software solutions with no customization,” Banker says that they tend to be attractive because they can be installed quickly - and in most cases, 50% faster - a fact that’s helping to raise shippers’ confidence in the new software acquisition process.

“You can’t argue about the price of software for six months when it’s implemented in three months,” says Banker, “a situation that’s clearly improving the supplier/customer sales environment.”

Room for both at the Top?
Not everyone wants to drive a Hyundai, and not everyone wants to allocate big bucks for a top-of-the-line luxury car. The same philosophy extends in the SCM space, where for some shippers “good enough is good enough.” Because of this, there’s still a healthy demand for both mega-suite and best-of-breed vendors.

“There’s definitely a market for the best-of-breed software provider who can demonstrate that there’s true value in the breadth and depth of its applications,” Klappich says. Within the best-of-breed market, there are varying levels of application sophistication, and complexity, he notes, with Manhattan Associates, JDA, and HighJump populating the upper end of the market. “These companies have the bells and whistles that large companies need.”

Klappich says that he’s also seeing a resurgence of vendors at the lower-end of the market, where a multi-channel market needs pop-up storage lockers in which to store its inventory for distribution to end users. He points to DSI, a digital supply chain platform, and RFgen, used for mobile data collection, as two vendors that are catering to these types of shipper needs by developing systems that can be layered onto an existing ERP.

“We’re seeing a resurgence of vendors in these areas, where shippers need simple, customized solutions - attached to an ERP - versus having to go down the full-blown TMS path,” says Klappich. “That’s almost the other extreme, where simplicity and ease-of-use are most important.”

To shippers that are trying to make the decision between their ERP-provided SCM applications and those developed by niche software providers, Klappich says it generally pays to explore the first option - at least as a starting point. “All other things being equal, having a single vendor maintaining an integrating solution has certain advantages,” says Klappich.

“So, if you’re already working with an ERP vendor, short listing that vendor may make the most sense at this point in time.”

Related Article: The Truth About Growing Your Business in an Age of Personalized Products & Mass Customization

Related White Papers

Download the Paper

Last-Mile Supply Chain Mastery: Is Your ERP Really Up for the Job?
This white paper details how 3pls, contract packagers, and corrugators are transforming last-mile logistics with specialist software-as-a-service applications. Download Now!


Download the Paper

The ERP Selection Process Survival Guide
This guide provides an overview of the steps for conducting an effective and successful enterprise resource planning solution evaluation, the process can be challenging because of the level of detail that must be addressed, ensuring that key steps are not overlooked. Download Now!


Download the Paper

Will Your Legacy ERP System Define Your Legacy?
Making the switch can help secure your business and your reputation - if you don’t pull the plug in time, your business could be on its way down a dangerous spiral of lost opportunities and profits. Download Now!


Download the Paper

The Current and Future State of Digital Supply Chain Transformation
Executives see a large gap between the current state of digital transformation across their extended global value chains and what they expect to see in just five years from now. Download Now!


Download the Paper

An Innovative Approach to Enterprise Software Implementations
Making the switch can help secure your business and your reputation - if you don’t pull the plug in time, your business could be on its way down a dangerous spiral of lost opportunities and profits. Download Now!


Download the Guide

Oracle JD Edwards Cloud Computing
Choosing a deployment strategy that fits - Companies can own and manage their computing solution, yet still be involved in cloud computing by the fact that they have a private cloud for their internal application users. Download Now!


Download the Guide

Deploying SAP EWM or WM in Your Automated Warehouse
As the market-leading enterprise resource planning system, SAP has become the go-to choice for companies seeking to streamline their operational processes to gain a competitive edge. Download Now!


More SC24/7: ERP White Papers


Article Topics
Trends   Supply Chain   Enterprise Resource Planning   ERP   Nulogy   One Network Enterprises   Supply Chain Software   All topics


Comments
Be the first to post a comment.
You must be logged in to post a comment. Login.

About the Author
Bridget McCrea, Editor
Bridget McCrea is a Contributing Editor for Logistics Management based in Clearwater, Fla. She has covered the transportation and supply chain space since 1996, and has covered all aspects of the industry for Logistics Management and Supply Chain Management Review. She can be reached at [email protected]
 
Latest Supply Chain News
DHL Launches Global Trade Barometer, a New and Unique Leading AI Indicator for World Trade
DHL Global Trade Barometer derives predictions for global trade by evaluating large amounts of logistics data with the help of Artificial Intelligence.

Maersk IBM Form Joint Venture Applying Blockchain to Improve Global Trade & Digitize Supply Chain
A.P. Moller - Maersk and IBM have announced their intent to establish a joint venture to provide more efficient and secure methods for conducting global trade using blockchain technology.

Designing a Logistics Distribution Model for the Future
Certified Retail Solutions specializes in delivering high-quality systems and services to help retailers manage their national technology deployment and on-site maintenance needs.

One Network Enterprises New One Blockchain Solution
New blockchain solution enables customers to build blockchain enabled multi-party apps and transact with trading partners over the blockchain.


 

24|7 Pro Team

The 24|7 Team is your direct pipeline to solutions for your business challenges. It's your opportunity to have supply chain and logistics experts look at your specific challenges and needs, and give you free, no-obligation advice, solutions, and information.

The 24|7 Team will simplify the task of creating a database of likely partners, building your knowledge base, and preparing your Request for Proposal list.

1
  Choose a topic for your RFP

Transportation RFP/RFI

The Transportation RFP is your direct pipeline to solutions for your transportation challenges. It's your opportunity to have logistics experts look at your specific transportation challenges and needs, and give you free, no-obligation advice, solutions, and information specific to your request.

Choosing the perfect software or system can be an indomitable challenge. Using this transportation/TMS RFP will simplify the task of creating a database of likely partners, building your knowledge base, and preparing your Request for Proposal list.

Warehouse/DC Management RFP/RFI

The Warehouse Management Systems (WMS) RFP is your direct pipeline to solutions for your WMS challenges. It's your opportunity to have logistics experts look at your specific WMS challenges and needs, and give you free, no-obligation advice, solutions, and information specific to your request.

Choosing the perfect WMS solution can be an indomitable challenge. Using this WMS RFP will simplify the task of creating a database of likely partners, building your knowledge base, and preparing your WMS Request for Proposal list.

Supply Chain RFP/RFI

The Supply Chain RFP is your opportunity to have logistics experts look at your specific challenges and needs, and receive free, no-obligation advice, solutions, and information. It simplifies finding a pool of likely partners, building your knowledge base, and preparing your Request for Proposal list. The companies in the Logistics Planner have agreed to respond to your request for in-depth information and follow-up, and your request is totally confidential.

Software/Technology RFP/RFI

The Software/Technology is your direct pipeline to solutions for your logistics information technology challenges. It's your opportunity to have logistics experts look at your specific technology challenges and needs, and give you free, no-obligation advice, solutions, and information specific to your request. Whether it's WMS, TMS, Mobile or Cloud, our pros can help.

The companies listed below have agreed to respond to your request for in-depth information and follow-up. Your request is totally confidential.

Executive Education RFI

The Logistics and Supply Chain Education RFI can help you identify the schools, coursework, continuing education, distance learning and certification opportunities available from leading logistics educational institutions.

Upgrade and improve your logistics and supply chain skillsets. Whatever route you choose—advanced degree, executive education, certification or distance learning—the time and money you invest in your education today can pay off in continued career success tomorrow. Contact leading universities and professional institutions for the information you need to prepare for the future.

Third Party Logistics RFP/RFI

This 3PL Request for Proposal (RFP)/Request for Information (RFI) can help you find the 3PL and 4PL providers that can meet your specific 3PL service challenges and needs. The 3PL companies below will provide free, no-obligation third-party logistics advice, solutions, and information.

Ask your 3PL questions, you'll get answers. Simply complete the information, and detail your 3PL challenges. Then, check off the third-party logistics companies that you want to review your request.

1. Choose an RFI topic.
2. Enter your contact information and challenge.
3. Select companies and optional categories.
4. Submit.


2

Your Information



Your Challenge, Problem or Request *

3

Select Transportation Companies

  • Select All

  • 3Gtms
  • BluJay Solutions
  • CSX Trans. Intermodal
  • Kuebix
  • Landstar
  • Legacy Supply Chain Svs.
  • One Network
  • Pitt Ohio
  • Purolator
  • Quintiq
  • SEKO Logistics
  • SMC3


Select Relevent Categories

  • Air Freight
  • Intermodal
  • Motor Freight
  • Ocean Freight
  • Rail Freight
  • TMS

Select Warehouse/DC Management Companies

  • Select All

  • 3PL Central
  • Apex Supply Chain Tech.
  • Honeywell Intelligrated
  • Kuebix
  • Legacy Supply Chain Svs.
  • Swisslog
  • Westfalia Technologies
  • Zebra Technologies


Select Relevent Categories

  • Auto ID & Data Capture
  • Automation
  • Conveyors & Sortation
  • Lift Trucks
  • Packaging & Labeling
  • Pallets & Containers
  • Shelving & Racking
  • WMS

Select Supply Chain Companies

  • Select All

  • 3Gtms
  • 3PL Central
  • Amber Road
  • Apex Supply Chain Tech.
  • APICS
  • BluJay Solutions
  • CSX Trans. Intermodal
  • Frontier Business
  • Kuebix
  • Legacy Supply Chain Svs.
  • Logility
  • One Network
  • Purolator
  • Quintiq
  • SMC3
  • Synchrono
  • TAKE Supply Chain
  • Westfalia Technologies
  • Zebra Technologies


Select Relevent Categories

  • Global Trade
  • Inventory Management
  • Risk Management
  • Sustainability

Select Software/Technology Companies

  • Select All

  • 3GTMS
  • 3PL Central
  • Apex Supply Chain Tech.
  • BluJay Solutions
  • Honeywell Intelligrated
  • Frontier Business
  • Kuebix
  • Logility
  • One Network
  • Quintiq
  • SMC3
  • Swisslog Logistics
  • Synchrono
  • TAKE Supply Chain
  • Zebra Technologies


Select Relevent Categories

  • ERP
  • Sales & Operations
  • Sourcing/Procurement
  • Optimization
  • Transportation Mgmt
  • Warehouse Mgmt

Select Executive Education Choices

  • Select All

  • Graduate Courses
  • Online/Distance
  • Executive Education
  • Certifications
  • Undergraduate
  • Seminars
  • Associations
  • Conferences
  • Tradeshows


Select Third Party Logistics Companies

  • Select All

  • 3PL Central
  • Landstar
  • Legacy Supply Chain Svs.
  • Purolator
  • SEKO Logistics
  • Westfalia Technologies


4
 

24|7 Company Profiles