The Supply Chain Information Technology blog

I got a couple of emails recently pitching HighJump’s report, WMS in the Cloud, Real World Business Option or Just Fluff. HighJump has its sights firmly set on cloud computing as a key component of its sales and marketing strategy for its Warehouse Advantage WMS product.

 

So it shouldn’t be a surprise that the report outlined reasons why moving to the cloud for WMS functionality may make sense for some organizations. The reasons given were sound and familiar to anyone following cloud computing – lower capital investment, reduced impact on IT resources and faster implementation times.

 

However, HighJump’s pursuit of WMS opportunities in the cloud isn’t unique. RedPrairie reached for the WMS cloud last year through its acquisition of SmartTurn, but SmarTurn is a pure multi-tenant SaaS solution. It is only sold on a subscription basis where customers pay a monthly fee for usage. Its functionality and features appeal to small to modest size operations with limited complexity.

 

This is not a market segment that RedPrairie’s flagship WMS product can effectively address. HighJump is offering its Warehouse Advantage product on a hosted basis; users will pay a subscription fee to access a unique instance of the application in a remote data center. And HighJump will continue to sell Warehouse Advantage as a traditional on-premise, licensed basis.

 

So HighJump is effectively becoming the software vendor version of a brick and motor fashion retailer that has decided to open an ecommerce channel.

 

Offering a hosted solution means HighJump can reach customers that will not or are hesitant to buy an on-premise solution, but it also means that its existing customer pool now has a choice in deployment models. It will be interesting to see how HighJump factors this choice into how it prices, supports and markets both models.

 

A multi-channel retailer can anticipate that a substantial portion of its customer base will use both channels. I don’t think that this assumption holds true for software vendors looking to sell the same application on a hosted and on-premise basis.

 

I haven’t seen a quote from HighJump for its WMS cloud option, but I have seen quotes from other vendors offering the same package on both hosted and on-premise terms. While these vendors don’t break down the components that go into their hosted pricing, you can see the elements by comparing the hosted price to on-premise license fees and maintenance costs.

 

Of course, the vendor needs to cover hardware acquisition and operating costs in its subscription fee. However, they also appear to recoup the license fee over a three- to four- year period, as well as cover the maintenance contract element of their on-premise pricing model.

 

Depending on the subscription fee, a customer who utilizes the WMS for eight years might end up paying double for license usage for hosted services over an on-premise approach. The latter requires an upfront capital investment for licenses, while the former is spread out as an annual expense.

 

Still, 2x is a heavy premium for avoiding a capital investment. Maintenance may seem a wash for both options over the eight year period, but an on-premise customer can always choose to go off of maintenance at some point during the system’s lifecycle. I doubt the hosted customer will have this choice.

 

WMS vendor hosting services also cover IT infrastructure and operating expenses. These costs and associated headaches are hardly inconsequential for top-tier WMS solutions. You can always turn to another third party for IT hosting services, though there is comfort in having a single source provide and support both the application and the hardware.

 

I don’t think there are any WMS bargains to be found in the cloud if you only look at the proposition from a license, maintenance and hardware fees perspective. This doesn’t mean that I don’t think HighJump and other vendors can’t generate significant business with their hosted services.

 

I think success in the cloud will boil down to the value adds that a vendor can provide through a hosting model.

 

There should be a synergy between providing the application and hosting IT services that go beyond the data center. Any WMS vendor who can exploit this synergy by making the implementation process and ongoing WMS operations more effective and less costly for the customer will really have something.

 

If they can’t look beyond annual subscription fee and hardware infrastructure, then their hosting options may only be viewed as a method to hook customers into an annual revenue stream.

 

So what is your take on WMS in the Cloud? Is it for real or merely fluff?

 

-- Tom

 

Photo Credit: Fractal_Artist 

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Tags: cloud computing, warehousing, wms

In his recent Techwatch column, DC Velocity’s James Cooke reflected on the results of a panel session at the 13th annual Logistics CIO and Supply Chain Technology Form.

The session addressed the question of what technologies will have the biggest impact on supply chain in coming years. One of the technologies cited was mobile computing.

Given the latest generation of tablet computers and smart phones, this isn’t too surprising. These devices have already made significant inroads into our daily lives. Even people who don’t own one can’t escape them. There is no doubt in my mind that these devices are going to have a huge impact on how we use technology within the supply chain.

It isn’t difficult to find articles or blog postings touting the top 10 or so mobile apps for personal or business use. However, I haven’t seen anything yet on the top 10 supply chain apps.

I think that this omission will be shortly addressed as developers start targeting tablets and smart phones as logistics systems platforms.

Tompkins Associates is currently working on a tablet-based reporting app for our Tompkins Warehouse Control System (TCS). And many supply chain software vendors are already working on the next generation of mobile supply chain apps (see RedPrairie’s recent press release on mobile solutions group.)

So what will these supply chain apps look like? I must admit that my vision is somewhat fuzzy although I have a basic inkling.

Part of my vision problem is that mobile computing is hardly a new topic within the supply chain. Mobile computers have been used for years by supply chain operations to track and manage goods movement.

They have gotten more powerful, flexible and cheaper over the years. But in many ways, they are used in the same manner today in logistics as they were employed 15 years ago. While they have become relatively ubiquitous, they remain transactional devices that direct and capture activities through bar code scans and key board entries.

Although I expect to see some apps that turn smart phones and tablets into data collection devices for supply chain systems, the really killer apps will undoubtedly look quite different. They will take advantage of capabilities that these devices offer over the current generation of mobile computers found in warehouses and delivery vans.

Specifically these apps will leverage the enhanced graphics, wide-area connectivity, and flexible form factor capabilities provided by tablets and smart phones. They will utilize GPS, integrated cameras, voice recognition and cloud computing in truly novel ways.

As Cooke’s column points out, smart phones and tablet computers offer flexibility not found in traditional computing devices currently used in the supply chain world.

They can help break the bounds that tie managers to desktop computers. They can make control panels and dashboards accessible on truly portable devices. They can also eliminate the need to carry multiple devices (e.g., cell phone, hand held computer, GPS, and others) to do the job.  

The possibilities are numerous and intriguing. All we need are for developers to bring them forward. But don’t put your imagination on hold until you see the inevitable articles and press releases.

Let me know what you think will make the top 10 supply chain apps list for 2012.

-- Tom

 

Photo Credit: nvidia corp

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Before you open your checkbook on a system implementation, let me ask you a question: “How many supply chain system implementations sub-perform?”

While I can’t cite any specific statistics, I have read articles stating that more than 60% of ERP implementations fail.

Failure can imply a wide range of outcomes, but I think a common factor among companies that have fallen victim to this statistic is that their ERP implementation ran significantly over budget. I also believe that many large-scale supply chain systems deployments end up exceeding their budgets. This may actually be the norm for top-tier WMS implementations rather than the exception.

Time and materials are the favorite contract terms for most top-tier supply chain suite vendors. It is very comfortable ground for vendors, especially when significant complexity and process re-engineering is involved.

Unfortunately, it can produce some very painful results for supply chain executives and managers who must explain major cost overruns on implementation projects.

It’s no wonder why more companies are pursing fixed-fee or not-to-exceed terms on their implementation projects. Implementing a supply chain execution package can involve considerable uncertainty, which can result in more time and effort to complete the project than was originally budgeted.

A time and materials contract implies that the customer covers any potential budget overrun for vendor services, while fixed fee or not-to-exceed terms mean the vendor is responsible.

So, fixed fee or not-to-exceed terms definitely appear to be the way to go.

By using them you eliminate the risk of vendor cost overruns and get rid of the hassle of managing vendor hours. Unfortunately, it doesn’t always work out this way, and you may end up paying more than you need to control this risk.

Vendors tend to incorporate a contingency factor into their bids when providing fixed or not-to-exceed terms. The amount of contingency that a vendor incorporates into the bid is generally directly proportional to the knowledge available on the customer’s true requirements. The more the vendor knows, the less contingency the vendor must incorporate into its bid to cover uncertainty.

Many software selection processes do not do a very thorough job specifying requirements. Because of this, significant knowledge gaps may still exist even when the customer feels it has developed a solid set of requirements.

There may be a gap between what the customer initially believes it requires and what it truly needs. There certainly can be gaps in understanding what customer-developed requirements mean between the customer and vendor.

If these gaps are too great, you may end up paying more for vendor services under a fixed fee or not-to-exceed contract.

Few contracts under these terms end up costing less than the vendor originally quoted even if the level of effort needed turns out to be less than entailed in the dollars quoted.

While you may think that the risk of vendor cost overrun has been adverted, without detailed requirements that truly meet needs and measurable performance milestones, a not-to-exceed contract can also be an invitation to a slew of change orders and endless haggling.

Avoiding an open checkbook project is a goal that every supply chain systems implementation should reach.

It’s important to know that simply executing a not-to-exceed contract with the vendor may not be enough to truly cap final expenditures and deliver on the benefits that originally prompted the project.

Not-to-exceed and fixed-fee terms require clear and concise requirements to deliver the intended value. Furthermore, they do not eliminate the need to effectively manage vendor performance. They are merely a tool that must be properly applied in order to produce the desired results.

In certain situations they may not even be the right tool. However, when applied and managed correctly, they can prevent many implementation projects from blowing out their budgets.

What has been your experience?

-- Tom

More Resources

Supply Chain Information Technology: Creating Shareholder Value

Top 11 Priorities for Supply Chain IT in 2011

Technology Investments: Plan Ahead for the Payoff

 

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Last fall, I attended a review meeting to discuss a client’s options on upgrading or replacing their existing warehouse management system (WMS). During the session, someone mentioned the importance of factoring Business Intelligence (BI) into the equation and began to explain why the dashboard and reporting capabilities of any prospective solution should be considered.

This provoked an immediate reaction from a senior logistics VP, who said that he had heard this same song and dance before when his company’s current WMS was selected. And he has been waiting seven years and still does not have his dashboards.

Many organizations have an untapped wealth of supply chain performance data locked away in their systems. Executives and managers constantly clamor to get their hands on this information so that they can identify issues and trends in a timely manner.

Considerable efforts are spent developing a plethora of custom queries, reports, databases, and spread sheets to meet this demand. And they typically produce additional requests for even more performance data and metrics.

Supply chain executives and managers want information presented in a timely, concise manner; sifting through a variety of reports and spread sheets is impractical. They want to see trends and issues that matter to them presented in an actionable format. So, they tend to be very interested in getting tailored dashboards on their desktops and mobile devices.

Many companies pursue BI initiatives that seek to extract value from information locked away in databases across the enterprise. Some enterprises standardize on platforms from SAP, IBM, Oracle or other full BI solution providers.

These solutions provide tools to build data marts, perform analytical processing, and extract and disseminate performance and trend information. Other firms use BI modules and tools provided by their supply chain suite vendor to get actionable performance data into the hands of supply chain executives and managers.

These traditional BI solutions typically provide tools to develop and deploy dashboards. While they may provide some templates that are relevant to a particular supply chain operation, it is up to the enterprise using the tool to develop dashboards and reports that meet the specific needs of its supply chain user community.

This is why the plight of the aforementioned senior logistics VP is not uncommon. The platform can do the job. But from discovery to deployment, it takes a lot of resources to fully construct these solutions to meet the needs of every potential user in the enterprise.

I recently sat through demonstrations of two BI solutions that target special supply chain audiences: Blue Sky Logistics and Oco. Both vendors offer pre-built content that can be integrated with multiple data sources. Both deliver content through intuitive dashboards and reports.

Blue Sky offers a collection of more than 100 instrument panels that focus on performance data primarily inside the warehouse. Their solution employs a proprietary data model that is fed by client transactional systems. It is typically deployed on-premise. Blue Sky provides professional services to support the integration of client data sources to their data mart.

Oco offers a SaaS BI solution that provides pre-built analytics that focus on inventory, transportation and procurement. Customers typically feed Oco’s cloud-based data warehouse on a daily basis through a FTP upload. Oco provides a standard data exporter for SAP, but they also provide services to help map non-SAP sources to their data schema.

The Oco presentation included a transportation spend analysis demo that included information extracted from transactional sources and industry-specific benchmarking data from Tompkins Supply Chain Consortium. (View the press release on Supply Chain Intelligence: Next Generation of Benchmarking and Analytics is Powered by SaaS.) The prospective user was able to compare their performance against relevant benchmarks with the help of some really cool drill-down and discovery capabilities.

While I was impressed by both solutions, my initial reaction was to ask: How do you position these solutions to enterprises with top-tier ERP and supply chain suite solutions?

Many of these organizations already have a standard BI solution and tool set. If I am running BusinessObjects, Cognos or Hyperion, why would I be interested in Oco or Blue Sky? But then I remember the senior VP who has been waiting seven years for his dashboards.

I understand why an IT department using a full BI package may not be that adverse to an Oco-like solution. They may even jump at the opportunity to get logistics off their back.

It may take many person-months to develop similar content as Oco provides using their standard BI tools. Oco can do it in weeks within a SaaS framework.

The BI world is not one-dimensional. There is room for agile solutions that can bring immediate value to a targeted audience at an attractive price.

These solutions and traditional packages are not mutually exclusive. In many ways, these solutions complement full BI packages by offloading content and audiences that are better addressed by a specialty solution. Plus, they keep important audiences from waiting seven years for their dashboards.

So where are your dashboards?

-- Tom

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Tags: supply chain intelligence, benchmarking, wms

If you are considering or about to undertake the acquisition of a new supply chain application, you may find the cover story from Computerworld’s December 6 issue interesting. The topic was How to Negotiate Better Enterprise Software Deals.

Having participated in numerous supply chain software selections, I can confirm many of the article's points from experience.

While the article dealt with software acquisition in general – including operating systems, office suites, SaaS-based sales automation solutions, and enterprise systems – there were several observations that were particularly germane to the pursuit of supply chain applications.

Taking some liberties, I have summarized a few key points as follows:

1. Haggling is a best practice.

Like buying a car from a dealer, prospective buyers should be prepared to haggle for the best deal from a software vendor.

The article gave some tips for pressing a vendor’s hot button by raising the specter of competitors or alternative solutions. I’ll go one step further for supply chain software. There is nothing like a selection process that forces vendors to go head-to-head for your business to help you get the best deal.

You’ll really get the competitive juices flowing if you include arch competitors in the process. All is fair in love and buying software. So don’t hesitate to tell a vendor what the other guy is offering when attempting to extract concessions.

2. Know what to buy.

This may seems like an obvious point. But knowing how many licenses you need to buy for immediate and future use is critical in getting the best deal. Buying more than is needed can result in wasted money. Buying too little can mean paying a premium for additional licenses at a later date.

Supply chain software selections can also inject additional elements into the equation. If suite vendors are included in the mix, there may be other applications that should be considered. Vendors have been known to offer very attractive pricing on secondary applications to get the sale on the primary product in question. Also, some have been know to get creative in offering additional licenses to cover peak season demand.

3. Consider pushing back on maintenance.

For many firms, the reward for completing a selection is the dubious honor paying for all licenses purchased, plus a full year of support and maintenance. Some firms find the total cost of support and maintenance over a five-year period exceeds the initial license value.

Vendors may also routinely increase support costs for older releases. Once you get around to an upgrade, you may be faced with a substantial bill for vendor professional services and modifications. Companies with long or delayed deployment schedules may end up paying for maintenance and support on licenses for years prior to their actual usage.

Questioning any vendor on its support and maintenance pricing will probably result in a serious lecture on the necessity to properly fund new development as well as provide quality support services. But this doesn’t mean that the vendor won’t show some flexibility, especially concerning effective dates and limiting increases in outlying years. If they don’t, you can always mention that you are putting the same question to the other guys.

4. Don’t try to pound the vendor to a pulp.

The final section of the Computerworld article cautioned the reader not to be too rough on the vendor.

Hard nose bargaining is commendable. But getting the rock-bottom price and every desired concession shouldn’t be the sole aim of the prospective buyer. Selecting a supply chain execution or planning package is also about building a long-term relationship with the vendor. You run the risk of poisoning this relationship if you push too hard.

I’ve marveled at the ability of some sourcing and procurement folks to beat software vendors down on price and terms. But you are not buying office supplies or packaging. Totally alienating the selected vendor may result in the delivery of substandard services and support. More likely, it will make the vendor less flexible to work with you in the future concerning any new or changing needs.

The article really didn’t touch on professional services. This is understandable, since it covered office suites and operating systems as well as enterprise applications. But professional services and modifications expenditures can significantly exceed license costs for many supply chain system implementations.

Professional service rates certainly can be the subject of negotiations. But it is more important to place some boundaries or control around the total hours charged. This is a lot more challenging that getting reduced license prices or a deferred date on the start of maintenance.

I think the key to negotiating the best deal on supply chain applications is to fully appreciate and embrace the power you have as a prospective buyer.

Your leverage with any software vendor is never going to be greater than it is prior to signing the contract. You should take full advantage of it.

-- Tom

Resources:

Case Study: Retail Flow WMS Implementation

 

Photo credit: SEPBlog 

 

 

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I am officially an eReader user. I didn’t make the plunge into this technology because I wanted to be an early adopter. As it happened, I got a Nook as a birthday gift last year from my wife.

I had made a couple of innocuous comments to her on the potential convenience of an eReader for the business traveler and the amount of books that we have boxed in the garage. I wasn’t angling for the device. Actually, I thought the convenience of electronic gadget could not overcome my desire to feel a book in hand, and I assumed that eReaders would provide a similar experience to reading PDFs on a PC, which can be a bit painful.
 
If I hadn’t received my Nook as a gift, I might still be sitting on the eBook sidelines, contemplating when to buy the device. Although, by now, I might be looking at the new full-color touch screen model as proof that my waiting to take the plunge was justified and be ready to make the purchase.

If I didn’t get my Nook when I did, I would have missed out on some interesting discoveries. First, I found that the eReader provides a comparable experience to reading paperback books. Once I started reading an eBook, I didn’t find myself longing to hold an actual book.

Secondly, while the Nook was certainly a more compact travel companion than a hardcover book, it takes almost as much room in my laptop carrying case as a typical paperback when combined with its protective leather cover.

The real convenience of the Nook comes from the ability to provide a book on demand. No more having to go to the bookstore or wait for a delivery of an online purchase when I want a new book to read right away.
 
At the same time, I don’t find the Nook experience flawless. Detailed maps or diagrams on this eReader can be illegible. And using the internal dictionary and highlight mode is a bit cumbersome. There are also many titles that are still unavailable in eBook format.

But these issues are negligible when compared with the benefits. So, as 2010 winds down, I haven’t bought a printed book yet this year and have no plans to do so in the future.

Being one of the converted, I find comments on the lack of merits from eBooks skeptics somewhat amusing. Essentially, they are saying the same things about this emerging technology that was said about downloadable music when hard-drive-based portable media players first became available.

I wonder, when was the last time these eBook cynics bought a music CD? Just like music distributors in the late 90s, major book retailers see the writing on the wall. Not only are they fervently pursuing the eBook marketplace, but brick and mortar bookstores seem to be focusing more and more on café traffic and gifts and curios sales.

It wasn’t until I got my Nook that I knew the technology would work well for me. I don’t think I am unique or that eReaders derive from a radically new concept.

Frequently, we really don’t know what a new technology can or can’t do for us until we get our hands on it.

That’s why many companies pursue pilot projects with new technologies. If a pilot is impractical, then companies can always do a thorough evaluation that benefits from the previous experience of others. Once we implement, the smart organization knows that it should do a post-stabilization assessment to determine what, if any, adjustments should be made.

In dealing with new technology, many folks naturally shy away from being on the front wave. They like to let others face the challenges inherent in the first or second generation.

Price and performance tend to smile on those who wait in the technology world. But waiting around doesn’t allow the possibility that a new technology can provide substantial value right now, before the more advanced generations of the product emerge. Deciding when to take the plunge requires putting aside preconceived notions and determining if taking the plunge may be the best bet.

I’m glad my wife forced my hand on the Nook. Otherwise, I would still be sitting on the sidelines finding all sorts of reasons why I shouldn’t buy one instead of enjoying the convenience that the technology provides.

-- Tom

 

Photo Credit: Mike Licht

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Susan Evans is a first-time guest blogger on the SCIT Perspectives Blog. We appreciate her joining us today to give her expertise on the global side of TMSs. Susan is Managing Director, Tompkins International, EMEA. With more than 20 years of experience in transportation, logistics technology and global supply chain issues, Susan leads companies to achieve supply chain excellence. Her first-hand expertise in Europe and Africa stems from living and working in these regions for the past 14 years.

-- SCIT Blog Team

---

Recently we were discussing Global Transportation Management Solutions (TMS) and deployment with one of Tompkins software vendor partners. During our conversation we began to talk about how many companies, shippers and Logistics Service Providers (LSPs) are truly running a global TMS solution.

We determined that there may not be as many as you think.

This piqued my interest to dig deeper and find out what people really consider to be a “global solution” in the area of transportation.

You hear the terms – “Global Trade Management,” “International Transportation,” “Transportation Management System” – but what really constitutes a global solution?

After some examination, I found a few interesting points as well as some contradictions that I would like to share with you today.

To begin, there are a number of Tier 1 and Tier 2 Transportation Management Systems on the market and some of these are able to support solutions in all regions – the Americas, Europe, Asia Pacific, Middle East and Africa. And while some solutions are more geared to North America, in Europe we find some are very country-specific (available only in French or only in German).

But what we are looking for here is the number of shippers and LSPs that are using these solutions on a global basis.

The reality is that some shippers standardize globally on a single TMS; however, each region’s business is very different, so the TMS has to manage domestic transportation on a regional basis.

Locally, different carriers are used and different business rules apply. At the same time, multiple currencies can be used with value-added tax (VAT) and cross-border issues in Europe, while North America is more homogenous.

Likewise, LSPs may standardize on a supply chain technology solution to manage their business, but others may have a list of TMS solutions that they prefer (some being legacy and others Tier 1 and Tier 2). In actuality, most are not deploying a single solution for a single shipper on a global basis. But, there are exceptions to this.

Some companies have embraced a single installation of a solution that allows central planning which is then executed locally. As a result, companies that have been able to achieve a single ERP solution on a single box, are more capable of achieving a single install of a TMS than companies that have embraced a core carrier program or working with a single LSP.

As I took a deeper look at this subject, I began to think more about the aspects of ocean and air transportation.

Often, companies that have an international transportation solution use a domestic TMS. And while a Tier 1 TMS can support ocean and air, more frequently, deployments are for road transport following an international move managed outside the TMS. Yet, some vendors provide integrated networks that allow GTM/international transportation to feed to domestic TMSs.

So, where are we now?

A global transportation management system has different meanings to different parties. But most often, companies are moving to a standardized, single solution or platform that deploys on a regional/divisional basis.

The exceptions include a few companies that are implementing a global Tier 1 solution on a single box offering in order to take advantage of centrally negotiated rates with a more centralized and coordinated approach.

I hope this helps you as you begin to think about standardizing your global TMS. For those of you who have already found yourself in the middle of this issue, let me know how “global” your TMS is.

-- Susan

 

Photo Credit: The_Tahoe_Guy

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Tags: transportation management systems, logistics service providers, europe

Collaboration is usually viewed as a good thing in the supply chain world. The theory of customer and supplier working together to drive out inefficiencies in their supply chain for the benefit of all is a generally accepted principle. Facilitating supply chain collaboration through technology should be a given. But how well does your supply chain leverage technology to improve collaboration? 

There are a lot of really neat supply chain collaboration solutions available that vary in focus and capabilities. For example, there are collaboration hubs for procurement, vendor-managed inventory, goods and services requisitioning, supply chain visibility and tracking, global trade management, transportation services procurement and tendering, and a plethora of other supply chain functions.

Some are oriented toward suppliers; some are designed to face customers, while others support multi-node extended networks. They are used by manufacturers, retailers, distributors, and logistics service providers. Typically, the software used to run the hubs comes from ERP, supply chain suite, and best-of-breed vendors.

Supply chain collaboration hubs may vary in purpose and audience, but they generally have two things in common:

1. Hub functionality is typically delivered over the cloud. Users access hub functionality through their Internet browsers.
2. The basic premise of most hubs is to provide value to all participants. They typically do this by automating the flow of information between partners and providing increased visibility.

You may want to dispute the second point, especially if you have a large customer or service provider who is trying to force you to use a particular trading partner gateway. But smart enterprises that have made collaboration hubs work know the hub must provide value to all participants in order to reach their full potential. They also know that collaboration is a two-way street.

The potential for collaboration hubs as a software solution is never more apparent to me than when I see a well-run supplier collaboration hub. These solutions allow manufacturers and distributers to automate the exchange of information with non-EDI capable vendors.

The advantages of this can be substantial, especially for operations that have a large base of small and off-shore suppliers. It can mean major reductions in data entry labor and associated errors, as well as an increase in the timeliness of critical information. I’ve seen distribution operations in this situation use collaboration hubs to boost the percentage of their inbound shipments accompanied by case level ASN data to nearly 100%.

You should know that these advantages cut both ways. Suppliers can spend an inordinate amount of labor processing paperwork and expediting issues via email, phone calls and faxes. They, too, can benefit from increased timeliness and visibility of data. Provided there is a well structured value proposition and on-boarding process, a collaboration hub may be a pretty easy sell to vendors.

So, if collaboration hubs are so neat, why don’t we see more of them?

They are hardly a rare commodity in the supply chain world, but I don’t believe that they are as prevalent as they should be. I realize that they are not appropriate or justifiable in many situations.

Traditional EDI tools are well established and work just fine for many trading partner communities. For some companies, the opportunities to improve processes and information flows with trading partners may not warrant pursuing a collaboration hub. Also, the relationship between trading partners may not be conducive to hub adoption as there is not a predominate partner to drive the process.

Based on what I see and hear, I believe that too many operations are still missing the boat on the value of collaboration hubs. Perhaps other needs continue to suck up all the oxygen in their IT strategic plans.

Many probably would agree that increased trading partner collaboration and integration is important to the health of their supply chain, but enhancing trading partner collaboration probably remains a perennial “Day 2” goal on their strategic IT to-do lists.

If this observation is correct, then it is a really strange one. We live in a world of extended supply chains. Improving collaboration between trading partners should be an objective few supply chains can afford to postpone.

-- Tom   

 

Photo Credit: D.Begley

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