Supply Excellence

Busch: Soldier for Supply Management Innovation

July 11th, 2006 · by Tim Minahan · No Comments · best practices, supply management

Spend Matters superhero Jason Busch was back on the streets last night, defending free trade and supply management innovation. This time the caped crusader set his laser focus on the latest Forrester Research report, which found that 41% of enterprises will rely on their ERP vendors for supply chain solutions. Jason rightfully disarmed this finding with a sharp-witted barb: “…it dawned on me that mediocrity is alive and well in the software market.”

And I agree. (This time.) But I would add this mediocrity is both enabled and perpetuated by enterprises.

While an analyst, I dealt with many supply management executives that struggled with balancing corporate IT edicts to standardize on a common ERP system with the need to access functionality that could help them achieve their cost and supply management goals.

I called it the cult of corporate addiction.

Just as an addict often acts irrationally, making decisions that are often against his or her self interest. Many companies continue to act the same way when selecting business software. Supply management executives often know their next ERP investment may be bad for them. They know there are “healthier” (read: more innovative) options available. And they know that with each new investment, they are becoming more beholden to their dealer…er ERP provider. Yet they continue to buy that next module.

For example, when considering sourcing optimization solutions, the CPO at one of the largest food and beverage companies in the world once told me, “It will be three more years before [our ERP] vendor will have the optimization capabilities we need. And, by then, [the best of breed solutions] will be offering far greater functionality. But we’ve already invested more than $2 billion in [X ERP system]. There’s really no way we can’t select [this ERP provider].”

This mindset may make things easier on your IT department (although unlikely), but it won’t provide a competitive edge in the marketplace.

The real question Forrester’s finding raises: Is the flip side of this finding that 59% of enterprises finally realize that waiting for Godot…er…their ERP vendor to catch up on the functionality front is a losing proposition?

If the future of competition is not between companies but between global supply chains, then the winners will be those that augment their organization structures, processes, and strategies with truly innovative technologies that provide a competitive advantage.

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