The rapid changes in the retail market are having a massive impact on logistics operations all the way back up the supply chain – and that in turn is affecting what companies are looking for from their supply chain execution system.
The growth of online and click-and-collect is driving change across the SCE (and WMS) market, says Alex Mills of Chess Logistics Technology.
“Applications must be integrated and orders processed immediately so that picking, shipping and other processes can be completed to meet the required delivery requirement and timeframe. In retail distribution and internet retailing there is a trend towards smaller orders being placed more frequently by shoppers. In traditional warehouse environments the norm is to pick a single order, typically comprising multiple items, in sequence because this is the most efficient.
“Omni channel operations tend to involve a larger numbers of orders but each comprising just one or two items. Picking these orders one at a time would generally be inefficient. SCE systems need to be flexible to support the different processes and services and dynamic to enable real-time task prioritisation to ensure orders are processed efficiently while balancing workloads and meeting delivery schedules. This trend to omni channel also implies a higher degree of integration than the past.”
Mills points out that more generally all businesses are moving towards shorter delivery times and leaner stockholdings. SCE systems can support this by offering high efficiency, accuracy and flexibility. Many supermarkets for example have been moving more items from “day one for day three” to “day one for day two” deliveries.
“Supermarkets (and their key brand suppliers) are currently in a period of tough competition where price changes and promotions are introduced to help drive sales, often at short notice. This can lead to peak demands which must be fulfilled. SCE systems need to be adaptable to support the processes required.
“A further trend is item tracking and traceability. Customers, both business and retail, now expect greater predictability of delivery times. At one end of this scale are the supermarkets which impose strict delivery timeslots at their DCs and stores, and at the other are the retail customers who now expect to be told with better accuracy when their package will arrive. Delivery confirmation provides suppliers and retailers with real-time information. SCE systems must provide the information to all stakeholders via web and mobile services.
Linda Rodway of Proteus Software summarises it as “the need for speed, accuracy, visibility, traceability and word of mouth reputation”.
And Chris Pass of BCP says: “The omni-channel challenge has to be the hottest topic around at the moment. At its root is the development of mobile devices and their escalating use for doing business throughout the supply chain. To deliver a good omni-channel experience for customers, where all channels of purchase interconnect seamlessly and orders are fulfilled accurately, cost effectively and on time, requires an SCE system which can handle the new demands and processes required, exploit the mobile model and deliver true visibility of real time stock, powerful forecasting and rigorous fulfilment procedures.”
Inevitably, these considerations are making the choice of supply chain execution system for a particular operation, increasingly complex.
Rodway, says: “Really, all companies should undertake a thorough examination of: their current processes; know what they are looking to achieve from their IT systems; consider where they are going and their future growth plans; select an in-house team who are going to champion the IT project; and select an IT provider who has a proven track record of supplying good IT, and has the ability to protect their investments.
“The most important criteria to consider is the suitability of the software in terms of feature rich complexity versus perfect match for business requirements,” says Eric Carter, solutions architect at Indigo Software.
“One aspect to be aware of is the tendency to overcomplicate processes so that you end up with a highly complex software system with functionality you pay for but never take advantage of.
“Businesses change so fast that old thinking like ‘get a system for the next ten years’ really has little or no value in the real world.”
Chris Pass recommends choosing a fully integrated, modular SCE solution as this enables users to choose the modules they require for their particular business and be sure that the whole system operates seamlessly.
“Clearly, it’s fundamental to choose a system from a supplier who has a proven pedigree in delivering successful SCE implementations and a commitment to keeping abreast of changing technologies so you can be sure your system will serve you well not just when you first invest in it, but in the longer term, too, as you grow and diversify.”
Steve Bayley of OBS Logistics highlights the importance of understanding how the supplier and the system cope with change. “An ITT is good for today but it can’t predict the unknown that lies around the corner. A track record of managing change and allowing customers to stay with their solution is usually indicated by a string of long term (ten years or more) relationships with customers that a supplier will let you contact.”
And Bayley points out: “There are a good number of otherwise fine systems that have been ditched because of the supplier’s failure to deal with change and the lack of importance attributed to this aspect during the procurement phase.
Craig Stephens of Epicor Software, highlights the importance of strong core functionality: the chosen solution should be able to handle 80 per cent of the business from the base functionality.
There should also be strong resource management capabilities for both human and non-human resources to ensure greater productivity; and strong rule based logic to allow for maximum system directed functionality. “A good SCES will enforce the processes of the company, but be flexible enough to allow changes by in-house staff when processes need to change or the business diversifies. A rule-based system should never leave staff having to fight or work around processes to run the business,” says Stephens.
Alex Mills argues that it’s rare that any single technology will provide a complete solution. “Assuming this to be the case, the objective is often to take the best technology available and use an adaptable platform (such as the WMS) to draw it all together. Good system design from the outset will certainly make it easier and less expensive to add new technologies later.”
And Kewill’s Evan Puzey says: “My advice would be not to get caught up in the ‘blue-sky’ approach of solution procurement. This is where a company spends a lot of time and effort thinking of everything that they could possibly want to do with a given SCE solution (TMS/WMS/DOM/etc.). But in reality, many companies never use all the features that they thought they would like or need to have.
“Take the time to look for a proven solution from a reputable vendor – they may not be the biggest or the perceived best, but they will be able to demonstrate how they supported their customers through business process change, during implementation, and delivered on or above the estimated level of return on investment.”
Growing role for SaaS
Software as a service has become dominant in some sectors of the logistics market but to what extent can they be used in supply chain execution? Kewill’s Evan Puzey says: “Beyond the easy one off cost, the most significant advantage to most SaaS or hosted solution models is the speed of implementation, particularly in the initial on-boarding phase. Buying the system is the relatively simple part of the process.”
Alex Mills points out that innovations such as SaaS and cloud services in general have the potential to open up a new market for smaller and start-up businesses that in the past would have been excluded from “traditional” SCE and WMS because of the cost or complexity. These businesses have relied on paper-based or simple spreadsheet systems but SaaS and cloud could make many of the core SCE/WMS functions available to them in the near future. At present very few applications are available that offer a cost-effective option.”
Gavin Clark, commercial director at Synergy Logistics which produces Snapfulfil, says: “When the SaaS solution is single tenant, with virtual ‘VMWare’ machines managing the system resources and unique database for each subscriber, this allows the use of custom code and provides for a far greater level of service for the users. This can be on a par with the hosted system, but where SaaS really begins to show its superiority to hosting is when the solution has been designed and coded for SaaS/Cloud deployment. Simply deploying traditional software from another location can create bottlenecks and performance latency that just doesn’t affect a well engineered SaaS system in the same way at all. A precisely designed ‘Web Native’ solution will offer the same speed and power provided by an ‘On Premise’ system, but without the need for an IT or Super user team to support it. The main disadvantage with SaaS is when the different clients are sharing a core system, this often limits custom/bespoke development and can create resourcing issues/database congestion during peak operations. ”
Eric Carter, solutions architect at Indigo Software, says: “SaaS is important for those who don’t have a dedicated in-house IT team due to resourcing challenges. It can also be seen as a lower cost of entry into incorporating such a system. The obvious disadvantage to SaaS over a hosted system is the loss of access to data if your internet connection fails.”