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Survey: End-to-End Supply Chain Orchestration Unsupported by ERP Software

March 20, 2014
Trans

Recently, Lora Cecere at Supply Chain Insights conducted a survey of supply chain leaders at global manufacturers. The findings were eye-opening – particularly for supply chain executives. The study found that companies relying on ERP for supply chain visibility suffer misalignment between IT and business executives, resulting in a 50 percent gap in inter-enterprise visibility capabilities. Startlingly enough, 97 percent of companies agree on the need for supply chain agility, but only 37 percent of companies are meeting their stated goals.

The research also found that, despite the explosion of global outsourcing and increased efforts to automate the extended supply chain, most companies focus on automation within the enterprise, leaving interactions between business partners to spreadsheets and EDI.

Today’s supply chain processes are more dependent than ever upon trading partners and interactions across the extended supply chain. In fact, research from Aberdeen Group indicates that 80 percent of essential supply chain data resides externally, among trading partners. Here are a few industry takeaway points from these findings:

• Current Technology Doesn’t Deliver Required Visibility
Supply chain visibility is a corporate priority, but ironically, most companies continue to invest in technology that functions only within the enterprise. Interactions between business partners continue to take place with spreadsheets and EDI. The survey found that supply chain visibility is low and performance levels in the extended supply chain are half of what they are inside the enterprise. There is a 54 percent gap between visibility performance within the enterprise versus visibility with suppliers and customers.

• IT Cannot Meet Needs for Agility
IT capabilities are largely based on traditional ERP software, relying on electronic data interchange and one-to-one portals for external collaboration, which is inadequate. Business networks require new solutions for supply chain visibility and agility, but current IT architectures are not meeting this need.

• Dissonance Between Business Executives and IT Departments
Because current IT architectures cannot meet current global business needs like visibility and agility, there is friction between line-of-business leaders and IT. Line-of-business leaders are struggling to find funds for non-ERP supply chain visibility initiatives and IT is generally not in agreement that the visibility gap cannot be closed through ERP. In fact, the survey found that misalignment between IT and business executives results in 83 percent of companies unable to achieve the supply chain agility promise and a 50 percent gap exists in inter-enterprise visibility capabilities.

The bottom line is that current architectures, infrastructure and overall technology approaches deployed today are not allowing companies to meet their goals in the extended supply chain. In today’s increasing complex global landscape, external trading partners are more vital than ever to a business’s success (see the latest headlines on GM). It’s difficult to justify more than 50 percent of IT spend going to ERP software when it’s been proven that the technology can only automate processes within the single company --- not the end-to-end network, where it’s needed most. 

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