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Can your ERP handle today's logistics and SCM complexities?

Frans Kok, General Manager for AEB Asia Pacific | Sept. 14, 2015
There are three areas where ERP systems might face challenges: customs management, transport optimisation, and cross-enterprise collaboration with supply chain partners.

This vendor-written piece has been edited by Executive Networks Media to eliminate product promotion, but readers should note it will likely favour the submitter's approach.

Enterprise resource planning (ERP) systems are the backbone of many businesses. Users are largely satisfied with their solutions but the level of satisfaction varies widely depending on which part of the business the system supports. Many companies face a dilemma, especially when it comes to supporting their own logistics and foreign trade operations: Is it better to model the processes in the ERP system or turn to best-of-breed solutions?

According to Gartner, ERP is defined as the ability to deliver an integrated suite of business applications covering broad and deep operational end-to-end processes. These solutions have greatly expanded their scope in recent years beyond the traditional functions of finance, accounting, corporate governance, and human resources.

Developers have also now equipped ERP products to handle supply chain management (SCM) and support a wider range of processes within the realm of logistics. But how much sense does it make to use ERP systems for logistics and SCM? German business management consultancy Trovarit AG might have the answers to this question.

ERP for logistics gets mixed reviews
In a broad-based study spanning more than 10 years, Trovarit AG have been regularly tracking how happy users are with the performance of their ERP systems. Such satisfaction is a key indicator of the benefit and cost-effectiveness of the solutions. In their latest study, Trovarit surveyed nearly 2,400 users on a wide range of criteria. In addition, Trovarit also analysed and evaluated user satisfaction with 38 "logistics ERP" systems.

"Our study shows that users are by and large relatively satisfied in the area of logistics," says Dr. Karsten Sontow, Member of the Board at Trovarit AG. "Their ERP solutions deliver the benefit they're looking for — which is generally end-to-end support for their processes and an integrated database."

What the study also shows, however, is that user feedback in the area of logistics is somewhat critical for some criteria and less enthusiastic overall compared to other business functions. "The reason for this in my view is that ERP solutions with more sophisticated logistics features are much more complicated than the solutions that focus strictly on business administration," explains Dr. Sontow.

"The more individualised nature of logistics processes makes the systems technically complex if they try to cover everything out of the box. If the solutions opt for greater flexibility, on the other hand, then the complexity is shifted to the implementation phase," he adds. This often leads to budget overruns and missed deadlines.

Complexity is also one of the reasons that day-to-day work with such software is so challenging, and why customers often criticise the usability of the ERP systems for logistics. "Power users don't tend to have problems, but it can be a real headache for the average user. That is reflected in comments such as 'not what I would describe as user-friendly,'" Dr. Sontow notes. Inadequate usability is no small problem, given its critical impact on how efficient the use of the solution will be.

 

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