Supply Chain Execution systems: ERP or Best of Breed solutions?

Filed in archive Market Overview

Supply Chain Execution (SCE) systems are real-time systems that manage supply chain operations. SCE solutions are composed of Warehouse Management Systems (WMS), Transportation Management Systems (TMS), Collaborative Production Management (CPM) applications, and other real-time supply chain applications. This is a very large and very fragmented market composed of both Best of Breed suppliers and enterprise resource planning (ERP) suppliers. Leading ERP suppliers tend to have a fuller suite of SCE applications; Best of Breed SCE suppliers tend to offer either logistics or production SCE applications, but not both. Despite that, Best of Breed companies dominate the list of the largest SCE suppliers.

Arc Advisory group recently highlighted a concern among senior managers:

Executives who are evaluating investments in new SCE systems are often confronted with two options: expand the use of existing ERP solutions or procure a best-of-breed SCE system. ERP systems already manage some operational information, so why can't they be used to actually manage execution? Why should additional investment be made in SCE systems?

Some experts like Greg Gorbach, ARC Vice President for Collaborative Manufacturing and Architecture believe that while solution capability has evolved, existing ERP solutions may still reflect certain aspects of their financial heritage, according to how they were implemented and the focus of the implementation. A system intended primarily for management of financial and 'business' transactions may still utilize batch processing of transactions across many applications. While this may be appropriate for proper tracking and auditing of information and operations, it can place severe restrictions on the system's ability to support the real-time needs of shop floor operators and managers.



Granularity and connectivity of information in existing ERP systems is likewise influenced by heritage and implementation objectives. Detailed transactions are basic to accounting and are carefully managed by every ERP system. But rarely do such records include information about individual production units or equipment conditions. Batch and shift summaries are generally granular enough for systems whose focus is to collect costs, allocate overheads, and support only general traceability requirements. But, plant floor managers require the ability to inquire about specific production units and relate units to equipment conditions at the time of production. These detailed unit history records are often absent from ERP style SCE applications for production.

(Source: Arc Advisory Group)