Software Advice, Austin, Texas, surveyed hundreds of supply chain professionals from a variety of industries seeking to implement new software for their business to gain insight into the broader trends in supply chain management (SCM). Then, Software Advice analyzed 200 of these interactions to help other buyers understand what those trends are, and how they can improve their business’s operations with a new software solution. Results were outlined in its latest “Supply Chain Management Buyer Report – 2016.”
Key findings
- Many companies (28%) are still relying on manual methods to conduct various supply chain processes such as procurement, warehouse management and planning.
- The desire to modernize and automate systems (40%) and to improve integration (26%) are the leading motivators for businesses to implement new SCM software.
- Rapid business growth, or changes to business (e.g. mergers and acquisitions), are another leading cause for businesses (19%) to overhaul their SCM software.
Manual methods, antiquated systems paralyze business processes
It’s a familiar tale—a small third-party logistics (3PL) or manufacturing firm has been getting by using pen and paper, clunky spreadsheets or outdated software. But now, they’re at a crossroads and must either upgrade their IT infrastructure or languish. Even though manual methods worked in the past, the business has either grown or is facing tougher competition, and these methods are no longer sustainable.
Indeed, 28% of the businesses surveyed in 2016 were seeking to replace manual methods with modern, commercial SCM software.
Outdated software is also a problem for many small and mid-size businesses (SMBs). The survey showed that 46% of businesses are already using some sort of commercial SCM software, but offer a number of reasons as to why they want to replace these solutions:
- Overkill. They got sold on a fancy enterprise resource planning (ERP) suite years ago from a major vendor that is too expensive and has features they don’t need or use. They want to cut down their IT budget while implementing a more user-friendly and modern system with features they actually need.
- Underkill. They are using some “light” enterprise supply chain software (usually a basic accounting program with inventory and warehouse management modules) that is no longer sustainable for their growing business.
- Lack of support. Hell hath no fury like a supply chain manager scorned—or late with a shipment due to a technical glitch. Unresponsive customer support can be a driving motivation for a business to seek greener pastures.
Modernization, automation, integration are critical
Forty percent of businesses surveyed were seeking to modernize their software. More specifically, this means automation of processes and closer integration of systems.
Automation might be the buzzword du jour in the world of supply chain management, but it can also make or break a fledgling business. Too often businesses are overspending on inefficient practices— manually syncing supplier invoices from their ordering system to their accounting system—and making costly errors in the process.
Business growth driving new software purchases
A growing business is a nice problem to have. That said, it can still present a lot of headaches and challenges. Nearly one in five businesses said their businesses are growing, and as a result, their current methods and tools are not sustainable.
In many cases, business growth has meant adding more warehouses or more vehicles to the fleet. While their current solutions can handle a single warehouse or a small (fewer than 10 vehicles) fleet, that growth means there are now more cogs in the machine to be mindful of.
Indeed, 35% of businesses specifically say they want to improve their warehouse management software—usually to be more fully featured and support multiple locations.
What this means is that more growing businesses are starting to tie their growth to improving their IT infrastructure, and as such, are positioning themselves for sustained growth over time.
Demographics
This sample was comprised primarily of manufacturers (60%), 3PL firms (32%) and other specialty distributors (8%). Eighty-three percent of the businesses were small (under 500 employees) or mid-size (between 501 and 1,000 employees); 17% were large businesses (more than 1,000 employees).
Conclusions
There are many reasons why businesses would want to overhaul their SCM software, but at the end of the day, it boils down to several key themes. Many businesses are paralyzed by clunky, out-of-date software or unsustainable methods that cost both time and money. With more modern and user-friendly software solutions, businesses can kick into high gear and reduce inefficiencies in their supply chain.
