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Agile Supply Chain Decision-Making: First You Need to Know The Truth About Enterprise Software

Enterprise software does well with what it was designed to do – create a reliable system of record and drive operational efficiency. The problem? Today’s supply chain executives need more than efficiency. They need agility. Indeed when market conditions shift or disruptions hit, leaders can’t wait weeks or even years for their rigid enterprise systems to adjust. Sure, these systems pump out mountains of data, but they do not do well with advanced analytics or making timely recommendations. This is the missing link for achieving an agile supply chain.  Hence, it’s time to face an uncomfortable reality about our enterprise systems and what they can actually deliver.

In this article, I’ll look at why we need an agile supply chain and how enterprise software does not fulfill this agility need for busy decision-makers. More specifically, I’ll provide you an enterprise software reality check by examining six categories of business software that are failing to deliver on providing agility. The bottom line: we have an agile supply chain software gap. Namely, we need high-speed, adaptable decision support software that works directly with executives. 

1. What is an Agile Supply Chain?

Indeed, there is a renewed focus on agile supply chains lately with recent worldwide disruptions. Without a doubt, the pendulum has swung from lean management methodologies to a more resilient and agile approach. So, let’s look at what an agile supply chain is and why it has increased in importance in the last couple of years.

a. Agile Supply Chain Definition.

agile supply chain and enterprise software
Are Enterprise Systems Agile?

First, here is a definition for an agile supply chain:

“Supply chain agility is a supply chain organization’s ability to respond efficiently and avoid making knee-jerk reactions to fluctuations in consumer demand as well as the effects of market vulnerabilities such as geopolitical crises, shortages of labor or raw materials, and acts of nature. An agile supply chain can more easily accommodate, for example, sudden demand spikes and major changes in raw material availability.”

Oracle

b. Lean Supply Chains Are Impacted More Severely by Disruptions.

In the not so recent past, companies did not focus on agile supply chains. Indeed before COVID-19, supply chains chased the lean dream: minimal inventory, just-in-time delivery, and razor-thin margins. Then reality hit. Empty shelves, chip shortages, and medical supply gaps exposed how fragile these systems really were. Companies learned the hard way that efficiency without flexibility is a liability. 

c. The Refocus on Resilient, Agile Supply Chains.

Now, businesses are rebuilding with resiliency in mind, designing agile supply chains that can bend without breaking. Moreover, this transition is primarily focused on how managers make decisions, not on fundamentally changing business software such as enterprise systems. For more discussion about this change from lean methodologies to an agile, resilient approach, see my article, Supply Chain Resilience: It’s Important and You Need to Know Why.

2. What Enterprise Software Is and What it Is Not.

Next, let’s talk about enterprise software. In this digital era, all businesses have and use enterprise software to run their business. For instance, most supply chains use a WMS or a TMS to name a few. At its best, enterprise software is a system of record for businesses. It excels at tracking what happened, storing master data, and maintaining operational consistency. So, let’s look in more detail on what enterprise software is and what it is not.

a. Enterprise Software Definition.

 For a frame of reference, below is a definition of an enterprise software application.

“… are large-scale software solutions designed to streamline and automate various processes of an organization’s operations. These solutions are intended to increase productivity, efficiency and collaboration across departments.”

IBM

b. A Short History of Enterprise Software.

Looking back, enterprise software as defined above started simple: record transactions, track shipments, manage orders. This is how it was in the 1970s. By the 1990s, vendors began adding fancy dashboards and reports. Now, enterprise software vendors continue to add features, going way beyond their core capability as a system of record. For instance, vendors continue to add more features such as AI, advanced analytics, decision tools – you name it.

c. The Limits of Enterprise Software: Great for Transactional Processing, Poor for Analytics and Decision Support.

However, can a single system really handle both day-to-day transactional processing (e.g. a system of record) and complex analytics? The answer is no. It’s like asking a sumo wrestler to win a marathon. Indeed, when software tries to do everything, it usually ends up doing nothing particularly well. For a more detail discussion on what an enterprise system is and is not, see Joannes Vermorel’s article, The three classes of enterprise software. Also, see Geoffrey Moore’s article, Digital Systems Maturity Model on the different purposes and maturity of business systems.

3. Enterprise Software Reality Check: 6 Categories Failing to Deliver Agility for Today’s Executives.

The hard truth is that our current enterprise software landscape is too fragmented and slow to meet the agility needs of today’s executives. This is particularly true for CEOs, COOs, and CFOs who need a cross-functional view of their business and supply chains. Indeed, most, if not all, supply chain enterprise applications are digital silos by design, providing only a limited functional view. Additionally, this lack of a comprehensive view causes executives in particular to make isolated decisions. As a result, they may fix one problem but create others within the supply chain. So, let’s look at these different types of enterprise systems and see why they’re falling short when it comes to supporting agile supply chains.

a. Execution Systems: Not Designed for Cross-functional, Executive Decision-Making.

These types of enterprise systems possess rich transactional data, but are in functional silos. Software vendors did not design these systems for executive, cross-functional decision-making. For instance, Transportation Management Systems (TMS) track shipments but can’t predict disruptions. Then there are Warehouse Management Systems (WMS) that optimize space but can’t dynamically adjust to sudden demand shifts. At the same time, select data from these systems are needed for corporate analysis.

b. Visibility and Tracking Solutions: Identifies Problems, Not Solutions.

This type of software may meet select visibility needs, but they are missing information such as demand and financial data. Specifically, these types of systems include cloud-based “Control Towers” and shipment visibility systems to name a few. Further, these systems and their data interfaces are expensive and only provide partial information from an executive perspective. Indeed, these visibility systems can identify problems but often do not have the capability to offer solutions, nor options. 

c. Planning and Modeling Software: Lacks Agility and Does Not Work Directly with Decision-Makers.

Software vendors design these systems for planners to leverage “Big Data” sets. They are not designed for agile decision-making. These types of systems include ERP, Inventory Management, S&OP, Digital Twin, Forecasting, and some AI-powered systems. For examples of shortcomings, ERPs focus on transactions, not insights. Moreover, planning systems are in the hands of planners, not executives for agile decision-making. 

d. Analytics and Knowledge Tools: Short on Practical Utility for Agile Decision-Making.

Modern analytics solutions promise deep business insights, but their practical impact often falls short of expectations. Indeed, organizations invest heavily in business intelligence platforms, machine learning algorithms, and artificial intelligence systems, only to find that these tools generate more reports than results. As a result, the fundamental challenge isn’t their analytical capability – it’s their inability to translate complex data into clear, actionable recommendations when business leaders need it most. Without a doubt, this gap between analytical power and practical utility remains a persistent challenge in these types of software.

e. Backend and Customer Support Business Systems: Isolated Data Silos, Not Designed for Agile Supply Chains.

We can characterize these types of software as having valuable data, but it is isolated within its own individual functional silo. Specifically, these systems have functions such as procurement, payment, accounting, customer relationship, and customer support. At times, the data in these systems are needed by executive management teams. Again, the problem is that these types of software are systems of records not designed for agile decision-making.

f. Business Automation – BPA, RPA, Personal Assistants, Autonomous AI: Designed More for Automation Support, Not Decision Support.

Lastly, software vendors design these types of automation solutions to automate business processes and execute tasks, not to support executive decision-making. Specifically, these solutions can include Business Process Automation (BPA), Robotic Process Automation (RPA), Personal Assistants, and emerging autonomous AI applications. For a more detailed look at business automation, see my article, Business Automation AI Remake: First Just Tech To Empower Processes And Now Operates Autonomously.

4. The Agile Supply Chain Software Gap: High-Speed, Adaptable Decision Support for Executives.

So, today’s executives continue to drown in supply chain data but are starved for real insights. This is especially true for top executives, such as CEOs, COOs, and CFOs. Without a doubt, current enterprise systems excel at recording what happened, but struggle to answer the questions that matter most: What’s about to go wrong? What should we do about it? Indeed, without tools built to directly support rapid decision-making, leaders fall back on “gut” instinct or try to use transactional enterprise software, not designed for agility. Neither approach works in today’s fast-moving, technology-advanced business environment.

To find out more about what is needed in an Agile Decision Platform for executives, see my article,  An Agile Decision Platform to Empower Executives For Superior Supply Chain Performance: Here Are The Best Attributes.

An Agile Decision Platform to Empower Executives For Superior Supply Chain Performance: Here Are The Best Attributes.

Imagine if corporate executives had their own software that could significantly enhance their decision-making to maximize supply chain performance in today’s fast-paced digital world. Indeed, this executive-level decision platform, without any middlemen, would offer cross-functional insights, best options, and support decision-making communications throughout the supply chain. Positively, this is now possible, due to recent advances in AI, data analytics, fast computing, and the global internet.

Click here to see how digitalization is creating a growing requirement for business leaders to be increasingly agile in their decision-making. This is even more true in complex supply chains, where corporate executives are working in a dynamic, digital environment. Further, I’ll identify the key software attributes that corporate executives need in an agile decision platform that will fully empower their decision-making to maximize supply chain performance.

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