Supply Chain Management Buyer Report – 2016

Every year Software Advice speaks with hundreds of supply chain professionals from a variety of industries who are seeking to implement new software for their business. These interactions give us considerable insight into the broader trends in supply chain management (SCM), as well as the common issues many businesses face.

We analyzed 200 of these interactions from 2016 to help other buyers understand what those trends are, and how they can improve their business’s operations with a new software solution. Here’s what we found.

Key Findings

  1. Many companies (28 percent) are still relying on manual methods to conduct various supply chain processes such as procurement, warehouse management and planning.
  2. The desire to modernize and automate systems (40 percent) and to improve integration (26 percent) are the leading motivators for businesses to implement new SCM software.
  3. Rapid business growth, or changes to business (e.g., mergers and acquisitions) are another leading cause for businesses (19 percent) 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small third-party logistics (3PL) or manufacturing firm has been getting by using pen and paper, clunky spreadsheets or outdated software.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 percent of the businesses we spoke to in 2016 are seeking to replace manual methods with modern, commercial SCM software.

Software Buyers’ Current Solutions for Supply Chain Management
current scm solutions
Outdated software is also a problem for many small and midsize businesses (SMBs). We often speak to companies that had a software engineer custom build some basic supply chain modules to tailor fit the business’s needs (usually about a decade ago), but that software engineer has since retired or moved on.

Now, the business is stuck with the enterprise equivalent of abandonware. If you find yourself stuck with abandonware, you typically want to abandon it.

Mr. Software Maker, Make Me a Match!

We found that 46 percent of businesses we spoke to are already using some sort of commercial SCM software—and they have a number of reasons why they want to replace it:

  • 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.

Frequently, we see many businesses that are simply misaligned with the software vendors they’re relying on—for example, a business might realize that another, lesser-known vendor can better serve its niche.

Modernization, Automation and Integration Are Critical

Forty percent of businesses we spoke to are seeking to modernize their software. More specifically, this means:

  • Automation of processes
  • Closer integration of systems

Software Buyers’ Pain Points With Existing Solutions
buyer pain points
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—say, 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 we spoke to 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 percent of businesses we spoke with 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

Our sample was comprised primarily of manufacturers (60 percent), 3PL firms (32 percent) and other specialty distributors (8 percent). Eighty-three percent of the businesses we spoke to were small (under 500 employees) or midsize (between 501 and 1,000 employees); seventeen percent were large businesses (more than 1,000 employees).

Buyer Size by Number of Employees
number of employees by size

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 are costing them both time and money. With more modern and user-friendly software solutions, they can get their business kicking into high gear and reduce inefficiencies in their supply chain.

Sound familiar? Call Software Advice at (855) 998-8505 for a free phone consultation—We can help match you with the right SCM vendors at no cost to you.

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