Analysts and vendors are predicting widespread difficulties for
integrators implementing supply
chain management software.
The forecasts have been made following footwear company Nike’s announcement last week that its earnings would be $80m to $100m lower than expected due to a failure to implement supply chain management (SCM) software smoothly.
Maria Jimenez, research director for enterprise and supply chain management at Gartner, said, “Announcements likes Nike’s will become more frequent as companies fail to understand the realities of supply chain planning implementations.
Supply chain planning applications are immature and the supply chain problems of a company like Nike are complex.”
Nike has named i2 Technologies as the source of the software whose implementation ran into trouble. But i2 has declared that its software was not at fault and that it has many other satisfied customers.
The company claimed that Nike had ignored its advice to implement an industry-standard template with pre-configured settings. Nike had insisted on a more customised product.
Phil Woods, B2B applications manager at Oracle, warned that the more complex the software, the more likely problems such as Nike’s were to arise.
“People have got to get away from customising products because it compromises functionality,” he warned. “Best-of-breed products are fundamentally flawed because they are too complex and involved complicated, integration processes with disparate elements from different organisations.
Businesses need to reduce the number of moving parts and interfaces. By doing so, they reduce the chain of a similar disaster.”
However Gartner’s Jimenez warned that some complexity was inevitable. “For these types of problems there is no easy solution from one vendor,” she said. “In these cases enterprises are forced to build or integrate best-of-breed solutions. Supply chain planning applications have the potential of both fantastic returns and large downside risks.”
This was first published in March 2001