Nike flop is "first of many"

Analysts and enterprise resource planning (ERP) software vendors are predicting widespread difficulties in implementing supply...

Analysts and enterprise resource planning (ERP) software vendors are predicting widespread difficulties in implementing supply chain management (SCM) software.

Arlene Martin

The forecasts have been made following footwear company Nike's announcement last week that its earnings would be $80m (£54.5m) to $100m lower than expected due to a failure to implement SCM software smoothly.

Maria Jimenez, research director for enterprise and supply chain management at Gartner, said, "Announcements like 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 proved problematic. 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 as the software became more complex, problems such as Nike's were more likely 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," Woods added.

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."

Arlene Martin

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