26th April 2019
There appear to be two conflicting trains of thought in the supply chain world at the moment; in fact there has been for some time. On one hand, retailers and supply chain leaders want to minimise the amount of suppliers they work with – whether that be software suppliers, product manufacturers, or supply chain service providers. On the other, they wish to remain flexible enough, and agnostic enough to work with whomever they want, whenever they want, at the drop of a hat. Both have their merits, both can co-exist, and in fact each can strengthen the other.
When it comes to supply chain software, there have typically been two types of vendors. One who offers broad, headline services that often require supplementary software or customisation to complete, and more specialist providers that bring yet another business partner to work with, and manage the relationship of. An increasing number of vendors are becoming “specialised” in a broader set of solutions without turning themselves into the traditionally “hard to implement to completion” ERP vendors. As a result, retailers are finding it possible to get the best of both worlds – specialised solutions that are deep in their functionality, and fewer suppliers needed. This allows for convergence from a software perspective.
When it comes to product and services suppliers, it’s slightly more difficult. Retailers would like to have fewer suppliers but the also want to mitigate the risks on themselves, and their suppliers. Many retailers will not work with a supplier if they make up too high a proportion of their business – in both directions. So in fact, divergence is often the case here.
Supplementary to this, retailers need to be able to diversify their offerings and routes to market. With global events being increasingly unpredictable politically, environmentally, and economically, the requirement to both spread risk, and the ability to switch gears quickly have never been more relevant.
On top of all this, many suppliers (supply chain service providers in particular) will come with their own inherited software that either they will work with, or they will require the retailer to work with.
This is where expansion and convergence can really come to fruition as a powerful coalition.
Whilst retailers need fewer suppliers in order to maximise the relationships they have with them, they also need the ability and flexibility to switch between suppliers swiftly. The first step to being able to achieve this is to ensure the internal processes are adaptable enough to flex to a new supplier (or suppliers). This is where having software that is configurable and rich in functionality is key as it enables retailers to adapt to a changing landscape of external users and external processes. The question is then one based on relationship – force suppliers to use the retailer’s software of choice, or work with them to integrate? – both valid and both more than likely needing to co-exist.
The supply chain industry is both expanding and converging at the same time, with a healthy dose of agnosticism and flexibility thrown in for good measure. Retailers want to work with fewer software suppliers, but maintain the flexibility and configurability that enables them to work with an increasing product and services supplier base. If retailers crack this – they crack the market, and they are on the fast track to being considered industry leading.