Facing Reality: Is Your Business Rationalizing Away Updated Technology Infrastructure?

In a business environment that is constantly changing and growing increasingly complex, small to medium businesses (SMBs) know that to remain viable, they must adopt new technology. However, there is often a disconnect between acceptance and adoption. Is your SMB effectively leveraging technology to address the reality of your competitive environment, or are you rationalizing reasons not to adopt?

As you will see below, a WMS system can provide a rational first building block in developing a robust technology infrastructure for your supply chain. But first, here are two trends affecting adoption in SMBs:

Innovation and Adaptability

Innovation and adaptability are both key factors in keeping up with technology trends. For many SMBs, goods movement and logistics is riddled with inefficiencies due to lack of investment in technology. Legacy applications are showing their age, and oftentimes require massive costs to maintain. These inefficiencies are compounded by the fact that many companies' supply chains are growing more complicated as they explore remote sourcing of raw materials and outsourcing of processes to remain cost-competitive.

Organizational and technology adaptability is important because today's best practice will easily be tomorrow's primitive practices. The rate of change in distribution models continues to accelerate as companies move from push to pull to flow through to lean. Unfortunately, as a SMB, your company is probably not the biggest gorilla on the block and as a result is subject to requirements dictated by the much larger companies in your supply chain (e.g., label formats, RFID compliance, packaging, etc.). This does not even include government regulations such as increasing track and trace requirements throughout the entire supply chain. Your company will need to react to these edicts too, but with fewer resources than your larger brethren.

Competition

Adding a sense of urgency to the trends of innovation and adaptability is increasing competition. As the pace of globalization continues to increase, more and more international companies are competing in your local markets. While these companies do not have your local market knowledge, they bring with them a scale and plethora of best practices that will make them formidable competitors. In addition, barriers to entry in many industries have been lessened. Now a company with a little seed capital can set up a call center in India, source product from China, sell products over the Internet, and take away your customers. With the advances in technology and communication it is very easy to start a global company and address a profitable market. Bottom line: more companies are entering your market and threatening your position.

The results of these trends are making it nearly impossible for SMBs to deliver goods effectively without making strategic technology investments in their supply chains. Still, no matter how strong the justification for modernizing your supply chain and WMS system, there are always going to be reasons for resisting and ignoring change until it is too late. Here are some reasons I've heard:

• We need a new system, but cannot afford a long and expensive implementation cycle
• We do not necessarily need a complex system today, but we want a system that will grow with us
• We want a system with fast employee adoption, and many systems appear too complex
• We want a vendor that can share industry best practices
• We want a vendor that will be there in the future. We don't want to be restricted to vendors running/developing the system out of their garage

Maybe you have heard similar statements in your company. Many of these assertions assume that SMBs have to deal with SMB software companies. However, as the supply chain is maturing, so are WMS software companies. More vendors are specifically building solutions targeted to smaller companies, including:

• Right-sized feature sets
• Flexible pricing and delivery models (subscription and/or hosted)
• Quick implementation methodologies

Vendors recognize that SMBs have different requirements and different price points for adopting new technology and are actively bringing solutions to market to address these requirements.

Why the Time is Now

The days when only Fortune 500 companies needed a WMS solution have passed. Now any SMB should strongly consider a packaged warehouse management solution. A WMS system can provide the cornerstone for a company's supply chain, delivering inventory visibility, on time and complete orders, reduced inventory costs and employee efficiency.

Updating the technology infrastructure in your supply chain is not a light undertaking, but with the realities at hand, vendors are offering solutions specifically targeted toward smaller businesses with features and functions to make them productive from day one. For many, WMS is the logical first step toward gaining efficiency and keeping pace with the competition. How much longer can your SMB manage this complexity with a paper-based system or legacy application that has been patched together over the years? It's time to face reality: whether your SMB makes an investment in technology infrastructure or not, your competitors surely will.

Chris Goldsmith is Director of Product Strategy at HighJump Software which is a provider of supply chain execution solutions that streamline the flow of inventory and information from source through consumption. www.highjump.com

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