Daily Archives: March 12, 2010

Was it Nearshoring? Or Bullwhip Effect?

Editor’s Note: Today’s post is from Dick Locke, Sourcing Innovation’s resident expert on International Sourcing and Procurement. (His previous guest posts are still archived.)

China’s exports in February were up 45% from last February. (LA Times)

My opinion: the rapid decline and unsustainable increase in Chinese exports were from the bullwhip effect of a long supply chain. A small change in final demand can cause huge swings in upstream supply.

This mainly applies to those using ships to transport from China. If you can use air, China isn’t much further (in hours) than Mexico.

Dick Locke, Global Procurement Group.

Seven Warning Signs Your ERP System Is Extinct

I enjoyed this white paper from PLEX Systems on Seven Warning Signs Your ERP System Is Extinct because there are so many ERP systems out there today that are literally technology dinosaurs and so many companies who are unaware, thanks in part to continuous efforts on the part of their providers (charging 22%+ maintenance) to keep them in the dark. It’s nice to know that someone besides myself and Vinnie is willing to speak a little truth on the issue now and then.

The white-paper doesn’t beat around the bush and gets straight to the seven warning signs it promised:

  1. Your ERP system can’t integrate mission critical business data
    “Silos” of data are not useful. You need integrated data to do meaningful analyses that can deliver meaningful results.
  2. Changes to the system are costly and time-consuming
    Are your new releases on a 24 month schedule? Do new features only appear years after you need them? Do custom changes start in the six figure range and take months to complete? In comparison, new SaaS platforms tend to do major releases on a 3-6 month schedule, develop new features as soon as they are identified as important, and use integration platforms that allow them to develop customizations in a matter of weeks that start in the five figure price range.
  3. Your disaster recovery plan involves tapes
    A technology that has all but disappeared because it is easily eaten by players, easily erased by nearby magnets, easily destroyed by a spilled drink, and easily lost. (When was the last time you saw a tape produced by the Music Industry?) A modern system that maintains an on-line remote backup can be recovered in minutes as compared to the hours, or days, it can take to reload data off of tapes — which could be days, or weeks, out of date.
  4. Maintenance fees are high
    Maintenance fees on current technology should be low, not 22%!
  5. Upgrades are Disruptive to the Business
    Outdated ERP systems often require OS, database, and hardware updates which take time to plan and even more time to execute and take your business ‘down’ for a period of time to do the conversion. (In contrast, modern SaaS systems can be upgraded instantaneously.)
  6. Trading partners can’t easily interact with the system
    There’s no ability for partners to get data from, or submit data to, the system — which is problematic considering how importance visibility is in today’s supply chain.
  7. Globalization is too difficult
    Many legacy systems require you to run a different version of the system to support China, Russia, India, or another country. A modern system supports multiple languages and allows you to run the same system in every company you operate in, and only the language used in the UI is different.

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