How to Evaluate VendorsSelecting and implementing new SCM systems has become progressively more difficult, due to the rapid evolution of solutions and accelerating technological change.
Mobilizing information technology to support Supply Chain Management is a continuing challenge, particularly given the rapid development and ongoing evolution of SCM technology products. To be effective, supply chain managers must work assiduously to appreciate the burgeoning role of information, keep abreast of developments in SCM software, select solutions wisely and dispassionately, and rise above implementation challenges to leverage information technology for maximum benefit in managing the supply and value chains.23
Keep the following in mind:
- Supply chain information must be readily accessible, relevant to decision-making, accurate, timely, and within an easily shared, easily understood format to be used effectively.
- When properly implemented, SCM software should support critical supply chain capabilities and strategies, including supply chain connectivity, product visibility, partner collaboration, and process optimization.
- A well designed SCM framework links people, processes, and technology in a way that provides actionable information and improves decision-making.
- Timely data collection and synchronization support visibility across the supply chain, exception management, and rapid, effective response to changing customer requirements.
Before beginning the search in earnest, the following decisions need to be reached:
- Planning tools for forecasting and related activities
- Execution systems for management of day-to-day processes
- Event management tools
- Business intelligence applications that help organizations analyze performance across the extended enterprise 24
As global competition has intensified in the past decade, systems such as SCM have promised increasing benefits and become increasingly vital to organizations. During this time, though, selecting and then implementing new systems has become progressively more difficult, due to the rapid evolution of solutions and accelerating technological change. The developmental velocity can make it tricky to get a solid grasp on systems; what looks good on the surface may not be a good fit for a particular industry. Some systems lack flexibility; others have more functionality than is needed. Vendor viability, software reliability, and ease of implementation must all be considered. Making the right choice requires an organized approach.25
SCM software selection and implementation are major undertakings. Once the basics have been considered in relation to the potential supplier—number of years in business, how long the SCM product has been on the market, functionality for the type of business considering the purchase, vendor stability and reputation, ability to service and support the software, and, of course, making sure the vendor has a roadmap for the future of the product—an exhaustive requirements analysis should be undertaken. This 10-step process outlines the essential tasks for purchasing the right SCM system.26
- Do a comprehensive assessment of your existing business processes and the scale of operations to identify the need for an SCM system.
- Define the objective of your selection process. Considerable background research is necessary before exploring the market for SCM software.
- Form a selection or evaluation committee for carrying out the evaluation process. The evaluation committee should typically include functional experts from different departments, top management (CIO, COO, or IT director), consultants, and supply chain partners.
- Define your product requirements, in terms of both core and advanced modules and features.
- Develop pre-evaluation selection criteria to permit the evaluation of the available packages on the same parameters; this will help in identifying the top potential SCM providers.
- Create a shortlist of four to five SCM systems. Besides using pre-evaluation selection criteria, SCM software vendors can also be whittled down with the help of tools such as TechMATCH and external consultants, and by identifying products that are being used by peer companies.
- Conduct extensive research on the shortlisted products. The selection committee should also gather more information about shortlisted packages through independent industry experts, user reviews, and research agencies.
- Formulate the final selection criteria. Even before marketing executives of SCM vendors make presentations based on their tools, be ready with a comprehensive list of questions for vendors.
- Evaluate vendors based on selection criteria and product demonstrations. The vendor’s responses to your questions will help to eliminate a vendor or strengthen its case. You can also prepare minutes of the meeting and make the vendor sign it. This will prevent the vendor from making false claims and hold it accountable in case of failure to deliver promised results.
- Check for successful SCM implementations by the vendor. Before making the final call, visit and consult companies where the selected vendor’s SCM software has already been implemented.
- Coyle, John J., Langley, C. John, Gibson, Brian, Novack, Robert A., and Bardi, Edward J., (2008), ibid.
- “Software Evaluation and Selection,” Strativa, Inc.
- “ERP System Buyer's Guide” (2009). Focus Research, p. 31-32.