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Last-Mile Supply Chain Mastery:


Is Your ERP Really Up for the Job?
HOW 3PLS, CONTRACT PACKAGERS, AND CORRUGATORS ARE TRANSFORMING
LAST-MILE LOGISTICS WITH SPECIALIST SAAS APPLICATIONS

1
Competition in the supply chains last-mile is intensifying with
each passing month. Yet some suppliers continue to experience
significant business growth amid stiff competition. How do they
do it?
Top firms are winning market share by serving a variety of flex-
ible packaging products, services, and promotional campaign
tactics which in turn, enable their customersbrand ownersto
capitalize on trending consumer demands.
These firms blend innovative, cloud-based, responsive I.T. solu-
tions and stable, on-premise incumbent solutions to achieve
exceptional levels of service. This hybrid approach produces
guaranteed outcomes while executing agile, iterative solutions
to new and complicated problems. By operating in two comple-
mentary modesstable and agilesuccessful last-mile logistics
providers optimize while delivering consistently, and overcome
challenges that confound the competition.

WHY DOES THE LAST-MILE MATTER?

Services provided in the last-mile of supply chain logistics include any/all of the
following:

Assembling products into multi-packs/club packs, or promotional product kits

Manual or automated product assembly and secondary packaging

Labour solutions to manage activity spikes and meet last-minute requests

Inventory, and production control

Work-in-progress management

Each of these services entails coordination of people, interactions, and materials,


which require planning, management, and optimization. Its easy to see how last-
mile logistics services quickly become complicated.

2 Last-Mile Supply Chain Mastery: Is Your ERP Really Up for the Job?
Mobile & Digital: The Evolving Supply Chain
In the past half-century, the way firms in the businesses core areas of operation and laid
supply chain have managed their resources the groundwork for systems of integrated
and processes has transformed dramatically. modules to manage critical back-end sys-
In the sixties, the invention of the microchip tems of record like financial accounting and
let companies automate inventory control human resources.
for the first time.1 Since then, technology
As the Internet matures, the social, mobile,
has been the primary catalyst driving
and digital environments continue to weave
innovation, from automating production
themselves into everything we do. Just
processes, to collecting and leveraging
think about how much that smartphone in
business intelligence, and ultimately,
your pocket has changed how you com-
interconnecting a global network of supply
municate, connect, and plan your life. Slow,
chain partners.
tedious or limited interactions are now
By the late nineties, one technology dom- quick, easy, and fluid. Social is the new nor-
inated this trend. Enterprise Resource malthe cloud has changed everything.
Planning (ERP) megasuites transformed

EVOLUTION OF SUPPLY CHAIN MANAGEMENT SOLUTIONS2

MRP
Firms can now leverage
1970s scheduling data to improve
MRPII decision making.
Optimization of entire
manufacturing processes 1980s
becomes a reality. ERP
Stable, system-wide
1990s business process integration
EXTENDED ERP becomes possible.
Core functionalities expand
with module integrations 2000s
and add-ons. POSTMODERN ERP
Agile SaaS specialists
Today integrate with ERPs to
TRUSTED SAAS leverage network data.
NETWORK
A network of trusted SaaS Future
apps deliver agile and
stable data-driven,
real-time operations.

3
Supply chain service providers have always
used technology to drive efficiency, qual- The cloud has ignited a shift in IT,
ity service, and speed into their operations.
demanding that it too become
Yet today, many firms find yesterdays ERP-
socialmore collaborative, inter-
only solutions inadequate to fully support
the velocity, personalization, and agility re- connected, always-on, and available
quired for production in a modern, global in real-time.
market.

Savvy shoppers who demand personal-


a combination of toolsspecialist software
ized products and elite quality drive todays
as a service (SaaS) applications accessed
global market dynamic. These consumers
from the cloud, and an ERP megasuite
are trained to use the Internet to sort the
maintained on-premises to gain a competi-
most popular products from the duds and
tive advantage.
to pool their experience to locate the best
dealswhether they are online or in stores. By 2017, more than 70% of enterprises
whove outgrown their ERP megasuites will
Brand owners are responding by segmenting
turn to cloud-based software to acceler-
their markets and regionalizing offerings to
ate profitability.4 Emerging SaaS specialist
attract discerning, highly motivated con-
vendors are making a huge impact on last-
sumers. What does all this mean for last-mile
mile logistics providers bottom lines by
logistics providers? It means smaller batch-
equipping them with agile and responsive
es, shorter runs, and multi- and promotional
capabilities to address their dynamic and
packs. And that means more moving parts,
increasingly complex business problems.
handoffs and touch points, and a lot more
Agile and responsive solutions can then be
complexity.
iterated and refined by users over time to
Todays supply chain introduces business maximize process efficiencies. ERP solu-
challenges that must be solved using what tions alone simply cannot facilitate this
Gartner calls a hybrid reality scenario. 3 In a approach in an unpredictable hybrid reality
hybrid reality scenario, an enterprise adopts scenario.

4 Keys To Unlocking Last-Mile Logistics Mastery


Brand owners needs have never been more and optimize entire systems. Only Contract
complex than they are in the modern supply Packagers, Corrugators, and 3PLs who can
chain. The last-miles exponential increase evolve their businesses to offer brands the
of touch-points makes nimble, iterative, following capabilities will take full advan-
data-driven decisions very powerful, and tage of the growing last-mile logistics busi-
allows incremental efficiencies to cascade ness opportunities.

4 Last-Mile Supply Chain Mastery: Is Your ERP Really Up for the Job?
Todays brand owners prefer to work with
1 OPERATIONAL AGILITY: last-mile logistics providers invested in digit-
ization, and capable of building profitable,
Onboarding brand customers quickly and resilient partnerships. Suppliers armed with
securely into their networks, providing real- toolkits that increase operational agility,
time inventory and production capacity reliability, collaborative capabilities, and
updates, getting lines up and running with that support continuous iteration, are the
standardized processes, and the ability to ones thriving in the volatile contract pack-
do all this with a greater proliferation of aging services market.
SKUs, regardless of location.
Those that resist investing in agile,
data-driven capabilities fail to secure high
2 SPEED TO MARKET: quality strategic partnerships. Dependence
on traditional tools and yesterdays practi-
In addition to launching greater variety of ces leaves outmoded suppliers unequipped
products and promotions, last-mile logis- for the challenges of todays supply chain
tics providers also need to collaborate with and their organization and industrys evolv-
brands in real-time to reduce cycle times ing needs.
and get products on shelves faster.
Part of this struggle comes from the attempt
to modify traditional ERP-only solutions to
3 RISK MANAGEMENT: accommodate modern supply chain dynam-
ics. The rigidity that made ERPs stable in the
Increased variability introduces uncertainty past is ultimately too unwieldy to keep pace
to fulfillment and plan attainment. Last-mile with last-mile demands that require flexible
logistics providers are expected to mitigate and timely strategic response. ERPs have
hazardous business risk and demonstrate long been supporting business resource
high levels of quality control and reliable management without any allies, but today
traceability. theyre no longer alone.

Together, ERPs and purpose-built, domain-


driven SaaS applications can work together
4 PERSISTENT INNOVATION:
to relieve last-mile logistics providers (and
brands) of complicated, expensive and
Last-mile logistics providers need to find
time-consuming IT commitments, while
proactive ways to improve their operations
delivering the operational agility, cost-
and share savings, and cost reductions with
effectiveness, and usability necessary to
brand partners. Using data-driven insights
establish mutual stakeholder satisfaction
to identify areas of improvement is essen-
and business growth.
tial to meet mutual growth and scaling
agendas.

5
The Last-Mile Logistics Tech Gap & ERP Myth
Monolithic ERP megasuites have been the many specific needs and challenges with
backbone of enterprises business oper- the same focus and power that a specialist,
ations since before the Internet era. In the purpose-built vendor solution can.
pre-digital market, ERPs were used to facili-
Not only that, the costs of implementing and
tate linear business changes that were pre-
maintaining ERPs include both capital and
dictable, accurate, reliable and stable. And
operational expenses. Lump sum capital
for years, this solitary mode of operation
expenditures have a lifetime cost calculation,
was efficient. In fact, it was the only option.
a total cost of ownership, and depreciate
over time. ERPs also incur annual mainten-
ance and service fees, ongoing consulting
Todays suppliers must learn to oper- fees, and often additional fees for upgrades
ate in hybrid reality environments if and added features. As a monthly oper-
they want to discover new frontiers ational expense, SaaS solutions appreciate
of growth and profitability. over time thanks to regular feature updates
and product enhancements. Comparatively,
they are inexpensive, easy to implement,
That means they need business solutions fully supported, and purpose-built to solve
that are agile, responsive and undeterred the kinds of problems that ERPs reactively
by risk or complexity. overextend to accommodate.

Modern single and multi-site last-mile logis- Todays SaaS specialist vendors fill this wid-
tics providers confront vastly different chal- ening operational gap, and relieving the
lenges from enterprises in other verticals. host of associated frustrations left by yes-
A one-size-fits-all resource management terdays ERP-only solutions.
solution cannot sufficiently address their

THE BIGGEST CHALLENGES FACED IN ERP-ONLY SCENARIOS ARE:

RIGIDITY: ERPs are notoriously inflexible systems that make it a


struggle to meet end users needs for intuitive, mobile-ready, and agile
execution of new procedures and workflows.

INCONSISTENCY: Any workflow changes require ERP customization,


making all-inclusive network standardization very difficult. When
internal processes dont align, people work outside of the ERP and
accelerate the deterioration of standard practices.

6 Last-Mile Supply Chain Mastery: Is Your ERP Really Up for the Job?
COMPLEXITY: ERP functionality is comprehensive but generic. This
makes it difficult to onboard brand customers rapidly and makes
configuring and automating bi-directional integrations between brands
and suppliers complex, and clunky.

OPERATIONAL OVERHEAD: Modern labour and time-sensitive


business operations have little margin for downtime, nor the resources
to halt operations long enough to implement an ERP megasuite
adequately.

TECHNICAL OVERHEAD: Dependency on an ERP-only resource


management puts a heavy burden on internal IT teams and shifts their
focus away from keeping last-mile logistics operations running at peak
performance.

Bimodal Capabilities Power Business Growth


Last-mile logistics providers maintain their to implement responsive, agile and col-
core operations in on-premise systems of laborative business processes that unlock
record to solve some of these problems efficiencies, reduce costs, and accelerate
while keeping the lights on. Unfortunately, growth, even in the notoriously difficult
there is little to no way to mitigate the last-mile. Companies that combine gen-
mounting risk and uncertainty that come eralist and specialist solutions to support
with the increasingly digitalized supply different business functions are developing
chain. And thats where domain specialized what Gartner calls bimodal capabilities,
SaaS applications can help. and are transitioning from an ERP-only to a
postmodern ERP strategy.
Last-mile logistics providers have already
started to leverage specialist SaaS solutions

Postmodern ERP is a technology strategy that automates and links


administrative and operational business capabilities increasingly delivered
as cloud or software as a service (SaaS) solutions, with appropriate levels
of integration balancing the benefits of vendor-delivered integration
against business flexibility and agility. 5

7
Traditional ERPs thrive in Mode 1. They They take nonlinear approaches to busi-
manage linear business challenges in a ness challenges, rely on iteration, agility,
stable, predictable, accurate and reliable and speed to navigate problems that entail
manner (e.g., financial accounting and increased riskand opportunity (e.g., con-
human resource management). Emerging tract packaging, procurement, expedited
specialist SaaS vendors excel at Mode 2. shipping).

MARATHON RUNNERS & SPRINTERS. DEEPLY DIFFERENT, BOTH ESSENTIAL6

MODE 1 MODE 2

ERP megasuite SYSTEM Specialist SaaS apps


Think Think
Contract packaging,
Marathon Financial accounting,
STRENGTH expedited shipping,
Sprinter
Runner human resources
procurement, etc.

Reliability GOAL Agility

Linear challenges,
Nonlinear challenges,
stability,
VALUE iteration, speed, risk
predictability,
friendly
accuracy

Plan-driven, Empirical, continuous,


GOVERNANCE
approval-based process-based

Enterprise suppliers, Small, new vendors,


SOURCING
long-term deals short-term deals

Good at conventional Good at new and


TALENT
process, projects uncertain projects

Up front lump sum Operational expenses


capital expense, EXPENSE billed monthly,
depreciates appreciates

CYCLE
Long (months) Short (days, weeks)
TIMES

In a postmodern ERP solution, Mode 1 and pilot project proves successful and stable,
Mode 2 systems work together to facilitate it is validated and scaled out to the whole
a hybrid reality scenario. Once a Mode 2 business and becomes a Mode 1 solution.

8 Last-Mile Supply Chain Mastery: Is Your ERP Really Up for the Job?
Specialized, Responsive, And Domain-Driven
Due to the dynamic nature of assembly, when using ad hoc workarounds (like ever-
kitting, labour and WIP management, last- more complex spreadsheets) to get work
mile logistics providers are losing out on done in ERP-only scenarios.
significant business opportunities by using
Mode 1 challenges are met with a Mode 1
the wrong tool (ERP) to manage challenges
tool, and Mode 2 challenges with a Mode
beyond the scope of its design. Last-mile
2 tool. This agility is how bimodal last-
logistics providers with bimodal capabilities
mile logistics providers are evolving hybrid
that leverage ERP megasuites and domain-
reality operations that dominate in a modern
driven SaaS apps can use the right tool for
supply chain.
the right problem. Bimodal flexibility also
eliminates the risk that end-users introduce

WHY DO BIMODAL LAST-MILE LOGISTICS PROVIDERS GROW SO FAST?

ENTHUSIASTIC ADOPTION: SaaS apps enjoy rapid, widespread end-


user adoption because their user interfaces are designed for industry-
specific roles, are easy to understand, intuitive to use, and designed to
make peoples lives easier.

PROCESS CHAMPIONS: Operational managers can make direct


adjustments to how SaaS apps work, to safely differentiate processes
and meet brand customer needs without siphoning bandwidth from
internal IT teams.

RAPID INNOVATION: The speed at which SaaS vendors introduce new


functionality, and the control that end-users have over configuration
means that innovation is iterative and continuous. Managing business
process refinements within an ERPs enhancement cycles, on the other
hand, is a slow, demotivating and labour-intensive process.

REAL-TIME COLLABORATION: Specialized solutions make it easier


to spot inefficiencies on the shop floor and elsewhere in a workflow.
Suppliers can now reach out to brand representatives with data to
diagnose issues and work together to brainstorm solutions in minutes,
rather than hours or days.

9
REINVIGORATED INTERNAL IT: IT teams work the best when they
focus on their core competencies. By outsourcing Mode 2 challenges,
internal IT teams can reclaim their internal capacity to optimize Mode
1 challenges, and collaborate with external Mode 2 specialists eager to
meet their needs.

Profitable Partnerships In The Modern Supply Chain

By 2020, less than 20% of multinational organizations


will continue to plan and adopt an ERP strategy based on a single-
instance megasuite.7

3PLs, Contract Packagers, and Corrugators and-forth reciprocity is impossible to do


that are successfully scaling assembly, with an ERP-only solution.
kitting, WIP labour and inventory manage-
The last-mile logistics providers that will
ment services are winning the market
lead the competition and grow their busi-
by shifting to hybrid reality scenarios.
nesses are those that can balance standard-
Postmodern ERP and specialist SaaS appli-
izing operations to produce guaranteed
cation solutions together enable the
outcomes while having the agility to offer a
bimodal capabilities necessary to make this
greater variety of products and promotional
cutting-edge resource management strat-
tactics that the market demands. Suppliers
egy possible.
looking to future-proof their operations
Future-proof last-mile logistics providers need to evaluate the gaps in their current
with bimodal capabilities excel at driving technology strategy and identify the areas
and delivering mutually beneficial business and business functions which stand to gain
changes that are secure, stable and reliable, the most from a specialized, domain-driven
as well as iterative, agile and can thrive amid SaaS application. The suppliers ability to
risk and uncertainty. In return for this initia- leverage purpose-built, specialized solu-
tive, suppliers forge resilient relationships tions for their business to deliver cost-ef-
with brands by providing real-time collab- ficiencies, speed-to-market, risk mitigation,
oration, visibility, and control, while sharing and continuous improvement will be the
best practices, cost savings and continuous key differentiator to winning or losing in
process improvements. This level of back- this industry.

10 Last-Mile Supply Chain Mastery: Is Your ERP Really Up for the Job?
Sources
1. Liaquat Hossain, Jon David Patrick and Mohammad A. Rashid, The Evolution of
ERP Systems: A Historical Perspective, in Enterpise Resource Planning: Global
Opportunities and Challenges (Hershey, PA: Idea Group Publishing, 2002), 116.

2. Ibid.

3. Gartner, February 25, 2015.2015 Strategic Road Map for Postmodern ERP.
https://www.gartner.com/doc/2992430/-strategic-road-map-postmodern

4. Gartner, April 1, 2016. Hybrid DBMS Cloud Defined, and Why You Want To Know!
https://www.gartner.com/doc/3273417/hybrid-dbms-cloud-defined-want

5. Gartner, January 11, 2016. Transforming ERP to Postmodern ERP Primer for 2016.
https://www.gartner.com/doc/3184718/transforming-erp-postmodern-erp-primer

6. Gartner, 2015 presentation

7. Gartner, February 25, 2015.2015 Strategic Road Map for Postmodern ERP.
https://www.gartner.com/doc/2992430/-strategic-road-map-postmodern

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12 Last-Mile Supply Chain Mastery: Is Your ERP Really Up for the Job?

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