Selling Supply Chain Management: Integration Issues Slow Acceptance

Corporations deploying supply-chain management software to leverage the Internet in reducing procurement costs are finding the move toward electronic business more difficult than expected, a recent study showed.

Two-thirds of the corporations surveyed by market research firm INPUT, Washington, D.C., said they would process less than 25 percent of their supply-chain transactions within one to two years of implementing procurement software.

About 20 percent said they would process between 26 percent and 50 percent of their transactions online, while only 10 percent said they would do more than 50 percent.

The corporations surveyed either implement Web-based SCM software last year or this year.

INPUT, which will release results of the survey this week, found that the companies underestimated the time needed to implement SCM applications, including training, integration to legacy systems and changing business rules.

"The perception is put this application up and now I'm ready," INPUT analyst Sara Wells said. "Well that's not the case, its just the tip of the iceberg."

Getting up a site with two or three partners adds some efficiencies, but until most, if not all, of a company's suppliers are online, with appropriate backend integration and training, the full scope of the benefits won't be realized throughout the supply chain, Wells said.

Nevertheless, with the potential of an immediate 300 percent return on investment with just a few suppliers online, the demand for SCM applications is expected to increase, driving more sales in services, training and integration technology, Wells said.