Logistics Technology
Supply Chain Management

Supply Chain Management Software: Ending the Central vs. Local Battle

Published by in Logistics Technology

How much autonomy does each piece of the supply chain need? There’s a fine line to walk, especially when each piece depends on the others for its success. The logistics industry is in the middle of an ongoing debate about which way things should be managed – centrally or locally.

Supply Chain Management Software: Ending the Central vs. Local Battle

Some companies are starting to advocate for splitting the difference. Solutions like the new Flex Pulse from Flextronics are an attempt to find some sort of middle ground between all local control and all centralized control. Flextronics’ offering is just the most recent in a long line of solutions attempting to solve the centralization problem.

Also, check out their crazy command center setup.

Supply Chain Management Software: Ending the Central vs. Local Battle

Every spoke and hub can view the whole, allowing local managers to make on the fly decisions, while still giving most of the power to a centralized location. Is this type of system the future of logistics software?

Local versus central

As much as either side of the debate would like to contend it, there’s no clear winner in the battle between centralized supply chain management and localized management. A study from the APQC (American Productivity and Quality Center) found that centralizing operations led to “mixed results.”

Centralized management succeeded in minimizing losses from out of stock and production issues, but decentralized management was substantially cheaper and, for the average organization, just as good at delivering accurate orders.

While the data makes it clear, a lot of this makes sense intuitively. If I have one person overseeing production and delivery, things are going to be done right and planned well. If I let the people already in place do it, it’s going to be cheaper than adding that extra overseer.

Splitting the difference

However, what if you could gain the value of decentralized oversight while keeping the risk mitigation that comes from a centralized view?

Take the process of picking, for example. Swinging all the way to centralization allows companies to quickly change picking prioritization based on new information. A centralized office may discover that a shipment of parts has had an accident, and the next shipment of those parts needs to be moved up in the schedule. That view is a clear benefit of the centralized method, which can see the whole operation at once.

Decentralized systems have benefits for picking, as well. A warehouse manager may know that the next delivery coming in is going to take up a huge amount of floor space. They can thus prioritize the picking of a less important, but physically larger shipment, freeing up warehouse space.

A hybrid system, like Flex Pulse, could allow central management to control operations when there is a system-wide problem – like a shipping incident – while allowing local control over local issues – like physical space management.

The current options

In classic, centralized, multisite management, there’s a many-to-one relationship between facilities and management oversight. Each facility reports its data to a central hub, and that hub then parses and analyzes the data. Facilities don’t have a view into each other’s operations.

In a decentralized system, all the facilities act as self-contained units. There may be communications between them, but there’s no central owner of all the data and analysis. It’s not to say that a decentralized system lacks an overarching plan, but the execution of the plan isn’t centrally managed on a day-to-day basis.

These two systems mean that current supply chain software can basically be setup as either a one-site system, or a centralized multi-site manager. If your system is decentralized, each facility would be designated as a single site.

There are already some more collaborative options out there for multisite locations. TradeGecko offers multi-site management, with the option for every site to see the whole system. Mangers can change permissions in the system, allowing sites to manage more or less of the operation autonomously. Fishbowl – a warehouse and inventory management system for QuickBooks – offers a similar system, with some flexibility built into the system.

Flex Plus is an early iteration of the next step – full supply chain management of multiple sites with site-level autonomy. That doesn’t sound SEXXY, but it is.

The future is now

The new system from Flextronics isn’t the end of the journey – it’s just an early step. Godlan’s manufacturing ERP offers a similar supply chain experience. Although managers don’t have quite as much control as they do in the Flextronics system, the basic amorphous data and management structure is present.

There are other options for managing an amalgamated supply chain, and Capterra’s supply chain software listings can help you find the right software for your company. See what’s available now, and get ready for tomorrow.

Header by Abby Kahler

Looking for Logistics software? Check out Capterra's list of the best Logistics software solutions.

About the Author

Andrew Marder

Andrew Marder

Andrew Marder is a former Capterra analyst.


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