SINGAPORE--Deploying a commercial supply chain management (SCM) solution may be costly, but the failure of an in-house system could cost companies even more--in terms of customers and reputation.
One case that attracted media attention this year was Asian online book retailer MPH Online, which claims to offer 2.5 million-odd titles of books, magazines, comics, music and video.
The locally-based e-tailer recently found itself facing irate customers when it failed to place orders with publishers in time to meet delivery deadlines.
Then, an MPH Online spokesperson blamed the problem on a proprietary SCM system that couldn't track variances in the supply and demand of its stock. (The situation was also made worse by the company's late response to customer complaints.)
While it cannot be ascertained as to how many Asian companies have fallen prey to similar supply chain problems, i2 Technologies Pte Ltd senior solutions consultant Gerald Tan attributed many of these cases to "a lack of education".
i2, Oracle Corp, SAP AG, Manugistics Group Inc, Intentia International AB and Adexa Inc are among the well-known SCM vendors worldwide.
Labeling most of these proprietary systems as "half-baked", Tan observed in an interview that "SCM solutions are new to many Asian companies. Some jumped (head first) into developing their own systems, hoping to process some orders from the Web".
Some in-house solutions are also "not robust enough" to cope with customer demands, especially during peak periods, he added. Commercial SCM software, on the other hand, has been "implemented in many companies over the years and should be mature enough to suit most businesses".
His bottom line: Commercial packages may not come cheap, but the cost of a failed in-house system could be much higher.