Earlier in the year, ARC developed a supplier selection tool for Warehouse Management Systems. Our goal in developing this tool was to have it enable the cross functional, end-to-end process of developing supplier selection criteria, sending those criteria to suppliers, getting responses, evaluating the responses, and making the final selection.
I did not develop the process flow tool, but I did come up with the criteria for judging WMS solutions and suppliers. I found that process interesting and would like to share a few thoughts on what I learned.
The best known tool in the market is Gartner’s Magic Quadrant and they also have a tool for WMS evaluation. Gartner has some very smart analysts and I know they work very hard in putting these reports together. I also know suppliers pay a great deal of attention to these reports. But there are some cons associated with Gartner’s approach.
First of all, it is a black box. If you are a Gartner member, you can call up the analyst, get an hour on the phone, and ask questions about criteria specific to your industry and situation. I’m not sure how far one hour gets you toward tailoring the selection process to fit the specific needs of your company.
So my goal, and the goal of other analysts at ARC developing supplier selection criteria for other technologies, was to come up with criteria that would allow a company to pick a solution tailored to its specific needs. Think about that! Some companies have small and simple operations, others are big and complex. Then layer on top of that all the needs by industry, type of warehouse, and degree of automation. Wow, that is a big list!
So one conclusion we came to pretty quickly was that an all-encompassing approach did not make sense. Instead of trying to develop thousands of criteria, we developed about 100 to 150 criteria to create a “starter kit.” The tool is designed to allow companies to kill criteria that don’t fit their needs, add new criteria, and weigh those criteria (for example, criteria one is worth 10 points, criteria two is only 5 points) in whatever way makes sense.
The other problem with black box tools is that assumptions are hidden. Which path makes the most sense? Buying from a best-of-breed supplier, a supplier with a great suite of supply chain solutions, or an ERP supplier? Typically, the IT department and operational departments have very different feelings about these potential supplier selection paths.
Also, does a SaaS solution or traditional software solution make more sense? There are pros and cons with different paths.
We decided it was not up to us to tell companies which path to follow. But it was up to us to help explain the pros and cons of the different paths. The result is that my list of criteria actually has contradictory criteria: one criterion gives points for selecting an ERP supplier; a conflicting criterion gives points for working with a supplier of deeply functional supply chain suites.
But for me, probably the most interesting challenge was developing criteria that truly differentiate. It is pretty common to get requests for proposals (RFPs) back from suppliers where every supplier has checked everything. Questions need to be written in such a way that something like cross docking is not just a “yes we do it” or “no we don’t” style of answer, but a continuum where suppliers get some points for partly being able to support it and more points for being able to support it in a more holistic manner.
Later this year, I’m tasked with putting together a transportation management system selection guide. Then next year, I get to update the WMS and TMS guides we have. Supplier selection is going to become a bigger part of my day-to-day life.