When logistics managers go to choose a systems integrator, you might think that price or industry reputation would trump all other considerations. But an exclusive DC Velocity survey found that wasn't the case. According to the study, most readers value "in-depth experience with the equipment" above all else.
That was one of the key findings of a survey conducted this past spring on the challenges and issues associated with systems integration. As more distribution centers automate their day-to-day operations, information exchange between software and hardware becomes essential. That means when companies add new software or material handling equipment, the services of an integrator are generally required to create interfaces to ensure that the equipment and software can "talk" to each other.
Because systems integration projects can be both costly and time-consuming, DC Velocity decided to survey its readers to find out what particular challenges they face in this area. One hundred and fifty-eight readers participated in the online research. As for the types of businesses they worked for, 27 percent came from manufacturing, 25 percent from wholesale distribution, 17 percent from retail, and 16 percent from transportation/logistics.
THE INTEGRATION EXPERIENCE
Most survey takers have had recent experience with a systems integration project in their DCs. In fact, 62 percent of respondents said they had done such a project in the past five years. When that group was asked what the systems integration work entailed, 72 percent said the project had involved connections with data exchange. Another 51 percent said their project entailed linking material handling equipment to a warehouse management system, and 42 percent said equipment had to be connected to a warehouse control system. (Survey takers were allowed to select multiple responses to the question.) For the full list of responses, see Exhibit 1.
As for who performed the integration, a quarter of the respondents said they hired the material handling equipment supplier to handle the project. Another 20 percent said they turned to software vendors. Seventeen percent said they used third-party systems integrators, and 9 percent said they hired consultants. (See Exhibit 2.)
Because systems integration work can be time-sensitive and expensive, it's important that the project stay on schedule. When asked about their recent systems integration experience, the majority of respondents reported no problems in this regard. Eighty-seven percent said their integration work was done on time and on budget. As for the 13 percent whose project failed to meet deadlines, respondents gave a variety of reasons. One said that the project time was miscalculated. Another explained that the failure stemmed from "unforeseen configuration issues." Others cited a failure to understand the upfront requirements or a lack of resources.
IN-DEPTH EXPERIENCE REQUIRED
All survey respondents, including those who had not done a project in the past five years, were asked some general questions about challenges and issues associated with systems integration. For example, all survey participants were asked to name their number-one criterion for selecting a systems integrator. Twenty-seven percent answered "in-depth experience with equipment." Another 24 percent cited marketplace reputation, while 21 percent said it was past experience with the vendor that counted first and foremost. Interestingly, although systems integrators charge top fees for their expertise, making such projects a costly endeavor, only 16 percent cited price as their main selection criterion. (See Exhibit 3.)
Many industry experts have argued that using cloud-based software could make the process both quicker and easier. For the most part, readers are not buying that claim. Although 34 percent said cloud-based software would make integration easier, 24 percent disagreed and 42 percent said they weren't sure whether it would or not.
The survey indicates that systems integration will continue to be a hot area of activity in distribution. That's because a majority of survey takers said they were planning to do more systems integration work in their DCs. Fifty-three percent of readers said they would undertake a project in the next two years.
OBSTACLES TO SUCCESS
As for the challenges involved with systems integration, it's probably no surprise that many survey takers pointed to financial issues, such as keeping the project within budget or justifying the return on investment. Others raised "soft issues" involving personnel and work culture when asked to name their biggest obstacles. "Getting all employees to embrace the system," wrote one survey taker. "Keeping our talented staff who does this work for us," replied another.
Another issue raised by readers was "mission creep," the expansion of the project's scope once the work has gotten under way—a situation that typically leads to delays and cost increases. Another was pressure from vendors to use their affiliates instead of letting the company determine which integrator would be the best fit for the job. "Integrators always want you to use their partners instead of best-of-breed," wrote one respondent.
One of the most interesting responses came from a respondent who cited a lack of common definitions for the scope of work as the biggest issue. "Each area that needs to be integrated typically has its own 'language,'" the respondent wrote. "Establishing a project vocabulary that is understood throughout and not confusing is difficult."
As more companies turn to software and automated equipment to boost throughput in their DCs, more logistics managers will likely find themselves involved in systems integration projects—and therefore, facing some of the issues cited above. So what can they do to help ensure success? Judging from the survey responses, they would do well to pay close attention to project terminology, adherence to work schedules, and employee engagement as they embark on the systems integration journey.