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The logistics and supply chain industry is confronting a world of rising costs, changing consumer demands, cyber threats, trade complexities, labor issues, geopolitical instability and climate change. A recent study by KPMG found that enterprises continue to experience frequent supply chain disruptions due to these factors.
Facing the challenges head-on requires time and budget. Yet IT leaders in the industry are finding their wallets growing thin from major cloud providers’ rising licensing fees, vendor lock-ins, and bottlenecks on efficiency.
To free up the necessary resources, business leaders must consider transitioning from conventional IT maintenance frameworks to forward-thinking strategies. These not only improve cost and operational efficiency, but also enable the reallocation of saved funds to transformative technologies that align with business goals. Central to this shift is the reevaluation of IT budget allocation, especially for enterprise resource planning (ERP) systems and supporting infrastructure.
The Maintenance Challenge
In 2024, U.S. business logistics costs reached a reported $2.3 trillion, accounting for a whopping 8.7% of the national GDP. Logistics companies have long been entangled in the high costs of IT upkeeping, vendor upgrades, rising support fees, and mounting operational expenses. These demands consume IT budgets, often restricting the ability to invest in innovative practices such as the industrial internet of things, autonomous vehicles, automation, artificial intelligence and cutting-edge logistics solutions. As a result, supply chains become exposed to inefficiencies, delays, and heightened risk.
Breaking free from this costly cycle requires shifting to a more flexible, high-availability IT model by:
- Prioritizing business goals over system constraints. Develop strategies that align with executive objectives, ensuring that technology systems support — not dictate — business direction.
- Adopting vendor-neutral applications. Integrate adaptable IT strategies that incorporate the best-fit technologies without being confined to a single vendor’s ecosystem.
- Extending ERP lifespans. Optimize current ERP platforms to preserve custom workflows and redirect investment toward innovative supply chain and logistics solutions.
This reimagined IT approach can free up resources to invest in innovative technology such as AI, machine learning, IoT and automation.
ERP Optimization Is Critical
ERP systems serve as the operational backbone of logistics, handling procurement, inventory management and supplier coordination. Sustaining these critical systems requires skilled personnel and up-to-date software. However, traditional vendor-driven upgrades often hinder agility, introduce costly disruptions, and inflate budgets.
To break free from these constraints, logistics leaders must focus on ERP optimization strategies that:
- Stabilize IT costs. Reduce the frequency of disruptive upgrades to help foster financial predictability and allow for targeted innovation investments.
- Preserve custom workflows. Maintain tailored ERP configurations to ensure operational efficiency without sacrificing flexibility.
- Promote innovation at the edge. Layer seamless data orchestration, AI-driven logistics tools, real-time tracking, and end to end hyper-automation and user experience onto existing ERP systems, to strengthen capabilities without major overhauls.
- Drive accelerated outcomes. Collaborate with service partners who can enhance existing systems with in-demand features — bypassing costly, time-intensive upgrades while improving system performance.
Avoiding Costly Upgrades
By refocusing IT strategy to maximize the value of existing systems, businesses can free up budgets for front-end innovation. The savings in time and resources can be redirected toward strategic business initiatives such as strengthening and digitizing supply chains, workforce and workplace transformation, and keeping pace with evolving consumer expectations.
For example, instead of investing in the latest ERP upgrades, businesses can invest in IoT-enabled and AI-powered real-time tracking — thus improving shipment visibility, optimizing delivery routes, and minimizing delays. Supply chain leaders can also invest more money in tools that enhance real-time communication platforms to improve supplier and customer interactions, boost operational visibility, and enable seamless collaboration across the supply chain.
To bolster their ERP systems against disruption, organizations must shift their perception of IT from a burdensome cost center to a strategic growth engine of opportunity.
By optimizing ERP systems that are aligned to your business, adopting flexible IT strategies, and reallocating budgets for innovation, supply chain leaders can build cost-effective, resilience, future-ready systems to thrive in today’s fast-paced, highly competitive environment.
Han Law is regional chief technology officer for Southeast Asia and Greater China with Rimini Street.
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