In the Small and Medium Enterprises sector (SMEs) in India, a decision to implement a Supply Chain Management (SCM) software either on a standalone basis or in combination with a broader ERP package is likely to be one of the hardest decisions for management. Despite the obvious benefits that accrue from a successful implementation of a SCM (and or ERP) package, the cost ^f the software package itself apart from the sheer effort ^PIvolved in a successful implementation could be a deterrent factor.

Currently, sophisticated, feature rich SCM packages are available from large vendors (SAP, Oracle, i2, etc.,) either as standalone systems or part of an ERP package. However, the cost of these packages along with the cost of the backend systems (database, etc.,) may be prevent SCM and ERP systems from being seriously considered by the SMEs. Further, given the scale and scope of operations in the SME sector, companies may neither be in a position to utilize, nor need the rich set of features offered by these packages. In this context, it is worthwhile to consider an alternative approach for implementing SCM software based on the free software/OpenSource movement. This approach is likely to be much more economical, thus entailing fewer burdens and less risk for the SMEs.

What is Free-Software/OpenSource? 

Free Software and OpenSource are two increasingly popular movements in the software world driven by an army of volunteer developers and proponents. Though both movements espouse different approaches to the issue, both are aimed at replacing the current closed, proprietary model of software development with a more open, participatory model. Free Software movement promoted by the Free Software Foundation (www.fsf.org) argues that all software must be free. In essence, users must be free to download, use, modify and distribute any piece of software provided they distribute the modified software under the same terms – i.e. free. However, software providers who release software under FSF’s GPL license can charge for services such as implementation and technical support. On the other hand, the OpenSource movement (www.opensource.org) only requires that software developers release their source code for public scrutiny and suggestions for modifications. Both movements believe that the above would lead to faster development and more robust products since the products have to withstand broad public scrutiny as opposed to the closed development processes of proprietary software houses such as Microsoft. Of course, the above greatly simplifies the details of the movements but in general captures its essence. However, among lay public, the difference between the two movements has become increasingly blurred. Thus, though OpenSource is the more popular term, often times, people mean free software when they refer to a package as OpenSource. It is in this sense that the term OpenSource is used here.

Commercially, a number of software packages have been released under GPL. Of these, the most popular and well known, is of course, the Linux operating system. However, there are other important software which also have become very popular. These include Apache for Webservers, OpenOffice for office suite (as compared to MS Office), MySQL and PostGreSQL for database management (compared to Oracle and MS SQL Server) GCC for application development and GIMP for image management. These packages are widely used, are free and have proven to be as robust and secure as commercial packages if not better. They are being actively developed and maintained by volunteer developer groups and companies involved in OpenSource software development.

OpenSource in SCM and ERP

Unlike in other areas, especially in the area of software and productivity tools, software development in the SCM and ERP areas is still in its infancy. The packages available under OpenSource or GPL are nowhere as sophisticated and feature rich as commercially available packages. However, for SMEs, they have two major attractions:

• They are available for free or much lower nominal (cost of software) and overall (includes cost of associated software) costs.

• They have essential features that may be sufficient for SMEs’ scale of operations thus making implementation quicker and simpler.

Thus, SMEs can leverage OpenSource SCM packages as a low cost (and possibly low effort) entry into automating their SCM operations and once they gain enough experience in implementation, migrate to more sophisticated packages – use these packages to get their feet wet, so to say. In most cases, documentation is provided online or in any other electronic form and the vendors often offer paid implementation and technical support.

Developers and vendors have taken two different approaches to developing SCM solutions in the OpenSource arena. One approach is to use OpenSource tools to develop the software, such as GCC, MySQL and Linux. The other approach embraces the OpenSource/ FSF philosophy fully, making the software available completely free.

SCM Software developed using OpenSource Tools

Vendors adopting this approach leverage OpenSource development tools to develop their SCM/ CRM/ERP packages but the actual software is charged for and source code may be available to the client. Thus a developer may use GCC as the programming language, MySQL as the backend database, Linux as the operating system ‘and Ghostcript for developing the manuals. The idea is to reduce the cost of development of software thus lowering the cost of software to the customer. The cost of implementation is also expected to be lower than in the case of proprietary software since the implementation platform (say Linux) is also OpenSource.

OpenMFG (www.openmfg.com) is one company that has taken this approach. Its product – OpenMFG ERP Suite (which also includes an SCM module) is priced on a per license basis and annual support is also available for a charge. OpenMFG provides the source code to the clients so that clients can extend the product on their own (with some limitations). However, OpenMFG takes an all-or-nothing approach – you can either buy all of the modules or none – clients cannot choose only the modules that are appropriate to them.

This approach can also be used to custom develop an SCM package by an end user. If a user only requires demand planning and production scheduling, for example, the SME can have only these two modules developed by a local developer using OpenSource tools. Thus an SME can tightly control the functionalities to implement based on its need rather than implement all the bells and whistles provided by the vendor, while at the same time reduce software costs.

SCM Packages as OpenSource Software

Unlike the approach adopted by vendors like OpenMFG, other developers have embraced the FSF philosophy in full and have made their software available for free. They aim to sustain their business by offering implementation support and custom development on demand. Compiere is one such company (www.compiere.com). The company’s ERP suite alsi includes SCM and CRM modules and can be downloadec for free from the company’s website. The company has < commercial wing, which offers implementation services training, technical support, etc, for a fee. The source cod< is made available to the users and they are free to modif) the software to suit their needs. This product is also developed using OpenSource tools.

Is OpenSource SCM Software Appropriate for Me?

While OpenSource SCM software has many attractive features including cost, it may not be the appropriate solution for all SMEs. In the Indian context, the suitability of an OpenSource solution depends on the availability of the required software and implementation skills in-house. As mentioned earlier, most OpenSource software comes only with online documentation and limited or no support. If a high level of skills is available the then the company can consider downloading and implementing a fully free software such as Compiere. If only implementation skills are available, using an OpenSource package like OpenMFG may be a better approach. Or alternatively, the SME can consider engaging a local developer to custom develop an SCM solution using OpenSource tools. This approach has the advantage of meeting the specific needs of the SME and may also provide superior support and maintenance while keeping the costs down.

Another approach to implementing OpenSource SCM packages is to engage a local developer or a VAR to customize and implement one of the above packages. This will ensure local support and lead to a more successful implementation.

A further drawback is the fact that the free and OpenSource software packages do to sport the feature set of commercial/proprietary SCM packages marketed by established vendors. Though OpenSource SCM packages are being rapidly upgraded due to the efforts of a number of volunteer developers and coordinators, requirements of some of the SMEs, especially the larger ones may outrun the pace at which features are being added. In such cases, OpenSource SCM software may be considered as a first step and use the experience to gain implementation knowledge on a low cost-low risk basis. The company can migrate to one of the commercial, full-featured packages at a later stage.

In Conclusion, OpenSource SCM software offers SMEs an economical and often easy to implement solution to manage their supply chain. In many cases, existing packages may be sufficient to fulfill the needs of the SME. In the remaining cases, the solution can be easily extended (since the source code is available) or the company may use the OpenSource software as a stepping stone to migrate to more sophisticated solutions.