Welcome to What the Duck?! A podcast with real experts talking about direct spend challenges and experiences. And now, here’s your host, Source Day’s very own manufacturing Maven, Sarah Scudder.

Welcome to What the Duck?! A podcast with real experts talking about direct spend challenges and experiences. And now, here’s your host, Source Day’s very own manufacturing Maven, Sarah Scudder. Thank you for joining me for What the Duck?! Another Supply Chain Podcast brought to you by Source Day. I’m your host, Sarah Scudder, and this is the podcast for people working in the direct materials part of the supply chain. I’m @SarahScudder on LinkedIn and @SScudder on Twitter. If you are new to the show, make sure to follow this podcast so you don’t miss any of our direct materials supply chain content. Today, I’m going to be joined by Brad Feakes, and we’re going to discuss leveraging best-of-breed solutions to construct hybrid Cloud ecosystems that better support ERP customer needs. That was kind of a mouthful; we’re going to break it down and make it really simple and easy for you to understand. If you work for a manufacturer struggling to determine which add-on solutions will best support and extend your ERP, then this episode is for you. Brad has more than 25 years of experience in operations, supply chain management, and information technology. He leverages his background to help companies, especially manufacturers and distributors, benefit from the simplicity and security of private and hybrid Cloud solutions to support complex business environments. Well, Brad, welcome to the show. Oh, you bet, thanks for having me. Glad to be here. I have to say, if you are watching this interview on video, Brad is absolutely on brand today.

He is repping his company’s shirt, so you’ll see a little embroidery in the corner. So, Brad, I have to shout out and recognize you for being on brand today for your interview. Oh, you bet, thank you. So, Brad, we’re gonna go back in time several years, so you’re gonna have to put your thinking cap on a little bit. I want to go back to when you were a senior year in college and you were figuring out what the heck you were gonna do when you graduated. What did you think you wanted to do after college? Oh boy, it gets a little complex here, but I’ll give you a little bit of a spiel. My educational career was a little tangential, we’ll say. I got married in the middle of my education, born and raised in Canada. I’ll say born and raised in Winnipeg. They say the snow doesn’t fall from the sky, it falls parallel to the ground because it’s driven by the wind in Winnipeg. So, needless to say, I moved South. And I moved South to Wisconsin. I thought that was far enough for me. So, my education, I made it about halfway before life took over. I was a humanities guy. I loved literature, philosophy, loved Dostoyevsky and Nietzsche and all of these impractical things that have nothing to do with supporting a family and making money. A terrible option if you’re actually trying to do something in business, although it does, you know, it’s good after a few drinks at the conference. But yes, my intent coming out of college would have been to do anything but what I’m doing. But life kind of finds you in strange places and puts you in places where you didn’t expect. So, my education came to an abrupt end when I got married because I was no longer able to get in-state tuition, and the tuition costs made it such that I had to find a career in a hurry and then sort of make my living as I go. Complicating and enhancing, more than anything, that fact was we started our family at that point.

So, I was working in manufacturing. I had a son who was growing up slowly alongside me and my family, slowly chipping away. By that point, I had kind of shelved all of my literature and moved on to more practical stuff: operations management, applied statistics, IT, things like that. And that’s kind of the beginning of the conveyor that took me here. Yeah, sometimes we have things that happen, and we just have to figure it out. And it sounds like you were in that “figure it out” kind of state, getting married, having a family at a very young age. So, you started your ERP career at a window and wall systems company. Yes, what did you do for them, and why did you stay for so long? One thing that stands out when you and I were prepping for our discussion today was that you stayed at companies for what I would consider to be a relatively long time, especially in this day and age. A lot of my millennial friends, you know, they’re companies one to three years max, and then they’re on to something else. But it doesn’t seem like that’s kind of how you have operated. No, no, I would say I never really considered myself a job hopper. I try to find something that makes sense, and then I tend to hold to it unless I have a really good reason to do something else. So, I worked for Wasa Window and Wall Systems for about eight years, all pretty much in some form of operations management or manufacturing. Initially in direct manufacturing, and then eventually I worked my way into a Six Sigma Black Belt position. You may remember that old tradition. I don’t know if there’s still Six Sigma out there. Every now and then I hear someone mention it, but it feels more like going to an antique car show and you see a Six Sigma drive by. It’s one of those deals. But yeah, I did that for several years, doing optimization projects. And it was that that actually drew me into ERP because our company at the time was using an ERP system called BOND, which has now been absorbed by Infor’s Suite of products. But it was a great ERP system at the time, like a tier one. So, we had solid inventory management and integrations from module to module. And as we were doing some Six Sigma projects to kind of re-engineer the business, I found myself realizing that process improvement in a back-office sense, purchasing, planning, scheduling, project management, all involves ERP systems. And so, I found myself involuntarily learning about ERP systems and how they functioned, and that kind of led me to everything that’s common sense. So, you were there for years, then pivoted into a new company as a business analyst. Yeah, so tell me a little bit about what you did as a business analyst. Sure. So, Wasa Windows was owned by a parent company called Apogee Enterprises. Their holding company was centered out of the Twin Cities area. So, as one of the many satellite organizations under this big heading, I mean, at the time, Apogee was probably $700 million in size. They’ve doubled that since. But at the time, that was kind of the range they were at, and they had five or six companies underneath them. And they decided that they wanted to implement a company-wide ERP system. And as a function of that, they chose a core team that would be a cross-company core team, a team that would go from site to site implementing at each of those sites. And so, those were the business analysts that would be doing that function.

So, as a function of my previous Six Sigma work and learning the ERP system, I, coupled with the fact that I was the only guy from Wasa who was willing to travel, ended up landing this position with corporate and became part of the corporate IT team. They were kind of in the middle of a centralization in general of IT resources across the company. It’s very hard to do centralized ERP without a foundation of centralized IT underneath that. Else, you find yourself everyone being kind of drawing and quartering one another to try to control resources and/or their own business needs.

So, as a business analyst, our job was to try and understand each business that we were working in and solicit those requirements so that when the consulting team from the ERP provider came through, in our case, we were implementing Epicor’s manufacturing ERP, we would be working kind of hand in hand with those consultants to lay out these are the business requirements inside of the purchasing or the inventory or the manufacturing execution areas. Now, how do we go ahead and blend those requirements with the capabilities of the software so that we could merge them? And so, over time, I started finding myself learning enough that I stopped working on the requirements side and started working on the solution side. And that sort of led the way to my future endeavors in ERP consulting, specifically under the Epicor auspices.

So, you mentioned Epicor. Our podcast is primarily geared towards people working in supply chain at small and mid-sized manufacturers. So, not everyone may know what Epicor is. Can you describe to the audience what is Epicor?

Sure. So, Epicor is an ERP vendor. When I first encountered Epicor in one of its earlier instantiations, it was essentially a single software solution that was manufacturing-based, focused on discrete manufacturing for small, medium, and somewhat large companies. We were approaching a billion dollars, so we were probably kind of at the top end at the time. I’m sure Epicor has worked to expand their solution to handle larger and larger organizations, but they’re very strong in discrete manufacturing, very strong in custom manufacturing in terms of products that are following make-to-order, configure-to-order, or engineer-to-order product life cycles. That’s a set of solutions that the specific ERP solution under the Epicor header can handle very well. This has now been rebranded as Kinetic.

So, that was my background. My background was the train of ERP systems that led to Kinetic, ultimately now under the Epicor heading. They also have some other systems that are quite robust. Profit 21 is their distribution-oriented software. So, we found as a company at Estes working both in the distribution and manufacturing spaces and doing so with different Epicor products, we’ve kind of learned the unique dynamics of a distribution-oriented supply chain versus manufacturing, and two very radically different worlds right now, especially with the pandemic. And that’s been really interesting. But for me, yeah, getting introduced to Epicor as a function of my work at Apogee really is why I worked in the Epicor space and not in SAP, Oracle, NetSuite, Plex, or what have you. It’s quite often what drives us is whatever system that our company happens to be implementing.

So, there are a lot of ERPs in the marketplace. In particular, I would say manufacturing happens to be a vertical that has a fair amount of ERPs that were built specifically for manufacturing. Under distribution, for those that are listening that are maybe looking for a new ERP, maybe they have something that’s become a little bit outdated and they want to look at some solutions in the market, what are some of the pros and cons of using Epicor as your ERP?

Okay, so looking at let’s focus just then on Epicor’s Kinetic solution since that’s the manufacturing-oriented version of their software. I would describe Epicor as a generalist solution, so it’s not purpose-built for one industry per se. So, there are some ERP systems out there that are built around plastics or built around automotive, and they’ve had all the functionality related to that vertical built into the system, so they’re very solid in that system and all but useless in a different vertical. Epicor hasn’t taken that approach, especially. They have taken an approach that’s much more of a generalist approach to handle multiple industries, now again primarily in discrete manufacturing. So, I’ve seen Epicor used in process manufacturing, occasionally in plastics and steel. I would say that I haven’t found it to be as effective in those areas just because its native out-of-the-box functionality doesn’t lend itself as well to process manufacturing as it does discrete units.

So, I think when customers find themselves in that selection phase, what you do find often is you’ll find a company that’s large enough that they’ll have multiple branches underneath them, multiple divisions or operating units. Some of them are operating in a discrete manufacturing mode, some of them are operating in a process mode. So, you might have to kind of pick the best possible option, understanding that some areas, some divisions under your overall heading might struggle in some of those areas. But I would say that if you’re looking at custom manufacturing and to-order manufacturing with a good deal of functionality in a solid cloud-ready format, Epicor has been pushing on their cloud offerings for a good, well, as long as I’ve been with the Estes Group. So, probably a good 10 years, they’ve been pushing on cloud readiness. I think Epicor stands does very well in the field that it plays in.

What about some areas where they’re not so great or another ERP system should be considered instead? I mean, they can’t be a good fit for everyone, right?

So, I would say if you’re in a plastics or a steel foundry business, if you are doing process manufacturing, there are probably better systems to handle that. And if you are in a very large organization, generally SAP and Oracle gobble up the very large players for that work. I think those tend to be the areas where I found Epicor hasn’t competed as well as some of those others. Those would be, I guess, my biggest caveats that I could think of off the cuff here.

So, you have a lot of knowledge around Epicor because you implemented it and have worked with it at multiple companies. You are now president of an organization called the Estes Group. Let’s hope I said that correctly. What does your company do?

So, Estes, we’ve been around for, oh boy, 15 to 20 years now, and we started off as primarily an implementer of Epicor. The official term is system integrator. I’ve never liked that term because integration means so many different things to different people. We’re going to talk about integrations later, so that’s probably the reason. But yeah, we’ve been implementing ERP systems for 15-plus years. Over the last six or seven years, we’ve shifted focus strongly to focus more on the management of the application, for more of an installation versus implementation basis. And this has been primarily from a private cloud situation where we take on-premise customers and we move their on-premise implementation into a cloud architecture so they can stop worrying about their on-premise footprint in the data center and all the risks and costs that come along with that, and make themselves more cloud-ready and develop more robust, I would say, ecosystems that can support business complexity. So, that’s been for us the area where we’ve spent a lot of time growing into, and that’s been a lot of fun, really, because the managed service world of hosting and DRaaS and backup and endpoint security and all the things that come along with a cloud ecosystem is very different from the world of implementation projects.

What do your clients complain about the most? There’s been a lot of chaos and craziness the last couple of years, but what really stands out this year in particular?

I would say the biggest complaints from customers, speaking to manufacturing. So, as we talked supply chain in a manufacturing versus a distribution space, very different. So, manufacturers need products in order to make things. If they can’t get products, they can’t make things, which means their customers are angry. Distributors tend to be a step up in the supply chain, so whatever they have, they can sell to folks like manufacturers at a premium because of scarcity. So, what you find right now is in our own customer base, manufacturing companies tightening their belts and trying to find ways to survive while distribution companies are buying other companies, expanding operations, implementing new systems, optimizing what they have, etc. So, those are two kind of very different worlds we’re living in right now.

For manufacturers, of course, and this has been since the pandemic especially, and the pandemic kind of kicked a lot of methodologies in the backside because of all the unexpected changes in terms of how to get products and component parts, raw materials, etc., that you can further process. That means price fluctuations, lead time fluctuations. Those have been huge challenges for our companies. And we talk about the cost of goods. When you have labor as a shortage issue that companies continue to run into, finding good labor, you find that you’re paying more for labor, you’re paying more for the goods that you’re taking. The goods that you’re getting delivered are coming in at an inopportune time, which is adding latency costs to your own products. So, what we find is a combination of that kind of way we call a death by a thousand paper cuts a lot of businesses are feeling right now, that those things are all amounting to a very costly product to manufacture in a market that is very cost-conscious right now. So, that means margins are potentially, in a lot of areas, slivering out. Now, for companies that have niches that work specifically to where we were at, I had a company that was making products that were in support specifically of the pandemic. Right? So, that one vertical inside of their business went through the roof for this very short period of time. Now they’ve come back down to normal.

Crazy lows, right? So, I would say those would be the big ones that I’m seeing right now. You know, certainly, things that SourceDay as a solution has become, I think, for a lot of our customers, or the ones, at least, that have the budget to expand opportunities. They’re looking for solutions like that to say, “What can I do better in terms of the management of supply chain variability that the core applications themselves do not necessarily have?” And that kind of lends itself to those whole discussions of whether or not a third-party solution is a good fit for a company or not because it’s often in addressing these kinds of challenges that that happens, mm-hmm.

So, Brad, when you and I were chatting and kind of figuring out what we thought would make the most sense to discuss during the interview, we both decided upon an architectural question. And this question is about leveraging the best-of-breed solutions to construct hybrid cloud ecosystems to better support ERP customer needs. So, I’d like to have you break this down into something that’s a bit more simple and easy for people to understand, and also understanding why this is so important to manufacturers.

Sure. So, let’s start with the best-of-breed. Best-of-breed as an approach to enterprise ecosystem development says that I am going to choose the best functionality available in each domain to try and execute that area’s domain responsibility. So, an area of responsibility might be purchasing. If I’m using a best-of-breed approach, I’m going to say, “I’m going to try to find the best solution possible to cut POs quickly and efficiently, accurately reflect the right lead times, and be able to manage those changes as efficiently as possible.” That is the best-of-breed approach. You could compare it to what you might call the unified system approach.

So, ERP vendors generally will try to provide a unified system with integrated functionality that can handle all the needs of the business, and there’s been this tug of war, basically, ever since I’ve been in the ERP space. There’s been a tug of war between these two approaches, and I think the war of attrition has been slowly won by the best-of-breed. My model’s not to the point that people are cobbling together, just, you know, trying to put separate Lego blocks together, but more starting with a base system and then working to enhance it on the peripherals as much as possible. And that would be where you buy an ERP system, like say Epicor, and you enhance it with third-party solutions like an e-commerce platform or a quality management platform or a project management solution or a purchasing automation software, AP automation, things to try to make individual business areas within your organization as efficient and effective as possible, more so than the base system can afford to do. That’s kind of the approach of best-of-breed.

Now, the value then to the business is, are there areas in the business where one, you can have growth? E-commerce is probably one of those examples where we’re trying to improve by growing the business into different sectors by doing more B2B or B2C work and using technological upgrades to enhance that. So, that might be an area of business growth. It might be a customer service need. I need to be able to deliver customer service information faster to the customer so that they feel more comfortable in our business relationships. That’s more of a strategic goal, we might say. It might be simply a cost goal. I need to more effectively transact against this body of data in as efficient way as possible because we talk about labor shortages. These labor shortages run all the way into the back office where you find people. Your purchasing agent retires. Who’s going to replace them? There’s not a lot of people because you live in a small town. Okay, I need to now do two people’s job with one. So, I need something out there, a tool or a methodology, to try and balance this extra data. That’s where the business value itself quite often manifests itself for customers.

Now, in terms of the technical instantiation, we use the term hybrid cloud.

So, I’ve heard “best-of-breed” and “hybrid cloud” often kind of used interchangeably. I would say that a hybrid cloud is thought of as the technical instantiation of a best-of-breed approach. So, a hybrid cloud is where each solution itself may have its own architecture that is different than, say, the core architecture of the ERP system with which you’re working. Now, what that allows for in a hybrid cloud architecture is you build integrations between your core system and all of its peripheral ancillary systems. Some of those might be installed locally at the customer’s site. Shipping solutions, quite often, are installed locally because they have a very large sets of data that needs to be processed very quickly. So, you might have an on-premise application that connects to a hybrid cloud where your core ERP system is. Because we do specifically with hybrid cloud or private cloud deployments, we find ourselves as kind of the hub in this wheel of spokes, with each spoke being an integrated solution. So, we’re the ones who are playing with that hub, talking to that on-premise system, then talking to SaaS-based solutions that are living purely in the cloud and communicating over web protocols and speaking to an application probably over the API level. And so, the integration of all those conversation points from within your network and from outside your network, and constructing them so that they are secure, so that the conversation is limited to certain domains and cannot be expanded beyond that, is, I would say, a simple or a simplified version of describing what a hybrid cloud ends up being once all is said and done.

And, to put it in simple layman terms, I describe it as you have Solution 1 where you buy one system and you want it to do absolutely everything for your company. And then, the other option, the more of the hybrid approach, is you’re going to buy a system that’s going to centralize data and purchase orders and invoicing, but that system isn’t going to be able to do everything you need. So, you’re going to buy additional solutions that integrate with that main hub so you can have niche solutions that solve specific needs while all your data and information is centralized through some sort of core hub.

I’ve seen a pretty big pivot throughout my career in supply chain where companies used to expect one system to do everything, and I think that’s not really the thinking anymore. People realize that they’re gonna have to buy multiple systems because there are so many niche solutions available now in the market. Yeah, entirely. The best-of-breed model has really taken itself, I think, to become the de facto when you buy an ERP system. Software selection might include now what are all the tertiary systems that you’re going to have to look to integrate at the same time.

So, for me, when I think about the best-of-breed versus the more traditional unified system, the biggest hurdle that comes to my mind is the integration piece. Integrations can be very cumbersome, very expensive, and labor-intensive if I do have a central hub and then I want to buy different add-on solutions. So, from your experience and all the companies that you work with, what would you say are some of the main benefits and maybe liabilities of a best-of-breed versus a more traditional approach?

Okay, so one challenge immediately in a best-of-breed is you’ll want to make sure that you have an adequately staffed IT team to handle that. Integrations don’t manage themselves, and we find this all the time when you’re using tools like Zapier or what have you. They tend to break frequently, they upgrade constantly, and they need technical resources to manage them. So, if you’re going to have a complex infrastructure, you’d better make sure that you have the appropriate technical resources to manage them. That’s kind of one big consideration right away.

Another consideration you want to think of is performance. The integrations that you have may or may not perform at the same speed as the base ERP system. So, if you have a system that’s performing sluggishly, some of the benefits that you look to be gaining may be curtailed by performance concerns. You’d want to be talking when you’re looking at best-of-breed solutions that each solution has a deployment model that makes sense so that you can balance functionality, security, and performance. Those are kind of the three pieces that I always am considering. You want functionality, you want it to be secure, and you want it to be performing at a really high level. So, performance can be one area that could undermine what you’re doing. Security, of course, is another concern.

So, what you would like your solutions to do is to make sure that your solution isn’t introducing new security liabilities to your ecosystem, and not all solutions are made with the same care. Some of them are older, older generation solutions that have not been updated sufficiently to patch and plug new vulnerabilities that have been discovered. So, you want to make sure that you consider security as a real key piece.

So, going to the third piece, functionality, only add functionality that you feel will really bring business value. There are times when I think folks have pet projects that take them to a point where they overengineer their ecosystem, and they don’t really need the value that that thing is, or they don’t need the functionality because when it’s said and done, it doesn’t bring the value. So, you want to make sure that functionality is bringing the value.

Now, from a deployment standpoint, those are all kind of business questions. From a technical standpoint, one of the key pieces you have is at what level can these things be deployed? Is everything working at, like, an API level up high, or can you install these things locally within a hybrid cloud that can improve your performance and your security potentially? We work with customers and third-party solutions that have multiple ways. I was meeting with an e-commerce solution this morning, and they were going through that. If your base system is a SaaS solution, and your ERP system is SaaS, so it has no single home but it’s purely in the cloud, you need to be working at that API level. However, if you’re working in a private cloud environment, you can install that solution locally. It’s a little older technology in terms of not working necessarily at the API, but the performance benefits they might offset that. So, I think those are the kinds of conversations you need to be having when you’re going to start constructing that kind of ecosystem.

This seems like a lot and can be very overwhelming to somebody working for a smaller or even mid-sized manufacturer that has limited resources. How should a manufacturer approach constructing an ecosystem for their IT? Like, where do we even start?

Well, really, you start with the base. So, I think that’s when you’re constructing a hybrid cloud architecture, you always start and say, “Well, what’s my base? What’s that thing that everything’s gonna revolve around?” Once you’ve made that decision, that’ll drive every other decision you make. So, if you want to say, “Well, the vendors offering this SaaS solution, and they say okay, well, SaaS might be a good way that removes some of the technical maintenance that might be required upon me as a business owner. Do all the solutions that I want to use interact with that solution, the base system, in terms of functionality, performance, and security? If they don’t, okay, we may need to roll around and relocate the hub for us. And I’m going to be full disclosure, I’m a big proponent of private cloud because it provides, in many ways, the benefits of a SaaS environment or a cloud environment with all of the benefits of moving away from an on-premise. You have a great deal of access and control to all layers of the system’s architecture: database layer, application server, web server, etc., so that you could integrate at one of many points. So, I’d say that really, to try and sum this up before I get too techie, is be very careful in where you select your hub and where you choose to deploy that application to begin with because that will drive everything that happens subsequently.

What is the main, not that there’s one thing because there are many, but of all the challenges or roadblocks that can happen, what should I focus on avoiding as I’m trying to construct an ecosystem? What is the major, you know, absolute no?

Well, I would say if you’re constructing an ecosystem from scratch, one thing we have customers who’ve been on an ERP system for 25 years, so they have legacy integrations that did a lot of dirty tricks that they don’t want to let you get away with anymore. Database writes and reads that are maybe ODBC connected or maybe they’re stored procs and SQL schedules that are functioning at the lowest level. All of that tends to be a real nasty gram in our current world. So, I would say that architecturally, you want to make sure that you’re avoiding those lowest-level integrations whenever possible and keeping them up at the business level layer if at all possible. Hopefully, we’re working with an ERP solution that has a very robust API. That seems to be the way of the future with integration. So, if you have a good API to begin with, that sets the stage for I think everything that comes after.

How do I know if my ecosystem is successful? What does success look like?

Well, I would say if you’ve set reasonable budget standards, that’d be one criterion. It doesn’t cost you more than you expected. Two would be success would be an ecosystem that’s not penetrable, so it’s a secure ecosystem. It’s an ecosystem that has adequate redundancy so that if you were able to get ransomed, you could roll back to a hot site and keep the business running. So, business continuity becomes one key criterion. I would say the other then tends to be functionality, that you are able to support the needs of the business and make sure that you can achieve any of your business goals because ultimately, all the technical jargon that we throw out here is to achieve some clear business goals. So, if you’ve achieved some clear business goal, you should be able to measure against the achievement of that goal and whether or not all the work that you’ve done to achieve it has been for that. Probably the biggest key is to level set expectations in terms of what it might cost, what it might all be involved in terms of effort and time because I would say the more you look to integrate, the more you find yourself adding time and potentially adding costs. So, I think you need to go into that with some really level set expectations to say, “Okay, this is what I think we can reasonably achieve in this timeframe,” and that sets, I think, a basis for you to judge yourself fairly.

Thank you for discussing leveraging best-of-breed solutions to construct hybrid cloud ecosystems that better support ERP customer needs with me, Brad. Where would you like people to find you?

Sure, if you want to poke around and learn a little bit more about the Estes Group, I’d say come to our webpage, estasgrp.com. And from there, there are a bunch of jumping-off points where you can learn more. If you missed anything, you can check out the show notes. You can find us by typing in “What the Duck?! Another Supply Chain Podcast” in Google. To have optimal search results, make sure to add “Another Supply Chain Podcast” in your search to ensure you don’t miss a single episode. Make sure to follow this podcast and subscribe to us on YouTube. I’m at Sarah Scudder on LinkedIn and at @Sscudderr on Twitter.

This brings us to the end of another episode of “What the Duck?! Another Supply Chain Podcast.” I’m your host, Sarah Scudder, and we’ll be back next week.