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Supply Chain Management Software

The first item under this heading dates from August 2000. This is followed by a series of more recent Updates.

The demand for supply chain software is growing now the holdback to deal with Y2K issues is over and the need to consider the implications of e-business are driving organisations to review what they do and how they do it.

We have already seen the explosion in business-to-business (b2b) activity. Supply Chain Management (SCM) software is a part of the overall switch in emphasis, getting the back end right to better serve the customer. But all this change poses problems. Many organisations are finding it difficult to find stable sources of supply in this changing environment. So is this the time to consider SCM software? If that software is designed to work in, and help organisations cope with the current environment, the answer is yes.

Other changes are apparent. There is a gradual though accelerating switch to operating supply chains on a global, or at least pan-European, basis. This is the result of the general trend towards globalisation, and of the introduction of the Euro.

The web has accelerated globalisation. Who cares now where organisations are physically located? It also offers a kind of lingua franca for software front-ends. Any SCM software without a web front end, and links through to the wider web, would appear to be doomed.

This suggests, quite properly, that SCM is just a part of the general move towards e-business and towards the kinds of network connectivity that allow organisations to communicate with each other, to co-operate and to act as a co-ordinated, even integrated, single entity.

SCM is increasingly fluid and flexible (see the Hot Topic Supply Chain Innovation) and requires different forms of supporting software.

Issues/Questions

Should the choice be SCM as part of Enterprise Resource Planning (ERP) or as stand-alone?
If you already have an ERP solution, consider the SCM add-on from your supplier. Otherwise, the time (and cost) to implement ERP is too great. Another consideration may be to match your choice to that of major partners. It may make communication easier.

Is there a particular (set of) product(s) that serves the specific needs of your industry?
If so, it's worth taking a look.

Do you have the skills to implement a complex solution or do you need a business partner to guide you through?
It is important that any partner understands the technology and the change processes required to support its effective introduction.

What is the development history and plan of the product?
Looking at development history identifies those products that result from acquisition. When this applies to a number of modules in a product, the integration of those modules must be carefully examined. If the product lacks some of your desirable features, the forward development plan becomes important.

Can the operation be outsourced?
There are now organisations in the emerging Application Service Provider (ASP) market that will run SCM services on your behalf. This may be a fast way into a changed process.

Scope
There are many suppliers out there claiming to offer SCM software. Some of them only cover a part of the total supply chain. If that is your part, that's fine.

Scale
Getting a demonstration of software is fine but it's probably running on a small database. Ask about scaling up to the kinds of levels of operation involved in your enterprise and get a guarantee on performance on this scale.

The following is a list of suppliers & useful as a start point. Also try a web search on supply chain management.

In recent announcements, business collaboration facilitators EC Outlook and Ariba have unveiled features in enhanced products that should help manufacturers to streamline supply chain processes. Both companies hope that firms will now start to overcome what seems a natural reluctance to automate or support their supply chains with technology. EC Outloook provides a software-based service run on its Smart Document Interchange Server - an ebusiness platform that allows companies to interconnect easily and cheaply. Ariba has launched a new version of its Enterprise Sourcing procurement application to help buyers manage the whole of the sourcing process, from selecting suppliers to negotiating contracts.


Update July 2002

ARC Advisory Group recently released a new white paper entitled, Logistics.com: Maximizing Customer Value by Taking Holistic Approach to TMS. The white paper examines how shippers can improve service and reduce costs by dynamically combining the traditionally independent transportation planning and execution processes.

According to the ARC white paper, in light of the weak economy, many shippers are turning to transportation management systems (TMS) to improve efficiencies and realise significant short-and long-term cost savings. The report warns that despite efficiency gains, transportation costs in the US as a percentage of Gross Domestic Product (GDP) have remained steady at about six percent over the past decade, and advises that the key to overcoming this hurdle is integrating transportation planning and execution.

The white paper points out that while TMS has a proven history of delivering benefits, money is being left on the table as a result of a historically fragmented transportation business process. For example, explains ARC, a strategic routing guide established during a procurement event is based on planned assumptions, such as expected carrier turndowns and service levels. But most shipper execution systems cannot provide real-time measurement against that plan for turndowns and on-time performance, driving costly overrides and "maverick" purchases. In this scenario the theoretical savings from the procurement event fail to materialise.

To help companies realise the savings they project during the transportation sourcing process, Logistics.com claims to have adopted a holistic approach to transportation management and bridged the gap between planning and execution, as well as enabled automated workflow. To extend the previous example, Logistics.com's OptiBid transportation e-procurement system passes expected carrier performance metrics to the OptiManage execution system. Deviations between planned and actual performance drive immediate dynamic changes to the routing guide to protect service and cost savings. This approach coincides directly with ARC's vision of the market.

"Integrating planning and execution is the 'low hanging fruit' that many companies overlook," according to Adrian Gonzalez, research analyst at ARC Advisory Group. "In the TMS marketplace, Logistics.com is on the cutting edge of truly bridging the gap between planning and execution, as well as enabling automated workflow."

The white paper concludes that with advanced Supply Chain Event Management (SCEM) solutions to enable this integration, Logistics.com is demonstrating that it can truly provide customers with greater value through its holistic approach to transportation management.

The new ARC Advisory Group white paper is available upon request.

July 2002


Coca-Cola and SAP collaborate on managing supply chain networks.

Coca-Cola is working with SAP to develop software to improve efficiency in the drinks firm's supply chain. The technology produced by the collaboration could be used across the beverage industry.

The aim of the implementation is to give Coca-Cola more information at the store and account level to improve its retail customer relationships.

Margaret Carton, Coca-Cola's chief information officer, said the new software should cut paperwork, ensure cash settlements are made properly and reduce wasted space in delivery lorries.

Coca-Cola already runs various ERP and supply chain management applications, including SAP's R/3 material and production planning applications. However, these systems do not connect store deliveries with backend systems, Carton said.

Tony Hart, managing analyst at research firm Datamonitor, said the agreement reflected the desire of manufacturers and retailers to improve supply chain visibility, allowing for improved planning and reducing the potential unwanted deliveries.

"The agreement between Coca-Cola and SAP will try to eliminate inefficiencies and automate more of the extended processes from manufacturer to retailer," Hart said.

"There will be time and cost savings and the opportunity to drive revenues, for example, replacing sold-out stock faster.

"Mobile integration in a project of this size will have its problems, but as Coca-Cola is head-to-toe SAP, there is less potential for difficulties."

The data integration issues the project will tackle include providing functionality to the mobile worker so that the data entered into the mobile devise is either automatically transferred or synchronised to back-end applications, said Hart.

The new application should help to improve vending machine management, with support for direct upload and download of sales information using a handheld device. This could be improved further with the use of electronic tracking technologies, such as radio frequency identification tagging.

March 2004


Iceland Warms

Iceland, the UK frozen food retailer, is gaining real benefits by sharing key sales and forecasting data with suppliers. The company operates 760 stores and has begun a project whereby key suppliers such as Coca-Cola and Sun Valley Foods can tap into relevant replenishment and forecasting data stored in its JDA retail systems.

Data is shared via JDA's web portal Marketplace.com and this sharing has significantly increased the effectiveness of events and promotions, reduced distribution costs and cut stock levels.

Sun Valley, for example, claims to have achieved its lowest ever average pallet rate with Icelend since the system has been operating. They now deliver less frequently with fuller loads and have reduced their delivery costs; partly by sharing loads with another supplier.

April 2004


Golf Club

Ping, the golf club maker, is slashing development times on new product ranges by linking suppliers directly to its own IT systems. This allows those suppliers, in the US, the UK and in Mexico, to work collaboratively with Ping. The importance of this is clear when you realise that 85% of Ping's current revenues come from products brought to market in the last 2 years.

Ping introduced 'product lifecycle management' software from specialist provider PTC to improve its design and development processes. The result is delivery of a new club from concept to retail in 9 months, where previously it took 2 years.

August 2004

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