Linking the chain

Manufacturing & Logistics IT spoke with some of the leading names in supply chain consultancy about the state of the art in supply chain and warehouse management solutions, and what the key drivers for change are among both the vendors and end users.

A number of key drivers to achieve a competitive advantage in the marketplace have put pressure on solutions providers to further enhance the supply chain capability. This includes reducing cost while increasing innovation and helping to improve the end users customer service and responsiveness. This is the view of Tim Edwin, principal consultant, TATA Global Consulting Practice. Edwin believes that this implication has been addressed by building many possible solution options to accelerate time-to-value and lower Total Cost of Ownership. Some of the primary options, believes Edwin, are: closed-loop integration of supply chain planning and execution with real-time planning process capabilities; integration with the plant floor infrastructure; data and process visibility across the end-to-end supply chain and from plant floor to top floor; and the monitoring and analysis of the extended supply chain.
 

Commoditisation

Tim Payne, research director, SCM EMEA, Gartner, observes that over the past few years there has been a very high degree of commoditisation and functionality similarity within the supply chain management and warehouse management solutions space. However, unless the vendor is very small, very niche or very localised, the company is going to be looking at adopting a Service Oriented Architecture (SOA) approach, if it hasnt already taken this route, in order to move forward. Those vendors that can crack the code in terms of how that provides business value from a supply chain perspective will really start to put some clear water between them and the rest of the pack, said Payne. If you look at companies such as i2 who made the move from client server to SOA as early as five years or so ago, they have provided a platform environment and a modelling environment that is very suited to much more complex supply chain scenarios. This is where the innovation is going to come from. Leveraging the architecture and the technology is important to provide greater application agility and flexibility as it is required to mould to the business processes that users have in place, therefore ensuring the business process drives the application rather than the other way round. Were seeing the tip of the iceberg but that will become a much bigger differentiator over the next five years or so.

Mark Blowers, enterprise architectures practice director, Butler Group, also cites SOA as well as Software as a Service (SaaS) as key areas to watch as is the general issue of integration of supply chain management and warehouse management solutions with, for example, ERP. He also highlights the fact that Wireless access is moving to industry standards.

Capgemini Consultings head of supply chain, Steve Freshwater, believes that it is getting harder for vendors to differentiate, but also recognises that some ERP solutions, instead of being a kind of Frankenstein with of lots of acquired companiess systems bolted together, are improving from an integration standpoint. ERP is starting to make sense and connect, he said. Freshwater also references the emergence of the structures and architectures of these solutions, and how they have moved forward from being monolithic mega systems to structures that allow plug and play, modular approaches with Open Standards.

Edwin believes one significant current value-added service offering of note is SaaS. This new delivery model dramatically reduces the effort and cost required to obtain new enterprise software features and avoid infrastructure investments, he pointed out, adding: Some 12 per cent of users are already using SaaS applications, with another 40 per cent reporting that they are interested in the SaaS model. Blowers agrees, maintaining that one area that could be given the accolade of value add is the ability for a vendor to provide a hosted service or SaaS. However, in a more general sense, Blowers is not convinced that there are value-adds in the true sense of the phrase. This is because things such as service, support, and training are considered to be a given today. Indeed, he suspects the expectation in the current marketplace is that a vendor should be able to offer a complete package.

For Payne, one value add concerns domain expertise. Users are looking not only for a suitable application, they also want to understand what it means for them in the way that it could change and improve their business processes, he said. Some users are not just looking, for example, at scheduling software and its capability, they also want to know whether they should replicate what they essentially already have as a process or whether they should expect to get some best practice benefits and take things to the next level. So the domain expertise of the vendor, and of the consultants, is what customers are looking for.

Payne explained that this attitude can be seen at SME and Tier 1 level. Theres a huge amount of functionality in some of these solutions that users often dont tap into, he pointed out. However, they find it difficult to identify those skills sets whereby they can move from the basics up to the next level by utilising more of the advanced capability thats actually built into the software. And they are looking more to the vendors to provide that capability. Companies such as SAP and Oracle have really started to focus on that. They have optimisation teams that can help users identify opportunities for additional benefit from the applications.

Freshwater is witnessing the convergence of whole business models in some cases. At one end you have the software vendors, such as i2, putting managed services around their software not just implementation and at the other end there are some 3PLs who are moving into the market of offering technology, he said. In addition, he added, some consultants are talking to and working with companies to manage their logistics, so moving away from just the procurement outsourcing and into logistics service provision, and into planning as well. So theres a trend towards the service provider running the companys software. This activity is out there and there are studies and reports about this activity going on.

On the subject of system functionality, Freshwaters perception is there are many more productivity tools being applied to existing solutions, including those capable of measuring KPIs. He also believes one of the biggest services vendors are providing as a value add is the restructuring and re-architecting of their solutions to be more plug-and-play and scalable; highly suitable for companies as they start to go global, for example.
 

Eco-system

Blowers perception is that the supply chain and warehousing management market is now quite mature, with many vendors offering similar features and functionality. If there is any marked differentiation, he believes this can be seen in the form of ease of integration, deployment, migration from existing system, as well as support, brand and hosted services. Payne also recognises the markets maturity or commoditisation, but points out that some vendors have in place an effective strategy whereby end users can buy backbone, commoditised functionality that can be applicable across a number of different industries. Then, if they want a point of competitive advantage in certain areas, these vendors call on their partner network to discuss additional, differentiated processes. So a platform plus the eco-system, thats where that innovation is going to come from, said Payne. The larger vendors can provide that bundle of commoditised processes, and then the small niche companies can develop the innovative solutions, and work as part of the eco-system of the larger vendors. Payne points out that this process is still in the early stages, but that the dynamics are in place.

Freshwater observes that the types of offerings from the vendor community are converging. The software marketplace is huge with lots of available functionality, but what were seeing as a differentiation often relates to a specific sector or niche, he said. So whether thats something very specific for retail, whether its data monitoring or tracking, these sorts of things have differentiators within the solutions. Freshwater also believes the market is seeing differentiators in terms of what could be described as usability. For example, he points out that more vendors are selling a lite version of the solution rather than only offering a larger solution, such as full WMS.