Manufacturing & Logistics IT spoke with a number of prominent spokespeople within the Supply Chain Management vendor community about the current key trends and talking points within this vibrant technology vertical.
Many of today’s best Supply Chain Management (SCM) solutions offer a raft of functionality benefits; including Sales & Operations Planning/Integrated Business Planning, Business Intelligence (BI) and Demand Planning & Forecasting. In recent times many of the leading solutions providers on the market have fine-tuned and enhanced the way their systems can be integrated within the wider IT infrastructure of their end customer. There is also Cloud and Software as a Service (SaaS) to consider, and what the benefits or pitfalls might be for users considering these adoption models. And what of the effect mobile technology is having, and will continue to have, on the SCM space? These are just some of the issues and questions that we put to our guest vendor spokespeople, whose opinions and reflections make up this special report.
For Dan Turner, chief technology officer at ByBox, the current trends the company is seeing are about providing increased visibility and then allowing a wider range of actions as a result. “It’s Business Intelligence but on steroids,” he quipped. “For example, customers not only want to know everywhere they’re holding stock (including, for example, repairers and engineers) but then they want to be able to do something with it; like picking and shipping a good repaired part directly from repairer to engineer rather than shipping from repairer to warehouse first or, even worse, buying a new one. The benefits are the classic time and money arguments – this doesn’t seem to have changed much.” Turner continued: “We see the wider availability of real-time data as having driven a lot of these new requirements. We love to engage in blue-sky thinking and rapid R&D prototyping but we’ll only do any of this in conjunction with customers as they’re clearly the ones who best know where value can be added.”
Karin Bursa, vice president of marketing, Logility, believes it important for vendors to go beyond what a typical ERP or SCM solution offers in order to leverage optimisation across the functional areas of the supply chain. This, she maintains, is one of the top considerations today. “Companies need to optimally plan inventory across a multi-echelon supply chain,” she said. “However most only address finished goods at a specific distribution centre with limited visibility of inventory throughout their network.” Additionally, Bursa considers that the ability to evaluate multiple supply and productions scenarios to determine which plan best meets the needs of the business – while meeting corporate objectives such as least cost or highest margin, customer priority, etc. – is paramount.
Greater control and visibility
Bursa adds that companies want greater control and visibility across their entire supply chain network. “In today’s up-and-down market this is a necessity,” she said. “We are also seeing the combination of supply chain solutions – for example demand planning, supply planning and inventory optimisation – as an unparalleled trio in the ability to boost visibility, increase forecast accuracy, align inventory investments, and accelerate inventory turns to reduce costs while improving service.”
Shaun Phillips, global product manager, supply chain planning, at Infor, reflects that the biggest development Infor has seen in recent times has been the accelerated evolution of Sales & Operations Planning (S&OP) – the latest evolution of which is also known as Integrated Business Planning. “Quite frankly, the growth in this area has exceeded our expectations,” said Phillips. This, he continued, has been driven largely by what he describes as a remarkable evolution in customer demands. “In the early stages, S&OP focused on getting better BI into operational plans and balancing supply to demand,” he said. “However, with the addition of work flow processes to automate and then optimise much of this balancing, businesses have been incredibly proactive and fused the S&OP ‘architecture’ with promotion campaigns, new product development and even R&D (especially in the consumer goods / FMCG industry).” The ‘traditional’ S&OP processes, believes Phillips, have quickly become a comfort zone – and customers are now questioning the boundaries.
This is set against the context that S&OP buying behaviour differs, considers Phillips. “We regularly see customers approach with an S&OP strategy already under development and they ask us what point solutions they need to dive down to, in order to complete the next piece of that strategy. As a result, technology has had to evolve to offer a range of specific solutions. In addition to the initial planning and BI systems, the injection of workflow technology has been critical, and the ‘what-if’ engines of optimisation/simulation have been part of the appeal to FMCG businesses looking to integrate product portfolio planning and new product development into the S&OP. This has of course developed a huge requirement for integration.”
Michelle Campbell, supply chain industry director at RedPrairie, cites end to end visibility and better forecasting as being key requirements within the modern SCM space. “Manufacturers are being driven to provide better information and labelling on goods they ship, with an emphasis on their customers to provide better forecasts to meet customer demands,” she said. Campbell added that customers are wanting to make more immediate purchases and enjoy shorter lead times together with lower costs. She believes there is therefore a need for visibility into the supply chain in order to offer those services and streamline the supply chain process. Another key current talking point concerning SCM is fuel, according to Campbell. “Costs here are increasing, as are raw materials,” she said. So, in her view, better planning of transport is needed, while direct deliveries from manufacturers are also required.
Impact of Cloud and SaaS
For Razat Gaurav, senior vice president EMEA at JDA Software, the Cloud is becoming an increasingly important topic of discussion in the supply chain industry. As the economy continues to struggle, he believes more and more businesses are looking to the Cloud model as a way of delivering capabilities in a non-intrusive, fast-to-deploy, pay-as-you-go fashion with minimal costs; such as an on-demand model. As a result, he maintains that SCM vendors need to ensure they adapting, are able to provide services via the Cloud and are able to work successfully in the agile environment.
In Turner’s view the ‘Cloud’ doesn’t offer all that much above a responsibly hosted service. “But it certainly appears to be a more effective sales term than SaaS,” he added. “We are seeing customers trusting the reliability of their Internet connections more than previously, and therefore choosing Cloud-based systems rather than local hosting – and why wouldn’t you? These solutions are so much quicker to implement. But the Cloud based systems are expected to perform almost as fast as local solutions so application and connection performance is key.” Campbell believes Cloud and SaaS are enabling lots of smaller players – who perhaps do not have as big an operation and which can be more variable and seasonable – to play competitively. This model, she says, can reduce their IT costs as they only pay for what they use. SaaS, states Campbell, offers smaller players the opportunity to engage and yet still get the best functionality and technical capability on the market at a price point they can afford. “There are no IT costs and all you need is an Internet connection,” she said. However, Campbell adds that larger corporations often do not benefit from SaaS style models. Nevertheless, she says, there is still a movement in some respects towards hosted solutions instead, where these companies own the software but do not have it on premise. “Those operating multiple plants globally are leaning towards hosted or data centres,” added Campbell.
For Bursa, SaaS/Cloud computing is just beginning to impact the supply chain market. “Where we see the greatest interest is in the area of transportation, which is easier to leverage and integrate with order management,” she explained. “Due to the sensitive nature of forward-looking plans, many companies do not want to place supply chain planning and inventory optimisation in the Cloud – yet.” Phillips maintains that the Cloud has definitely had an impact. “For quite some time now, the majority of the Request for Proposals (RFPs) want the option of off-premise software – though we still the majority of projects then proceed along an on-premise route,” he said. “Though this will no doubt change, it is clear there is still some way to go. One of the main elements that will drive this adoption – and indeed inform cloud development overall – is to give users a seamless application experience, no matter where the applications are running. The other main driver will be the ability to offer choice to businesses, be it on-premise, off-premise or a hybrid. Everything must still work seamlessly together – and this is again a key area of integration development.”
Another topic that Gaurav considers as becoming increasingly important is the way each part of the supply chain works together – from supplier to end customer via manufacturer. “The days when the retailer knew what was happening at shelf-level but the manufacturer didn’t need to are long gone,” he said. “These days the supply chain is moving so fast, driven by constantly fluctuating demand that such a segmented supply chain will never work. Instead, businesses need a ‘shelf-connected supply chain’ where all parts of the chain have an understanding of what is happening at shelf-level – any surges in sales; dips in interest; or any product shortages.”
A further development, according to Gaurav, is actually in the way supply chain companies work with customers. “It’s no longer enough to implement a great piece of software then walk away,” he said. “Organisations investing in supply chain software want to ensure that it is working to its maximum at all times and, as such, they require ongoing consultancy and support. Therefore, managed services are playing an increasingly crucial role as organisations look for the kind of expertise that will see them make the most out of their systems.”
In terms of what has driven these developments, Gaurav believes the demand for Cloud and managed services is a result of businesses’ need to cut costs in every way possible and ensure that any IT systems that are in place are being made the most of. “Moving to the Cloud enables businesses to cut the costs of hardware that is no longer needed,” he said. “There is also the increased flexibility the Cloud offers. Any need for increased capacity, or even the need for a completely new solution, can be fulfilled quickly and easily when delivered via the Cloud. It’s this scalability that allows for the reduced costs and improved operational efficiency – the two main goals for the majority of businesses.”
Gaurav adds that the need for a shelf-connected supply chain is largely a result of a change in the way customers are consuming products. “Take the retail industry for example - consumers looking for the latest gadget are not going to wait,” he said. “They expect it on the shelf when and where they need it. The supply chain must work in tandem to deliver this. Social media and the growth of online community in general has also had an impact and played a part in the need for a shelf-connected supply chain. If there is a certain item generating a lot of buzz, such as a new smartphone, then consumer demand can be sent soaring and within hours, retailers are sold out. At this point, manufacturers and suppliers must be made aware by integrated supply chain systems. It’s the only way they’ll be able to react and ensure that the boom can be capitalised on at shelf-level.”
Craig Sears-Black, UK managing director at Manhattan Associates, comments that lot of Manhattan Associates’ focus at the moment is centred on driving greater awareness of its capabilities in the online retail and multi-channel retail space. “We already partner with many of the world’s leading retailers and in the UK alone work the likes of Tesco, House of Fraser, Halfords and the Co-op,” he pointed out. “With the accelerating trend among many retailers in the region to more of a multi-channel focused model, we are particularly keen to increase uptake of our retail offering, Manhattan Zero Disappointment Retail. This system-enabled approach allows retailers to deploy advanced supply chain optimisation techniques to present a unified brand across all channels – traditional bricks and mortar stores, Internet, catalogue, call centre, television and mobile.”
In addition to the retail space, Sears-Black explains that Manhattan Associates is also focused on other sectors including 3PL where it works with the likes of Wincanton, DHL and Keystone Distribution and the fashion sector where it works with companies such as Mulberry, Urban Outfitters and PUMA. “Markets are changing rapidly,” said Sears-Black. “This can be seen in the short product lifecycles of consumer electronics goods; the impact of downloadable files on the music industry; and the complex mix of retail channels now available. Consumers are becoming more sophisticated and retailers are being confronted with a whole set of new challenges – optimising inventory, order management and fulfilment across multiple channels.”
Sears-Black also considers that cost containment enhanced with inflationary concerns has seen companies looking for ways to optimise worker productivity through task management, advanced labour management and use of voice technologies for their distribution operations. And, he continues, there has been a greater focus on improved access to information through Supply Chain Intelligence solutions. “These offer organisations the ability to see the status of orders and inventory in real-time, and share that data with key stakeholders in a highly co-ordinated and controlled way,” said Sears-Black. Additionally, he has witnessed signs of a growing number of companies incorporating ‘green thinking’ into their supply chain strategies, rationalising distribution networks, using more advanced transport planning and deploying technology to provide the lowest-carbon means of execution.
And what is the supply chain impact of multi-channelling and how can industry professionals manage this challenge? In Sears-Black’s view, retail organisations across the globe are being challenged by the complexity of bringing cross-functionality to their many channels to market. “To date, few have attained this ‘Holy Grail’ of multi-channel retailing,” he said. “However, many are now learning to manipulate stock and orders across all the channels and fulfil from anywhere in the enterprise to improve customer service and margins. For example, more retailers are sourcing products from further afield, which results in longer inventory lead times. If, demand drops off in one channel between the time a purchase order is raised and the inventory arriving, the retailer will want the ability to redirect that inventory to another channel, where demand may be stronger.”
Sears-Black maintains that as UK retailers develop their multi-channel strategies it is expected that demand will also grow for order management and order lifecycle management systems. “These systems are helping overcome e-tail’s franchise hurdle by enabling retailers to offer click-and-collect,” he commented. “Where previously delivering online orders direct to the customer’s home from a central website and warehouse has robbed the franchise of sales, a click-and-collect service that utilises the local store or franchise (and the added value service they can provide – such as configuring a product) will make franchise operations more relevant in a multi-channel retail world.”
And have ways of best integrating SCM-related solutions with other systems developed to any notable degree over the past year or two? Turner points out that ByBox is continuing to see a much more open approach to real-time data sharing; mainly through the availability of web services. “This low overhead development approach is driving more innovative use of the data on both sides of the transaction,” he said. For Bursa, advances continue to be made in the realm of visibility. “For example, Logility’s built-in performance management capabilities allow you to tap into critical data across the enterprise and ensure the entire company is working from the same, consistent set plan,” she said. “These features are inherent in the Logility Voyager Solution suite and can extend to include data from other enterprise applications to further boost visibility and responsiveness to customer and supplier needs.”
One common misperception, believes Bursa, is that supply chain capabilities from ERP providers are ‘fully integrated’. “We often find supply chain modules from ERP providers are more challenging to integrate than leveraging a best-of-breed provider,” she commented. “For example, 90 per cent of Logility implementations (including integration with existing systems) occur in less than 9 months. Compare that with the industry average of 70 per cent of deployments taking greater than 9 months.” For Campbell, the biggest developments related to integration are in web visibility to demand and stock situations, as well as real-time information related to transport; for example, where vehicles are located.
Gaurav’s view is that integration between SCM solutions and other software has notably improved. “Previously, bringing together various IT systems was a major challenge,” he said. “For example, perhaps certain parts of a manufacturer’s mobile computing solution were incompatible with its inventory management software. However, as the need to bring all areas of the supply chain together became increasingly important in the recession, vendors worked to improve this situation. Now, for example, manufacturers can integrate their ERP system with planning, analysis and execution software for an extremely responsive supply chain that adapts to consumer demand. This helps drive more precise forecasting and lowers inventory costs, positively impacting to the company’s bottom line. Although integration of supply chain management solutions is not yet perfect and there may still be issues, we are in a far better position to fix any problems that do occur.”
Phillips considers that as speed has become the dominant facet of business and survival of the fastest has become a reality, software integration has been a real focus over the past two years. “SCM has traditionally relied on point-to-point integration leading to a lot of rigid and restrictive systems that cannot be easily upgraded or improved,” he said. “Because the application communicates with other applications in its own proprietary ‘language’, the custom-written integration code that translates from one application to the next breaks with each modification or upgrade. On top of this, the development of the integration itself can be a huge project as it distracts from core business activity.”
To get around these problems, Phillips points out that one approach is the ‘loose coupling’ as found in Infor ION. “This is lightweight, unbreakable middleware built on open standards,” he explained. “Building on just the connectivity, ION enables reporting & analysis, workflow and business monitoring. Adding in event-driven architecture (EDA), the integration can pro-actively push data, work activities, and exception notifications to users. This is not just a matter of improving the links between SCM and ERP or WMS, but a wholesale re-imagining of how software can talk to other pieces of software to accelerate business processes.”
And how can companies tailor their Warehouse Management System (WMS) to specifically integrate multi-channel requirements? Sears-Black comments that to deal with the challenges posed by multichannel supply chain strategies, companies and, in particular, retailers will require a solution that sits outside traditional supply chain systems, one that aggregates data and integrates with the full distribution network – including all the warehouses, stores, in-transit inventory and vendors – to provide a consolidated and centralised view of inventory across the network. “This will allow a retailer to respond, in a split second to a purchase request,” he said.
Operating under a single roof
According to Sears-Black, the software managing this complexity needs to be applied in layers. “First it is important to lay a foundation where the retailer gains good visibility of inventory within its own warehouse and distribution operation, through multichannel enabled Warehouse Management Software,” he said. “This approach allows a multichannel retailer to operate under a single roof rather than in silos. Once the foundation is in place you can then introduce an extended enterprise system over the top to gain visibility outside the warehouse to the store network and to the ‘extended network’, including drop ship vendors and third party logistics operated fulfilment facilities. This will enable far clearer decision-making, giving the ability to maintain inventory in different areas and locations.”
Then, says Sears-Black, comes the order management system to coordinate the process by taking in demand from multiple channels so that it can be optimised across the inventory which could include inventory in the warehouse, retail store, dot.com, inbound or with the suppliers. “Importantly, the order management system provides end customers a view of their order regardless of how they’re currently interacting with the retailer,” he said, “be it in a store, on the website, or on a mobile device. Distributed Order Management systems also enable cross channel processes, such as buy online and pick up or return to store.”
In essence, Sears-Black believes retail organisations are faced with both a challenge and an opportunity. “The challenge comes in the form of needing to ‘see more’ – moving beyond the simple view of inventory held in high street stores or at the distribution centre, and widening the field of vision to encompass all the channels through which the company interfaces with the consumer. By being able to see - and make available for sale - as much inventory as possible, the opportunity presents itself to ‘sell more’. Those that ‘see more’ will ‘sell more’.”
What are some of the main functionality differentiators among the SCM -related software vendor community? Turner believes the SCM community writes, necessarily in his view, a lot of bespoke software, “and we would always expect a new contract or customer win to involve an element of this,” he said. “Some of the newer approaches try to build a very feature-rich system that can then be configured rather than developed for different applications. For me it remains to be seen which approach will ultimately win.” For Bursa, one of the main differentiators is the breadth and flexibility of the supply chain solutions available. “As supply chain networks grow and become more complex it is critical,” she said, “your supply chain software is able to scale and deliver the breadth and depth of functionality required to optimally balance costs and service levels.” Campbell believes the key differentiators are to be found in systems’ ability to deliver on time and on budget, offering local resources while still having a global presence.
Phillips has witnessed that functionality tends to differ “by shade, not by colour”. He commented: “As different vendors focus on different markets, it is more important that they have the deep domain expertise to offer clients. The next step in that evolution has become to offer applications tailored for a given industry (and by ‘industry’ we are not just talking about a vertical as big and generic as ‘manufacturing’ or ‘logistics’ – or even as big as ‘process manufacturing’, but we are looking at specific industries such as bakeries or breweries). By focusing on a given industry – or rather specialising by industry – you can offer a complete application that offers everything a business in that industry will need, but only what it will need. Integrations, configurations and analytics shouldn't be part of the implementation; they should be part of the application.”
And with regard to future developments and innovations within the SCM space over the next year or two, Turner believes we will see the professional socialisation of field service start to provide additional benefits and efficiencies as competitors work together to provide more joined-up solutions for customers. “We’re starting to see resources, equipment and knowledge all being shared,” he said, “but we think that technology will start to enable physical network sharing, like cross-carrier shipments, making use of smarter tracking labels and the routing information embedded within them.” Turner also believes that RFID will finally become more highly demanded as smart phones are now being built with NFC on board.
Bursa reflects that the next year or two will see continued evolution of S&OP that is tightly integrated into the day-to-day supply chain. “The ability to tie tactical and strategic objectives together with multiple scenarios will offer even greater flexibility and better decision making for global operations,” she said. And this, believes Bursa, will help balance the need to improve service levels while creating a more efficient and transparent supply chain.
The impact of mobile
For Phillips, the SCM market will feel the impact of mobile profoundly. “Indeed it may well drive a lot of the methods of mobile adoption in other areas such as manufacturing,” he remarked. “Much of the ‘back end’ work for this has already been done – porting applications for mobile devices, ensuring the infrastructure is there to enable connections etc. However the real key to unlocking a lot of the productivity boosts that mobile can bring to SCM is based on delivering a consumer grade experience at work. Everyone knows how to use Facebook. Everyone can pick up an iPad or Android phone and figure it out in a few minutes – even seconds. The challenge is to exploit that familiarity and intuitiveness to make it that easy to use the technology in the warehouse or operations planning office. This consumerisation will happen quickly in SCM – in fact it is already underway – and mobile devices will be a natural focus for it.”
Phillips believes there is also some way to go with the exploitation of social media. “It offers an interesting and potentially very effective template for some areas – SCM being a great example,” he said. “For example, instead of following a person on Twitter, you could follow a job order throughout the supply chain and receive short, quick updates on progress just as you see Tweets from a person. Available via a mobile device, this could provide critical visibility of orders where the manger or director happens to be. We have created a Tweetdeck-like application called Pulse as part of our integration suite that has so far had very positive feedback and bodes well for this area of development.”
Gaurav considers that over the past two years the movement of more business applications into the Cloud has become more prevalent. This popularity is made clear, he states, when one considers the recent report from ARC Advisory Group, which revealed the SCM market grew 7 per cent over the past five years, while the SaaS market grew at a compound annual growth rate in excess of 20 per cent during those same five years. “I’d expect this trend to continue,” said Gaurav. “As manufacturers seek solutions that leverage the benefits of Supply Chain Planning applications without the traditional investment of implementing on-site technology, Cloud computing comes into play. Cloud computing and SaaS enables manufacturers to improve forecast accuracy and provide more reliable demand visibility, leading to enhanced customer delivery performance, improved cash flow and reduced inventory across the supply chain. Furthermore, the metrics are quantifiable – the ability to deploy sophisticated planning solutions in just a few weeks and with minimal staffing requirements creates an exciting new opportunity for manufacturers to rapidly optimise operations, respond to new market challenges and reduce costs.”
Revisiting with the multichannel theme he cited earlier, Sears-Black believes that, in the near future, in-store assistants will require very different skills and technologies to deal with customers who have comprehensive information on their own smart-phones about competitive pricing, product availability and alternative products. “To maximise sales in this situation the assistant has to be a ‘supply chain’ expert,” he claims, “able to offer convenient service at a competitive price, knowing how to get the goods to the customer in the way they want. This service requires stock visibility on the shop floor and the flexibility to reserve or deliver stock instantly.” Campbell foresees an increased level of Cloud and SaaS offerings, and more one-stop-shop solutions for end-to-end business requirements.
Sears-Black believes that to deliver their new supply chain and IT skills – for example scheduling deliveries from supplier or arranging a pick-up in-store – shop assistants will be able to use tablet computers to obtain instant supply chain visibility, as well as process payments and triggering complex processes to ensure the customer gets the goods. “This sort of mobile distributed selling enables the shop assistant to take the customer the entire way through the process,” said Sears-Black, “checking stock levels in alternative stores, distribution centres and suppliers, identifying available items, processing payments and fulfilling the delivery. This approach will be an increasingly important element in ‘zero-disappointment retailing’ – not only increasing customer satisfaction with a greater chance of repeat business, it can also increase order take by several per cent and millions of pounds.”