Covering all bases- Supply Chain Management Technology report- March 2014

Manufacturing & Logistics IT spoke with a number of leading spokespeople from the Supply Chain Management systems vendor community about current trends and ongoing developments in this buoyant solutions space.

For modern supply chain professionals, being able to accurately anticipate demand and deliver to schedule and to correct specification has never been so critical. The good news is that the technology behind some of today's most state-of-the-art software solutions can facilitate better and faster demand trends than ever before. Manufacturing & Logistics IT invited some of the most prominent figures in the world of supply chain management solutions to share their views on where the current functionality sweet spots are within this fast-developing technology space.

Andrew Kinder, senior director, industry strategy at Infor, observes that Sales & Operations Planning (S&OP) is still a hot topic in supply chain but believes many manufacturers remain stuck in second gear in terms of how they manage their S&OP process. "All manufacturers can do demand-supply matching at a basic level, but for many this is still a spreadsheet exercise and their approach is to start with demand then try to work out the level of supply required to meet the demand," he said. "However this misses the financial component that determines if you are putting in place a profitable plan. Ask any production manager and they will tell you there are many ways of meeting demand – the goal is to find the most profitable way of meeting your customer service objectives."

Kinder also made the point that demand itself isn't a constant. "Every time you run a promotion, or introduce a new product, you change demand," he said. "Equally, demand is changing from external factors such as seasonality, weather, sporting events – even what recipe was shown on Celebrity Chef. So in terms of S&OP or 'Integrated Business Planning' as it is increasingly known, what you are striving for is to assess different demand and supply scenarios in a financially driven context and putting the business in the best possible position to respond when actual demand and supply conditions present themselves."

According to Kinder, where manufacturers are challenged is the reality that there aren't many tools out there that can pull all the available data together, not only from a demand, supply and financial perspective but also from a business process management perspective. "I think new technologies around social business collaboration are really needed for this because the creation of an effective plan doesn't happen in one meeting, it doesn't even happen over one week – it's a continuous sequence of conversations and events," he remarked. "With social collaboration built into the S&OP process you get documentation, you get auditability, you can track the changes and you can better understand how to make better-informed business decisions at every stage."

Karin Bursa, vice president of Logility, also recognises that S&OP and supply chain analytics are two significant initiatives that are driving tangible results in today's dynamic economy. "Companies of all size are focused on improving their current S&OP process or are working to implement one," she said. "As they move along the maturity path, it quickly becomes clear spreadsheets are error prone and require too much manual effort to support such a critical collaboration process and drive their long-term profitable growth objectives."

Bursa added that harnessing the power of S&OP is dependent on making sure everyone speaks the same language and works from a single comprehensive plan toward agreed upon goals in operational, tactical and strategic horizons. "Objectively evaluating the tradeoffs of multiple business scenarios in an environment of disconnected data from multiple sources can be daunting," she remarked. "We see the role of integrated supply chain analytics increasing as companies look toward technology and automation to help them turn data into information as they compare multiple paths forward. At Logility, we provide robust solutions that extend the visibility, increase the accuracy and deliver the insight needed to drive supply chain innovation and support growth strategies that rely on a responsive and more cost efficient supply chain."

In the view of Mike Verdeyen, chief technology officer for IBS, cost of ownership and business value are key considerations in the SCM systems space. "Cost of ownership speaks to anything from how a company acquires and runs SCM software to how well/easy that software works with the rest of the enterprise and existing ecosystem," he explained. "Business value speaks not only to how well the solution addresses the needs of the business but also how easy it is for the business to get that value – usability and user experience plays a big role here."

Tim Williams, distribution divisional director of BCP, considers that the omni-channel challenge has to be the hottest topic around at the moment. "At its root is the development of mobile devices and their escalating use for doing business throughout the supply chain," he said. "To deliver a good omni-channel experience for customers, where all channels of purchase interconnect seamlessly, requires a SCM system which can exploit the mobile model and deliver true visibility of real-time stock, powerful forecasting and rigorous fulfilment procedures."

Drivers

What have been some of the main drivers behind these developments? According to Bursa, companies are faced with greater challenges today than ever before from a highly dynamic global economy to rapidly changing customer needs, supplier risks, and aggressive competitive markets. "The supply chain has been identified as one of the greatest opportunities to successfully meet these challenges," she commented. "It is recognised that with the right people, process and technology the supply chain can make a significant impact on both top line growth and bottom-line profitability."

Williams' view is that, clearly, development in the mobile device arena has been the catalyst, but changes and developments have resulted from a combination of end-user demand and creative R&D by solutions providers. "At BCP, we always pride ourselves on our understanding of our specialist market and being at the forefront of new developments, investing strongly in ongoing R&D to ensure our solutions develop to take advantage of appropriate new technologies and meet changing business and market requirements," he said.

For Kinder, new standards have been set around data integration, analytics, mobility and social business and around the way companies can interact with consumer information through tablet PCs and smartphones. "This is all driving greater supply chain visibility, flexibility and speed," he commented. "It's interesting to see how our customers take these new technologies and become very innovative in their use- they see how the solutions can be applied to their real-life business and operational scenarios; the light bulb goes on and they think 'yes I can see how to use this'. What is better is that they bring their ideas and use-cases back to us – this is all part of the vendor-user feedback loop that creates further innovation."

Verdeyen believes a key driver for adoption is simply the maturity cycle in SCM software. "Many companies have realised that the days of highly customised, highly tailored systems drive a long-term cost to own and ultimately present a barrier to future upgrades," he said. "As the consumerisation of IT takes hold in the SCM space, expectations of system usability and accessibility (any device, anywhere) drive purchasing decisions."

Integration

Has the process of system integration changed to any notable degree recently; and if so in what ways? Williams considers that it is still much easier to deliver seamless operational excellence with a core end-to-end ERP system as the business backbone rather than trying to stitch together disparate best of breed solutions. "There really still isn't a silver bullet to resolve all the issues that come with trying to integrate lots of separate systems and technologies," he said. "A single technology platform reduces business risk and technical complexity in the business – hence fewer opportunities for things going wrong."

In Kinder's view, the most significant change is in the ease of sharing data between systems on common standards. "Where once, organisations strived for a single data model they now acknowledge that the information needed for full SCM visibility resides in multiple systems – yours, your customers', your suppliers', your distribution channel," he said. "You can't solve this with one data model. Instead, organisations are looking for more loosely coupled integration – which is exactly the architecture one which the Internet is based – multiple systems with common communication standards so that when you make your purchase from Amazon it doesn't matter that the information you see on screen is from many different sources."

Social technologies are also getting more infused into business systems, Kinder points out, and this makes it easier and faster to share information internally and also with supply partners and end customers. "Through this kind of ecosystem everyone involved can become more real-time with their decision-making," he said. "And it's not just about people communicating with each other; it can now also be about machines communicating with you through modern control technology, telling you, for example, when maintenance is due, when a particular part needs replacing, what that part number is and even how to fit it. All this adds to the efficiency of the manufacturing process and, as a consequence, the efficiency of the whole supply chain."

Verdeyen reflects that integration methodologies among vendors of SCM solutions have certainly evolved. "Vendors are offering standard APIs accessed in modern ways (REST+JSON)," he said. "Having said that, this is an area where, in the field, you will continue to see a blend of modern and legacy technologies – SCM systems touch many aspects of an enterprise and everyone seems to have a dated, legacy system where a flat file integration is the easiest, most reliable method."

Bursa points out that Logility has significantly reduced the time and effort required to integrate its solutions with enterprise resource planning (ERP) systems such as those from Oracle, SAP and Infor. "This effort further accelerates our already rapid implementation time frames and simplifies the deployment efforts," she said. "This approach puts the focus on the business requirements and goals to help operations align daily activities with the strategic needs of the business."

The Cloud

How has the Cloud-based Software as a Service (SaaS) model impacted the Supply Chain Management software solutions market? According to Verdeyen, the SCM market is rarely on the cutting edge of technology adoption. "SCM is core to a business and companies are naturally conservative in their adoption of new technologies and methodologies. Having said that, SaaS and Cloud seem to have finally started to make inroads in the SCM space. As the reputation for reliability in SaaS and Cloud solutions becomes more widely accepted, companies will no longer feel there is a need or value in running their own data centre."

Kinder believes many companies do see advantages in a subscription model – no upfront capital costs, faster to deploy, fewer internal IT costs. "At this stage we are still seeing this mostly in very small companies who are just getting started and lack technical resources or very large companies who are deploying SCM solutions in combination with other on-premise ERP solutions," he added. "However, this is still a young market and I expect Cloud deployments to grow for reasons other than just the economics – Cloud offers new opportunities for supply chain visibility across the enterprise, especially when private cloud arrangements within a supply chain ecosystem are considered."

From Bursa's perspective, today's enterprise environment is growing more complex and every company is unique in their market, challenges and opportunities. Her view is that the Cloud model provides companies with a choice in deployment methodology and services that best suit their individual needs and allows them to evolve as their business changes. "We have seen tremendous interest in Logility Cloud Services as companies evaluate all options," she pointed out. "These services change the economics and prioritisation of supply chain improvement initiatives by breaking down the barriers of cost, flexibility and speed to deployment. They also allow companies to migrate as their business needs change either moving from SaaS to hosted to on-premise or the other way around. This flexibility without losing the breadth or depth of capability makes a multi-delivery option model very appealing to companies."

Mobility

Are mobility solutions such as mobile computers and tablet PCs etc. having an impact or influence on Supply Chain Management? Verdeyen maintains that 'taking down the walls' has become a requirement in all enterprise software. "Mobile solutions have driven a requirement to have system access from any device in any location," he said. "This isn't unique to SCM but is pervasive in all IT systems in today's enterprise."

Williams believes the ability to access real-time information and place orders at the touch of the button from wherever you happen to be at whatever time of day or night suits you is now becoming a must. "It's no longer just a case of being able to log on to a PC or lap top to place an order over the Internet. Customers want to be able to do it from their tablet or smartphone while they're away from their desk," he said. "For solutions providers this means developing versions of their software which work on mobile devices – with the same level of functionality and integrity for users. And it's not as simple as you might be led to believe. It's easy to do simple things that don't really deliver much, but much harder to develop software that's effective. And it always needs to be optimised for mobile use – simple modification of the standard PC version is not the answer."

Williams adds that BCP has been supplying web ordering solutions to customers for many years, however its popularity has soared with the introduction of BCP's mobile version and the company has even introduced an App which wholesalers can make available for their customers to download free from Apple Store or Google Play. Williams continued: "Key of course to the success of mobile offerings is not only functionality, but transparency of information so you can see what stock is available, where it is, what new deliveries are due and the whole spectrum of orders that are being placed – and use that information, together with accurate forecasting and strict fulfilment operations to deliver a true omni-channel experience for customers – that's where a truly integrated solution comes in. Trying to stitch together lots of disparate systems to give true transparency is very difficult."

On the data side, Williams observes that online in general, and mobile in particular, mean that a lot more information is available about customers, their buying patterns, successful or unsuccessful purchases and so on, all of which can be used, if the SCM system is capable, to analyse behaviour and better match supply to demand.

Big Data

How is Big Data having an impact on the world of Supply Chain Management? Kinder has no hesitation in saying Big Data is having an enormous impact across many business functions, including supply chain. "With more information than ever before, smart analytics puts organisations in a better position to understand the behaviour of their supply chain, anticipate events and respond faster to situations as they occur," he remarked. "It also makes new forms of demand sensing analysis possible – an example would be a brand manufacturer who picks up on social conversations from Twitter or Facebook to get consumer feedback on a newly launched product that can help the manufacturer take advantage of potential demand spike – or avoid stocking up on a product that clearly has few 'likes'."

Kinder adds that with the right software and analytics, all of these things can be gathered in a data repository that becomes a tremendously rich source for big data analytics. "With more data than ever before you can analyse consumer trends to levels of accuracy that weren't possible previously," he explained.

Bursa sees more companies leveraging Big Data, such as multiple demand signals, to fine-tune demand plans, especially for short-term planning, new product introductions and promotions. "To stay ahead of a dynamic market, companies are innovating at a record pace, often doubling or tripling the number of new product launches in a year," she said. "Maintaining that pace requires superior visibility into the market opportunity and the ability to incorporate multiple data sources such as social signals (re-shares, likes, +1s), Point of Sale (POS), RFID, and more to help strengthen confidence around new product introductions, repeat buying intentions and future demand forecasts. Short-term signals around promotions, for example, help identify when and where demand will be strong. Companies that can more closely collaborate with their upstream and downstream partners can ensure supply is in the right place at the right time while keeping costs in line."

Williams believes the availability of Big Data promises much for business, but for solutions providers it is about how to make such huge volumes of data available to users in a meaningful, easy to use and interpret form. "Building on Accord's already superb reporting and business analytics features, BCP are about to tie in non-food Big Data tools to the food & drink arena so our customers can benefit from the plethora of data that is now available to assist their planning and decision making. They will be able to make use of Big Data for dynamic rules-based decision making, accepting all the many variables to automate previously manual complex processes, slicing and dicing the data to suit their own particular needs."

Verdeyen believes Big Data provides technologies and techniques that likely are ultimately required to deliver on the 'big promise' of BI from years back. "BI/Analytics has always promised to provide great insight into how a business was performing or changing on a periodic basis – the traditional challenge, however, is that those measures and analysis typically had to be fairly fixed or locked in to whatever ETL and data warehouse supported them. This locked a business into deciding up front what was going to be important to it now or in the future. The promise of Big Data is this analysis and insight can now take input from far more sources and move an organisation more to a model of user-driven BI. Big Data brings flexibility to BI and allows organisations to take a more holistic and sometime unconventional look at their entire enterprise and not just data from a single source. What metrics and analysis is needed can be determined at the time of analysis rather than at the time of data collection."

And what are the main drivers for these Big Data developments? Verdeyen maintains that to stay competitive it is essential for companies to understand all aspects of their business, from cost to acquire/serve customers to cross domain information where no single execution or planning system has a complete picture. "Big Data promises to marry disparate sources of data and provide the capabilities for analysis in an unstructured environment," he said.

According to Williams, the main drivers are the availability of matching Big Data with rules based engines – and the overwhelming need to access as much information as possible about customers, their behaviour, preferences, etc. in order to increase sales and better match supply to demand across all channels.

Future trends

So, what might be the next key developments to look out for in the world of Supply Chain Management solutions? Bursa believes that Sales & Operations Planning, also known as Integrated Business Planning, will continue at the forefront on strategic initiatives. "This is where you knock down the silos that exist in your business and get everyone on the same page," she explained. "It allows supply chain experts to put critical and insightful information into the hands of their executives. Forget the PowerPoint slides and spreadsheets and give them an integrated view of the business that provides the basis for a more informed discussion on the tradeoffs of multiple business scenarios."

A related opportunity remains around better more accessible supply chain analytics, according to Bursa. "There is tremendous power in the ability to visualise where the business is heading to both assess the opportunities and mitigate the risks," she said. "These capabilities combined with ongoing performance management and alert notifications will change the way you view your supply chain. After all, it's better to prevent a late order than to report it."

Verdeyen considers that consumerisation will continue to drive changes in solutions. "Look for social capabilities to start having more impact and for standards-based, inter-company collaboration to emerge among the early adopters," he remarked.

Kinder believes it is a steady march towards an increasingly real-time supply chain. "Feeds into the supply chain management process will continue to improve, through use of real-time sensors in manufacturing and distribution operations," he said, adding that further developments in predictive analytics and social business media will continue to enhance the demand side and rapidly assess the most profitable response. Kinder also maintains that mobile deployment will permeate all aspects of supply chain operations, "so that if you're out there on the shop floor or in the field working with suppliers you will be able to take even greater advantage of the speed of information to support your decision-making".