To kick off a series of special reports celebrating Manufacturing & Logistics ITs 10th Anniversary this year, we invited a number of established software vendors to take to the podium and discuss what they perceive to be the most notable developments within their market over the past decade...
There may be much uncertainty in life, but we can nevertheless rely on the regularity of many constants; including death, taxes and informed comment from the analyst community as to ongoing developments within the manufacturing software space. But what of the vendors themselves; specifically with regard to production-based software solutions such as Enterprise Resource Planning (ERP), Planning & Scheduling and Demand Forecasting software applications and even time & attendance (T&A) systems from a human resource management perspective what do solutions providers really hold to be the big leaps in terms of technology, system functionality and overall mindset over the past decade?
Neville Merritt, group marketing director, Chelford Group, maintains web based solutions have been one of the biggest technological developments over the past decade; facilitating easier integration to customer, supplier, and third party applications. From a broad technical perspective, Mike Hawkesford, managing director of Crown Computing, agrees, citing all things web oriented as a development of sizeable importance, along with the growth of faster networks, the dominance of MS Windows and the advent of browser based computing. This has opened the door to better centrally based solutions that are capable of being accessed on a global basis, he added. Steve Tattum, product manager, manufacturing & supply chain, Sage UK, also believes that web enablement has been one of the biggest technological sea changes over the past decade: This has not only provided direct contact for customers and their suppliers, but undoubtedly has also widened the access to business information and is a key driver in the extended supply chain, he said. However, although greatly impressed by the developments concerning the Web, Tattum adds that, perhaps an even greater impact has been made by vendors delivering business management software that truly enables sharing of information across business functions, rather than perpetuating the silos of transactional data that used to reside in each department.
And what of more corporate based developments, and their impact on system functionality and focus? For Dominic Regan, business development director, Oracle Transportation Management, EMEA, major trends such as outsourcing, mergers & acquisitions and specialisation have themselves defined the requirements for changes in ERP software solutions over the past decade: In contrast to 10 years ago, ERP solutions today have to be as much externally focused as they are internally, he said. For example, they have to recognise that many elements of the overall corporate process may now involve external parties such as sub-contractors and logistics providers potentially operating in different geographies, time zones, languages and currencies. ERP solutions have to be able to operate in complex environments both organisational and technological accessing, collating, executing and distributing information in the format and timescale that reflects the modern corporate lifecycle. For example, it is no longer sustainable for ERP systems to be off line for housekeeping or upgrades, as the demands of modern commerce simply wont support this.
Jonathan Orme, marketing director at Exel, also recognises modern ERP system have a broader application; external as well as internal focused. Todays generation of systems have much wider capabilities and have positioned themselves over the past 10 years from moving from the back office domain in to the front office, he pointed out. Mark Cockins, vice president, Central Europe, for IBS, agrees: Previously, the primary focus was internal process integration, covering the integration of internal functions such as order processing to warehousing to finance etc. That integration coverage has now extended externally to cover much more of the supply chain with integration and collaboration with customers, suppliers and service providers, he said. It is now about integrating the whole chain across multiple sites in multiple countries and coping with more complex logistical processes. Cockins adds that there has also been a drive and extension of ERP solutions towards more traditionally specialist solution areas such as warehousing and planning and forecasting: The gap between ERP provision and the best of breed environment has closed, with ERP modules more broadly in line with best of breed functionality, he said.
In addition, observes Orme, many systems have become more than just a transaction processing engine, with functionality for e-commerce, CRM and Document Management all out of the same database; facilitating a single source of information such as one customer record that can be easily shared many times. Once this platform is in place, it is much easier to layer on reporting and to streamline interdepartmental processes using workflows to physically automate various stages during transaction processing, he said.
Strategic mind shift
Orme also cites what he perceives to be the single biggest strategic development in recent times: Senior management are beginning to realise the benefits of IT, and are now developing an IT strategy for themselves as part of an overall business plan, he said. Compared with 10 years ago, supply chain and ERP systems were considered to be back office systems, much in the same way as accounting systems were considered 10 years before that, he said. I guess this is a combination of exposure to the advances of technology to the ordinary man in the street, and the fact that ERP systems are targeting the front office We now have a society that is more exposed to the Internet than ever before. It is becoming relaxed with e-commerce solutions in the high street and beyond. Consumerism and e-commerce solutions pioneered by players such as the low cost airlines, supermarkets, E-bay and Amazon have had a big part to play in educating our managers. It is clear that they have applied the same thought processes to their businesses and want to move beyond the simple web page as an advertising board.
In addition to the raft of other technological, corporate and strategic developments, increased flexibility has certainly been one of the watch words over the past few years. According to Regan, businesses simply cannot survive or enforce a monolithic one size fits all approach to ERP systems in the modern manufacturing age: With multiple external partners and multiple channels to markets, ERP systems have had to become
far more flexible in their means of accepting and distributing data; whether this involves an EDI link to a major global supplier or a fax or web browser link to a small specialist manufacturer, insisted Regan. This complex corporate ecosystem has also seen data continuing to grow exponentially. We have seen the shift of ERP systems from being simple repositories of data to providers of information, with the emphasis being management by exception, delivered through business intelligence and automated workflow capabilities.
Also, adds Regan, all of this has to be coordinated within the confines of strict corporate governance that has emerged in recent years: From a pure application perspective, modern ERP software recognises that different companies from different industries across different geographies need different solutions, he pointed out. In place of the all encompassing jack of all trades type applications that characterised the 1980s and 1990s, changes in the technical architecture mean that modern ERP solutions can easily be deployed alongside, if not directly composed of, best of breed applications.
Threats and opportunities
According to Russell Johns, senior director, enterprise solutions industry & product marketing at Infor, the functionality of todays extended ERP systems, as opposed to a few years ago, means manufacturing decision makers are immediately alerted to the occurrence of events that impact operations, and have tools available to respond immediately, to mitigate threats and leverage opportunities. He also points out that the breadth of ERP functionality now available means that, in many cases, customers no longer need other add on solutions. The capabilities of the best solutions on the market have also kept pace with business providing, for example, full support for off shoring and globalisation, he said.
Not just for the big boys
Then there is the issue of end user size and the right ERP application. In the view of Ian Cowley, managing director of Answer Solutions, one of the key developments over the past decade in addition to further and better integration has been the greater availability of solutions to all fit sizes of business. ERP is not just for the big boys anymore, he said. However, he believes that one of the key drivers for this has little to do with the software itself: It is all about falling prices on hardware, disks, processors, memory etc., said Cowley. This, as much as anything, has enabled ERP/Supply Chain to get out there. A key module area, such as Quality Management and its integration, is just one area.
To a vendor of graphical decision support software, the increase in computer processor power has proved to be a huge benefit, according to Graham Hackwell, technical director, Preactor International. However, he adds that, from his perspective, the real change over the past few years has been in the displays: Until quite recently CRT based monitors were the norm, and even large (21) monitors were often run at resolutions of 1024*768 or less. Today you can easily buy 24 to 30 LCD monitors with a resolution of 1920*1084 (over 250 per cent more pixels), allowing both the quantity and the quality of the graphical data to be greatly improved.
Research & Development advantage
In terms of overall ERP development, however, Merritt believes this has varied considerably over the past decade, and that some vendors have lagged far behind others: Those that have maintained their development investment have kept ERP applications in alignment with the evolution of business requirements over a similar time period, he said. According to Merritt, these include real time applications meeting the requirement for up to the minute information to improve flexibility and responsiveness to customer requirements and role based applications to improve user productivity.
And what of developments concerning the integration of ERP solutions with best of breed systems such as Advanced Planning & Scheduling (APS)? According to Hackwell, the major integration advance has been the move towards loosely coupled systems that use message based communications, which, much like email, have a store & forward capability: This means that the system integrators dont have to ensure that a live link exists at all times, he said. Data formatting standards such as XML have also made life simpler for the integrator, added Hackwell, and all these technologies are now being combined over the web to create the new breed of SOA applications. From an APS viewpoint the web has yet to make the impact that it has in purchasing portals etc., but the move toward cooperative scheduling to produce local agile supply chains that can compete with the low cost producers is the way forward.
High end perspective
And in terms of overall business and operational control, things have also moved on apace over the past few years. For example, Sales & Operations Planning (S&OP) functionality within a Demand Forecasting & Planning software package is a major advantage that can now be enjoyed by manufacturers, according to Richard House, managing director or FuturMaster: He maintains that, by exploiting all relevant data held within the organisations suite of software solutions (ERP, Demand Forecasting & Planning, CRM, etc.), S&OP functionality can point the way to business and operational best practice, saving the company money and tightening up efficiencies on the shop floor, in the warehouse and among the supplier network. S&OP considers the broader picture to help senior management formulate a coordinated set of plans to be executed by each aspect of the organisation, said House. By also securing the commitment of supply chain partners to participate in such a positive sea change in the decision making process, the manufacturer has in place a truly collaborative business and operation infrastructure, enabling it to make the most informed decisions possible.
Global linking mechanism
In Regans view, globalisation has arguably been the major business trend of the past 10 years and has undoubtedly had an impact on the software vendor community and the applications it offers: The ability to handle multiple customers, business units, time zones, geographies, currencies and languages strikes at the very architecture of such applications, he said. These are not the type of considerations that you can easily retrofit; for applications to operate effectively they have to be incorporated within the initial design. It also means balancing the goal of keeping software and hardware support to a minimum such as centrally located servers accessible via a simple web-browser
with the need to accept and present data, and control processes in as configurable a way as possible All of this has to happen in the context of security, scalability and data integrity.
Orme also recognises the effect of globalisation from a solutions perspective, believing that the Internet has become the great linking mechanism: Browser based applications (as opposed to client-server applications that require installed software on each PC, and need to connect to the main system) can be accessed by anybody anywhere with the right security levels, he said. Orme added that access can also be deployed on a range of different devices, whether they are touch screen wireless devices on the shop floor or PDAs out in the field linked via the Internet. This broadens the scope to agents and distributors who can be given access 24/7 to self serve. It also significantly reduces cost by not having to service the request in house, and provides information in a more timely manner. This hence improves customer service and significantly reduces the cost of mistakes. Orme adds that Exel is involved in several projects in countries such as China at the moment, where it is linking its UK customers supply chain with facilities abroad. The Chinese can use the system locally in their native language, whilst the UK management can access the same system, in real time, from the UK in English, he pointed out.
Johns also believes globalisation has had a sizeable impact on ERP system, but maintains that the available solutions are divided: Some just dont offer what an enterprising global manufacturer requires, while others have widened regional support (local government legislation, more languages, etc.) but dont offer multi-plant planning or visibility, he said. According to Johns, the best solutions do all of the above and offer functionality that addresses the new supply chain management and financial requirements. He also believes the best solutions have the ability to manage subcontractors whilst supporting rapid change as businesses both adapt to and learn what globalisation means for their operations.
Tattum again homes in on the World Wide Web as the mechanism that has changed the way that many multinational companies manage their businesses from a global perspective: Multinational businesses no longer need a single monolithic system deployed to all plants to effectively run their global supply chains, he said. In todays world, businesses expect to be able to integrate data from multiple disparate systems, have 24/7 real time visibility of key information and trade seamlessly with customers and suppliers electronically. Innovative software employing the latest technologies can provide the necessary flexibility to make this a reality whilst retaining the all important simplicity of operation for the users. As businesses move towards offshore manufacture, there is an increasing need to improve communication and response times in the event of product changes or production problems. Engineering Change, Produce Lifecycle Management (PLM), Quality Assurance and alerting software are all gaining greater prominence as a direct result.
When pondering globalisation, Cockins also returns to the subject of the web: Companies are far more global than they were and the world has become a much smaller place to do business. Historically, capabilities of the software itself were the main restrictions now, the only restrictions are the physical logistics of the supply chain how do you move products and people around in the most efficient and productive manner.
From a development perspective, the larger vendors have suffered by having to invest so heavily in localisation, according to Merritt: Each new global release costs the vendor millions of pounds, he pointed out, adding: The advantage for global clients is consistency, so although there will be localised differences, the core system is common and from a management perspective this is a huge advantage. Where there are specialised local requirements, the ease of systems integration means that a global ERP system can still be used with local, industry specific applications to meet specialised needs. This is because the global ERP systems will never include all the functionality that these specialists can deliver.
From a multiple possibly global plant perspective, companies that are capable of supplying the same product certainly have a huge opportunity to optimise the selection of which plant should produce a particular order, maintains Hackwell: For example a Preactor client in Europe is saving hundreds of thousands of Euros per month by using intelligent plant selection, he pointed out. To do this, however, you must have a good understanding of the available capacity in each plant, which requires a full Finite Capacity Scheduling (FCS)/APS implementation in each plant. Optimisation of this type cannot be achieved by the traditional top down approached used by most Supply Chain Management (SCM) software because it has no detailed capacity model for each plant. Typically, software of this type just uses a lead time to model the supply from any plant. Linked FCS/APS systems are required, which can take into account both local workload known only to the plant and the workload assigned to the plant from HQ.
And what of developments that can be expected over the decade to come? According to Orme, Wireless Technology will increasingly assist connectivity inside and outside the office and factory: With the availability of low cost portable devices coming on to the market, there will be further emphasis on front office applications, such as CRM, to make information available to both sales and service staff, he said. Also, he added, with Document Management now being integrated to many ERP systems (in a single database that can be controlled by Workflow), the paperless office, which never really took off 10 years ago, will start to become common place as a document is linked to a specific transaction or record in the back office system.
Cowley also anticipates that the next decade will witness more and more integration as well as easier access to data; both within the office, plant or warehouse and also on the move: Very fast wireless broadband is a must and not just the so called up to 8MB thats so often offered today, he said. We need to get to the speed levels of Korea, Japan etc., but lets not lose sight of the fact that many system users are still going to be office based with occasional home working. By this I mean the people that process sales orders, purchase orders, accounts transactions etc. Management may find it easier to work from home but the average worker cannot.
Better use of data
Merrits crystal ball also forecasts similar developments: There will be more and better use of data to drive events (automation and workflow): Everyone will have ERP applications seamlessly integrated as part of their work environment (as Microsoft CRM lives inside Outlook today), and that work environment will follow the individual around on their mobile device (always on, always connected), said Merritt. Even in 10 years time, there will still be laggards, but the leaders will be prominent, he added.
According to Johns, the biggest change over the next few years will be the benefits brought by an open service-oriented architecture (SOA). This is an SOA that is event driven, pragmatic and doesnt lock a customer into one vendors technology, explained Johns. A traditional SOA breaks every application into thousands of functions, whose relationships must be understood before any change can be made. This is the complete opposite of flexibility. He adds that a pragmatic, event driven SOA breaks applications into fewer concerns, which communicate through industry standards such as OAGIS 9 business object documents. This becomes much more flexible for businesses to adopt, said Johns. Infrastructure elements such as Wireless will ease system deployment as have browser based (thin) user interfaces but this is a minimal impact, especially when compared to the promise of implementing the right SOA, he added.
Hackwell also points to web based SOA solutions as being something to watch out for: This is going to be the mainstay of development in the next decade, he said. These techniques will not be popular just because they deliver the loosely coupled systems that are required to satisfy the requirements outline above; they also enable web based deployment of software. This will allow IT departments to recover control of the computing resources since users will only require a simple terminal to access the applications that actually run on a server.
From Regans perspective, the key developments to look out for will likely revolve around the continued deployment and more ready/widespread adoption of telematics, RFID and wireless. Our challenge as a software provider is to find increasingly flexible and readily pervasive ways to capture, analyse and disseminate information. Cockins also cites RFID as something to keep ones eyes on, as does Jamie Stewart, managing director of Exact Software UK. Steward also believes the development of configurable holographic images will change the pattern of supply and demand over the next few years; and in such a way that end users will be able to see their product and place an immediate order, manufactured to demand.
According to Tattum, there is a clear move to extend core business systems by adding Business Intelligence, CRM etc. to capitalise on existing investment: Without good integration across all business processes the full potential of these systems will not be realised, he said. Integration between front and back office systems is increasingly demanded by forward looking customers and is a key challenge facing the industry. Seamless integration across all desktop applications will be a key requirement in the software selection process. This must be accompanied by the ability to rapidly configure and customise the application to match the business processes, utilising workflow and alerting where appropriate. Integrated business management software suites matching these criteria and providing an easy and intuitive user experience will assist businesses to derive maximum benefits from their investment. Initiatives to provide single, common standards for RFID tags and XML messages continue to evolve. But whilst multiple formats abound, integration for all customers and suppliers continues to be more complex and expensive than anyone would wish.
In summary, effective IT systems will continue to force cultural change on a company, and can be used to assist that change. The use of IT to provide Business Process Automation is helping to reduce operational transaction costs and maximise efficiency as well as providing the ability to monitor all aspects of the business and supply chain performance, concluded Cockins. This impacts the business in many positive ways, but it means the organisation has to adapt not only its culture, but also its understanding of the business processes across the supply chain in order to fully realise the benefits.