11/4 Journal of Commerce Article, i2 and IMIC and SAP mentioned...
Shippers search for seamless solution
Journal of Commerce
Wanted: a seamless software system to solve tricky logis tical dilemmas.
"Companies like ours are looking for a turnkey solution seamless from the original supplier to the customer's hands," says Dan Kochenash, vice president of operations at [ Russ Berrie & Co. ] , a seller of toys and gifts based in Oakland, N.J.
To get the software system that works smoothly through the supply chain, Russ Berrie signed a contract with Optum Software, a company formed through the combination of Optum Software of Costa Mesa, Calif., which specialized in managing distribution centers; and Metasys Inc. of Charlotte, N.C., a specialist in transportation management software.
Optum is typical of the kind of partnerships and hybrids that are forming in the supply-chain software field as companies scrabble to provide that turnkey solution.
The last headline partnership was between Sweden's [ Industri- Matematik International ] and i2 Technologies, which brings together the market leaders in execution and planning software.
To explain -- SCM software comprises two types; until recently, companies have tended to specialize in one or the other. There is supply chain planning -- predicting which component will run out and when it will be necessary to order some more, including playing what- if games to estimate the impact on the supply chain if a factory shut down, or if a product line were moved from one plant to another.
Then there's execution -- managing the more nitty-gritty aspects of manufacturing and distribution, directing which truck goes where to make its run more efficient, managing orders and responding to customer demand evidenced by bar code information at the checkout.
With the broadening of products on offer by any one software company, supply chain management software is raising its profile.In the case of IMI and i2, the companies say their joint products will challenge the dominance of enterprise resource planning (ERP) software such as SAP/3, the flagship product of German software giant [ SAP AG ] , by which manufacturers track orders, finance and manufacturing processes.
Other companies, like Optum, are content to source and install SAP/3 for their customers, bolting it into the system that aims to be seamless.Conversely, efforts by enterprise resource planning vendors to become a single source of supply-chain software can cause significant problems, according to Robert V. Delaney, executive vice president of Cass Information Systems, St. Louis.
ERP systems, for instance, are not performing well in planning, forecasting and logistics activities such as transportation and warehousing.
"We need more cooperation in this environment," Mr. Delaney said in a "State of Logistics Report" in June.What's needed, people in the market seem to agree, is a "wider footprint" -- products that do more things available from a single source.
"The payback has to be not only tactical but strategic," says Anne Grackin, a partner at Benchmarking Partners, a consultant in Boston that serves industry clients like [ General Motors ] and Estee Lauder, as well as software solution providers like Manugistics, IBM and Optum.
"One area is planning -- what am I going to do? What is the best way to do this work?" Ms. Grackin said. "But then there's the stage where you say, "OK, now I've got to do it.' If I haven't been set up well from a planning perspective, then I can't execute well. But then, execution comes in."Say I'm a pharmaceutical firm with a contract with CVS and their demand fluctuates daily. How do I deal with that, get the trucks moving?"
PLANNING AND EXECUTION
"The made-to-order mania means cycle times are very short," said Chris Jones, recently appointed vice president for corporate development at Synquest Inc. in Norcross, Ga. "Real-time business management has to combine planning and then execution, too. It has to be strategic, tactical and operational combined."
Stacie S. McCulliough, an analyst in the Package Application Strategies service at [ Forrester Research Inc. ] , agrees that companies need to adopt what it calls "make/move logistics," a strategy that fully integrates manufacturing, distribution, and logistics into a single process.taking input information from order entry and planning systems, make/move logistics can create schedules that harmonize all the activities in a complex manufacturing and distribution sequence," said Ms. McCullough, who also has authored a report on "Make/Move Logistics."
Companies like Optum recently have begun to marry together supply chain planning and execution software, in an effort to provide that "turnkey" solution sought by Mr. Kochenash. The new Optum seeks to combine Optum's and Metasys' skills and provide a wider range of offerings.
THEY WANT IT, NOW
"In a fast fickle ephemeral economy that wants it now, you have to have execution in your suite," says Chad Quinn, senior business manager for transportation at Manugistics, one of the top supply- chain management software players. "Execution is becoming as crucial as planning."
Manugistics, whose customers include [ Wal-Mart Stores Inc. ] , [ Nike Inc. ] and [ Nokia Corp. ] , used to be in planning, but now has entered the execution market, too.
"Fundamentally, especially in the United States, people recognized that the planning piece of ERP was very weak and so they went out and bought a separate piece," Ms. Grackin said. "But they also discovered that SAP etc. didn't have enough technology dealing with how these processes worked on the execution side.
"So people typically bought several different software systems to deal with different areas. Now companies are buying other companies in order to offer the full range of systems - integrating the response chain."
The joining of supply chain management planning and execution seems particularly useful. "Planning is a problem," Ms. Grackin explained. "You set up the chain and then there's a swing and you have to go back and change it. So the two pieces have to respond to one another."
Business philosophy is changing, and the successful company is one that's focused on the end-user, the customer, Mr. Quinn said.
"We're looking at a customer-centric supply chain solution these days," he said. "It has to deal with the just-in-time nature of the relationship between customers, suppliers and manufacturers. Companies are forced to put their customer in the center of their universe. Manugistics5 (the latest supply chain management software offering) is designed to do that."Ulf Casten Carlberg at Industri- Matematik International in Sweden, another major player, agrees.
A CUSTOMER'S PULL
"The customer "pulls' things through the network, the system is now driven by demand, not supply," he said. "This is where ERP companies don't come out so strong. They are more "push' driven."
Supply chain management firms are fond of bashing their ERP equivalents, especially when companies like SAP are making their first forays into the SCM software market themselves. But the turnkey is not here yet.
"No one has a footprint yet that stretches across the supply chain end to end," said Mr. Jones at Synquest. |
