SUPPLY CHAIN MANAGEMENT
Technology drives the supply chain information revolution
The gathering of information has long been a costly business. The alternative, the ghost in the machine, is something worse, and almost always more expensive, writes Stephen Neale.
From SAP and Oracle to Terra Technology, HighJump Software to Sterling Commerce, technology is shaping the future of transparency and access to information in the supply chain. on the up. Chad Collins, HighJump’s Vice President, says clients are increasingly looking at more efficiency to maintain profit, and he claims new technology can deliver what they want.
Software applications are transforming the way companies see costs
HighJump Software is one of the many global providers making good capital in the downturn, where knowledge of the entire process from ground to shelf level can be the difference between survival and slow death. From its headquarters in the US, the company announced in October a greater strategic focus on Europe as part of its new growth strategy. This is an industry Labour management solutions, which measure employees’ costs against the national labour standard, are one of the many measurements helping to deliver extra value to the system. “We will see solutions on top of warehouse solutions,” says Mr Collins. “That used to mean a 10 per increase in production, but now we can see the increased performance of
individuals working in a warehouse. In the past you would not have been able to see the presence on workers in warehouse.” Mr Collins leads global strategy and marketing initiatives. He joined the company in 2002 and has more than 12 years of experience using technology to deliver innovative supply chain solutions. Prior to joining HighJump Software, he was in the supply chain practice of Cap Gemini Ernst and Young Consulting, where he managed supply chain technology projects for some of the world's leading manufacturers. He anticipates innovation will continue to produce tremendous opportunities. “Nothing fuels innovation as much as new capital and we don’t have any concerns about that, even in this downturn.” The company’s expansionist vision is testament to its desire to speculate while accumulating, and it bucks the trend to reign in capital investment in some other parts of supply chain sector. For today’s clients, wary of costly overspends on software that may only provide short term solutions, system flexibility remains a crucial factor. The major market players accept there is an over-riding need for more than a nod to suppleness in the system if their clients are to be convinced to invest or upgrade.
HighJump, like most of its rivals, provides a set of tools that let the client set up the process in the programme. “We taken a great deal of care with those features,” says Mr Collins. Innovation over the next few years involves the most important factor to the client: greater transparency from the process. Software applications are transforming the way companies see the costs in the process, right down to the last penny. But like any system of
ic problem, not the business. The technicians will defer. A recent survey, commissioned by Sterling Commerce, found that in Europe 3.42 per cent of manually processed orders contained errors resulting in an average penalty charge of $38.95. The same research found that almost half of 374 IT decision makers in the UK, France and Germany surveyed, believe that a lack of IT process integration is limiting their businesses’ ability to compete at a global level. “Sometimes we see organisations sending out orders to suppliers and they are still using a FAX,” says Dave Carmichael, Sterling’s senior product marketing manager. “They are under the impression they have interacted with a supply chain.” “Electronic Data Interchange (EDI) has been around since before the Internet, but many companies only do EDI with 20 per cent of revenue. Yet the cost of process to a £1 million order or £1 order is the same. Too many companies are missing opportunities.” Sterling Commerce, an AT&T Inc company, has more than 30,000 customers worldwide – including 80 per cent of the Fortune 500. Mr Carmichael says that while supply chain management is recognised as crucial to profitability, best practice is too often regarded as complex and expensive when in fact the opposite is true. “It’s having more of a common sense approach regarding in-house management of your supply chain,” he explains. “The ability to do this has been around since EDI was invented, but the perception sometimes is that it’s not worth doing. “IT departments are not the best communicators in the world. They may see that they have another burden of managing another trading partner. They have to get over this. Clever people are realising that, as we edge off the cliff into recession, if you have perishable goods, any efficiency you can get into supply is good.” The time to take multi-enterprise integration seriously has arrived, just as companies started to implement internal integration seriously in the late 1990s. The decision over whether to build or buy remains the dilemma for the converted. Outsourcing makes sense at the best of times, but in the
Managing the business processes themselves is still the biggest challenge
improvement, be it technical or human, transparency can only ever solve a part of the problem. It can never be an end in itself, a fact that many businesses fail to grasp. Technical assistance is becoming better, but managing the business processes themselves is still the biggest challenge. What computer programmers can do to help is manage a specifface of recession the ability to shift major capital costs from a one off payment to a monthly operating fee with the likes of HighJump, Terra Technology or Microsoft is increasingly attractive. “Enabling your company to keep its hands on the cash today is pretty compelling,” says Sterling’s Carmichael. Never more so than now.
SUPPLY CHAIN MANAGEMENT 7
Supply chain visibility
What does it mean for you and your organisation?
Visibility Information Integration
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In today’s global marketplace, traceability and visibility of your supply chain is essential. The growth of globalisation has not only meant that tracking information has become more complex, but it has also brought additional costs for legislation across companies; increasing the importance of visibility across security, rules and finance. However, although many are now accepting that visibility is key, there is still a lack of integration with partners across the supply chain. Without this integration there is no information. Without information it’s impossible to achieve visibility. IT departments might struggle to provide support but it actually costs more not to know what is happening across the supply chain; not only due to charges of non-compliance but in some cases inefficient supply chains can easily lose revenue. There are therefore some important questions that need to be asked: • Do you have information from across the supply chain about orders and inventory, within your organisation and of your business partners? Visibility is built on information. • Have you integrated your systems internally in addition to those of your business partners to share the information? • Does your IT department have the capacity and skills to connect all different systems, respecting standards, security and regulations etc.? • If not, have you considered outsourcing these, often non-core integration activities, and signing up for a managed services offering? • Once you have integrated and can receive the information, do you have one central platform to coordinate this across different channels, systems etc. or are you in need of a distributed order management system, which assists you in coordinating all relevant information into one visibility environment? • So now you have the visibility, but do you really know what your customer wants? Are you sure you have done all the necessary activities, across all different sales channels and products to make sure you have the right Order Capture? With the right orders, information and visibility, you can now make the right decisions for fulfilling the demand from your customers across the whole supply chain, using warehouse and transportation management systems for the final details. The above diagram shows a typical supply chain with all relevant parties involved. Between all these organisations there is a need for integration to achieve information across the supply chain, which is needed to achieve complete visibility.
Sterling Commerce, an AT&T company 3 Furzeground Way, Stockley Park Uxbridge, Middx UB11 1EZ +44 (0)20 8867 8000 www.sterlingcommerce.co.uk