Enterprise Resource Planning systems have served linear supply chains well over the years. But, with the emergence of complex supply chain networks, requirements have changed, says Nick Allen
Supply chains are no longer the linear processes they used to be. The trend over the last decade or so, to outsource manufacturing and services to distant places, coupled with the need for greater agility to meet customer demands, has lead to a fundamental change in the IT architecture required to support the “networked” supply chain.
Web based systems and ERP solutions work side-by-side to create a patchwork of visibility. But just how well integrated are these disparate systems?
One of the greatest challenges facing many companies is that they have silo solutions which deal with just one element of the supply chain, with no overview of the whole supply chain. Denis O’Sullivan, managing director of supply chain collaboration specialists, Deltion, says the Germans have a name for this issue – the “Swivel Chair Syndrome”. “For most companies, if you want to know what’s going on in your supply chain at any given time you have to look at a number of different systems. You line-up a series of screens from each solution and swivel around looking at them, picking up different information,” he says.
“The cloud is a very powerful way of bringing all this together and integrating the technology,” says O’Sullivan. “For instance, you may find that your technology is in the areas which range from transport management systems to mobile phones, warehousing through to financial services. What the cloud can do is pick up the information from all of these systems, make it available to other systems where necessary and provide information from all of these systems at one single point.”
“So if you now want to find out the relationship between what is happening in your warehouse and in your logistics management, with your customers, with your suppliers, with your hauliers, and with your vendors – it can be done in one place. And because the cloud enables you to pick up what’s happening now, it’s live information, you don’t have to wait and analyse it in a week’s time, when it’s too late,” he says.
O’Sullivan points out that it is not just a matter of linking your own systems. Companies can integrate with their customers” systems too. “You can make the information available immediately to everyone from large 3pls to small hauliers using mobile phone technology, for instance, and it can be made available immediately across an extended supply chain,” he says.
Meeting the needs of an increasingly mobile workforce is becoming a key issue for ERP providers. Oracle, for example, recently unveiled a series of mobile apps for its JD Edwards EnterpriseOne ERP software. Applications include: Mobile requisition self service approval; Mobile purchase order approval; and Mobile sales inquiry.
According to Bob Godfrey, vice president EMEA at E2open: “Enterprise Resource Planning systems are not designed to allow you to make decisions across a business network,” he says. “It allows you to manage and control the resources within your own enterprise, but it doesn’t allow you to go to a business network where you’ve got multiple enterprises. It’s not designed for that purpose from an architectural point of view and it doesn’t have the collaborative processes or capabilities.” Godfrey believes the critical edge of what is happening in supply chain IT at the moment is in the cloud, for the very reason that companies need to communicate with suppliers and customers in a responsive way.
“We are seeing many companies now looking at investing in systems to extend processes outside the four walls of the enterprise, because that’s how you get the agility and responsiveness to drive out cost from your entire end-to-end supply chain,” he says.
Connecting to many is the key. However, Godfrey points out that many of the trading partners have got different capabilities and technical resources, “so you have to be able to connect using multiple, different technology fallbacks,” he says. But connecting up is one thing, making sense of the data and acting upon it is another issue.
“Unless you can orchestrate all that data and put it into a true multi-enterprise business process, then all you’ve got is data,” he says. “It’s the visibility and the ability to act in near real-time to rapidly resolve problems that’s critical. So you have to connect, then orchestrate the data, see where your supply chain is out of synchronisation and then have the tools to assess what can be done, the impacts on the rest of the business and then to execute.
“Historically, companies have focused on how to get the data, going into a war room environment, taking a week to work out the best plan to respond, and then take another week to execute those decisions. If you are already connected to your supply chain partners you can make very rapid decisions and action them within minutes or hours, rather than days or weeks or months,” says Godfrey.
Lenovo, one of the world’s largest PC makers, adopted E2open’s any-to-any cloud platform to effect the transition from its legacy systems to a worldwide IT capability, enabling the company and its partners to exchange data in any preferred payload format and protocol. According to Jon Pershke, vice president business transformation/IT, global supply chain at Lenovo, “Our average product innovation cycle is six months, which magnifies the cost of supply chain errors. To drive growth and profitability, our operations must be fast, flexible, and reliable to ensure that we can get the newest products to our customers – regardless of disruptions in the trading network or macro-environment.”
Through moving to the cloud based platform Lenovo are said to have reduced on-boarding time by 85 per cent, reduced IT costs by 53 per cent, reduced IT management costs associated with supplier integration by 70 per cent and achieved faster supplier adoption due to lower costs and ease of doing business.
However, cloud computing or SaaS does not suit all situations. Mark Brannan, international business development director at AEB, explains that: “With SaaS solutions you have to have standardised processes and that might not work for every company. SaaS is great, but it only works for certain areas of the business. For instance, sending declarations to customs is one area where we offer SaaS solutions because they have got to be a standardised declaration and a standardised process. But in other areas, such as a complex warehouse management operation, you may need a bigger, more heavyweight solution that can be tailored to your needs.”
Where data is under your direct control within a closed environment – and where it is not so necessary to have wider connectivity – processing power, speed and the ability to tailor solutions become the determining factors.
Brannan highlights the fact that for many companies sensitivity regarding data prevents them from using cloud solutions. “We work with aerospace and defence companies and they not only don’t want their data off site they simply can’t do it because every time they would want to access data on the cloud they would need an export licence, which would be ridiculous,” he says.
AEB offers both client server solutions and SaaS applications based in the cloud. “Being able to react quickly is important, if you can’t fly the goods in due to volcanic ash, for instance, then you need to see if you can source the goods from elsewhere and transport them in a different way – road or ferry and road. These are the kind of systems we can offer whereby they can identify different suppliers from different areas of the world and then calculate the corresponding freight costs to see if it is cost effective or not,” he says.
While the focus for many supply chain systems has been on managing the flow of goods from regions of low cost manufacture to the West, many leading retailers are now looking for systems that can support their expanding international retail operations. According to Craig Sears-Black, managing director UK and Ireland at Manhattan Associates, in the same way that supply chain IT has enabled global sourcing, it can also manage the complexities of feeding stores globally. “Logistics systems such as warehouse and transport management; supply chain planning for replenishment and applications offering supply chain visibility to view, link and manage a globalised retail operation will be vital,” he says.
Retail supply chains, in particular, have become highly complex in recent years. Serving the needs of the multi-channel consumer requires tight integration of systems for visibility of inventory across numerous points – from the warehouse, in-store or at a supplier.
Gerry Daalhuisen, global product manager at Kewill, says: “ERP technology has typically connected the store front to the warehouse, but with consumers demanding more flexibility in terms of availability of products and specific delivery time slots, retailers and 3PLs need tighter integration of systems such as ERP, order management and WMS for real-time visibility of stock.”
Services such as click and collect and next day delivery, is putting increased pressure on retail supply chain systems. “The ERP and WMS has always been able to adapt to the rapid order processing, pick, pack and ship methodology, but in the retail world where the priority has also been to minimise inventory levels, the demands on systems are even greater, requiring stock visibility across the organisation including interaction with e-commerce systems,” he says.
Tailored for fashion
In 2008, Jane Shepherdson, the retail visionary credited with transforming Topshop as Brand Director, purchased Whistles from Mosaic Fashions. Her aim was to create an independent cutting-edge women’s fashion brand. However, the company needed a dedicated IT solution mapped to the unique “retail DNA” of the business.
Retail Assist and BT Expedite were selected to provide supply chain and store solutions. Retail Assist’s Merret.NET supply chain management application was required to drive the multi-channel business forward through interfaces to Whistles” e-commerce website, and EPoS systems. The solution supported both merchandising and warehouse management.
Extensive support services were also designed and delivered to underpin the new IT infrastructure, including hosting Whistles’ new core servers from Retail Assist’s Northampton Data Centre and technical and application support.
With only three in-house staff looking after IT, e-commerce, logistics, payroll and finance systems, it was essential that any systems were low maintenance.
David Mold, IT and logistics director at Whistles, says: “From the new system, we will get clear SLA-based reporting, so the ability to introduce these service levels is one of the major improvements over the previous system. As our new solution was designed for us, responsiveness to issues has increased, and we expect we’ll be able to drive call volumes downwards.”