Already struggling to keep systems integrated and up to date, manufacturers are facing new pressures on their supply
chain management (SCM) operations resulting from globalization and the recession.
While software vendors are quickly bringing new software as a service (SaaS) logistics and transportation management offerings to market, other trends are affecting global supply chain management trends.
Outsourcing and ever-shortening product lifecycles, along with globalization, have put a new kind of pressure on supply chains, according to Mark Averskog, director of solution management within SCM at SAP. As manufacturing has shifted overseas, supply chains have become longer, with more time between when suppliers make products and when they're delivered to the manufacturer.
"The pipe is very long, and there's a lot more inventory in the pipe," said Anil Gupta, principal of Applications Marketing Group. "A lot of companies are going through the conversion of making changes in technology to make the supply chain more flexible."
Manufacturers want a better handle on how their supply chain is working and how it will respond to future changes, especially after the global economic downturn.
"More and more customers are asking about visibility," said Elinor Price, director of product marketing at Aspen Tech. "It's in two areas: the visibility of what the supply chain [will look] like in the future and the visibility of what's happening in the supply chain right now." Price also sees the supply chain acting as a foundation for business intelligence platforms. "We're seeing a lot more people looking at the supply chain with an end vision around analytics and business intelligence," she said.
Global supply chain trends include event management, systems integration
Companies are looking for more flexible and responsive supply chains, according to Nigel Davies, vice president of supply chain at CDC Software. "What's emerging in manufacturing supply chain management is the principle of enterprise event management -- the collective monitoring of end-to-end processes," Davies said. Enterprise event management lets manufacturers monitor what's going on in real time, he said, "and take corrective action before it's too late."
Integrating SCM with other systems is still a top priority for many manufacturers.
"A lot of companies don't have a fully integrated solution," said Robert Axenrod, president of Millbrook Consulting Group. "They are able to cobble pieces together, but it's not seamless." He said, for example, that customs-related tools in international shipping are often not well integrated, and many companies don't have warehouse actions tied in well with the rest of supply chain management software. "At the end of the day, tying them together can be a costly endeavor," Axenrod said. "People don't make the investment."
Other manufacturers are happy with the options offered by their integrated SCM implementations. Before implementing SYSPRO's SCM software, "anything manufacturing was done on paper or in a separate system," said Richard Gordon, president and CEO of Glenview, Ill.-based Chocolate Potpourri, a maker of gourmet chocolates. The next step for the small business's SCM software will involve adding more functionality to round out information within the system -- adding photos to product descriptions, for example.
SaaS playing its part in future of supply chains
SaaS or cloud computing has also made a splash in the SCM market.
"There will be a move toward a cloud computing approach," Axenrod said. Cloud computing can help improve applications that might not all be functioning at the same level.
"Certain parts [of a supply chain software implementation] are best in class," he said. "But the trouble with a fully integrated ERP system is that every module is not best in class. You're going to make sacrifices, and supply chain is an area where you can't make sacrifices."
"[At SAP] the general strategy is to try to unify user interfaces," Averskog said. "Interface technology will all eventually be Web-based. It's kind of a mixed bag right now."
But SaaS isn't necessarily for everyone. Chocolate Potpourri's Gordon said his company's network does what he would want a SaaS product to do.
"The key people in the company, if we're at a computer with Internet we can get to SYSPRO using the VPN or remote desktop," he said. "We're kind of there without doing the SaaS approach."
Gordon admits that SaaS could help them with multi-location facilities, letting all systems be centralized. He advises using technology only where it's appropriate.
"Don't get sucked into the bells and whistles of the software," he said. "They're cool, but are they relevant to running your business?"
Chocolate Potpourri has software modules that might do 30 different things, Gordon said, "but we're only using one of those because that's where the business need is. We're just using our software for things that run the business."
About the author: Christine Cignoli is a Boston-based freelance writer who covers IT infrastructures and storage technology. She is a regular contributor to SearchManufacturingERP. Contact her through her website.