For years, manufacturers have turned to supply chain event management (SCEM) software to help cope with all manner...
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of disruptions to their supply chain, but dedicated software is likely unnecessary, in fact, the term itself may be obsolete, according to industry experts.
While it is possible to buy a separate SCEM tool package from supply chain vendors like CDC Software, Logility and Manhattan Associates, experts say there's a good chance the functionality is already built into a manufacturer's existing supply chain management (SCM) software, transportation management system (TMS) or analytics services.
Is supply chain event management an obsolete term?
SCEM's integration into larger business applications may be so common, in fact, that industry analysts wonder whether the concept itself is out of date.
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"I think in some ways supply chain event management is an old term," said Simon Ellis, practice director of global supply chain strategies at IDC Manufacturing Insights, based in Framingham, Mass. "It was all the rage five to seven years ago, but then it died down a bit. I think event management kind of became built into other things. It's really part supply chain visibility, part getting the right messages to the right people at the right time." Most of the big vendors, such as SAP and Oracle, include event management tools as part of their ERP systems, he said.
According to Ellis, much of the functionality that was once considered unique to SCEM software is now found in many business intelligence (BI) or analytics systems, including access to scorecards and key performance indicators (KPIs) to measure a company's responses to supply chain events.
"I tend to be of the view that, frankly, at the end of the day, you don't need a layered event management tool, not with those analytics being embedded in other kinds of software," Ellis said. "Event management isn't trivial, but I think manufacturers are better off getting that functionality from the vendors that supply them with other systems."
SCEM and transportation management systems
Evan Armstrong, president of Stoughton, Wis.-based Armstrong & Associates Inc., also views event management as part of a larger system.
"What I see available out there in terms of event management tends to be a feature of transportation management," he said. "If things go wrong during shipping, there are customized alerts built into the TMS though dashboards or emails, usually triggered by EDI [electronic data interchange]."
Manufacturers that outsource their transportation management needs to third-party logistics (3PL) providers should expect those providers to include event management tools as part of the service, Armstrong said.
"Event management is one of the main reasons companies work with 3PLs," he said. "Transportation takes place outside the four walls of the warehouse or factory; much more can go wrong. You can blow a tire, drivers can get sick… 3PLs bring value to the table by working out these problems."
Whether a manufacturer should look for event management in its own in-house TMS software or turn to a 3PL depends largely on the scale of the operation, Armstrong explained. "You might have shippers or manufacturers that handle TMS themselves, maybe with [the] help of freight companies, but when there's a global supply chain, more lean toward 3PL," he said. "On the international side, you really need a 3PL that has operations in foreign countries and can handle events in ocean and air transport and freight forwarding."
Selecting SCEM software providers
"SCEM is a capability within the broader supply chain management process and usually ties to an overall desire for improved supply chain visibility and control," said Michael Dominy, research director at Stamford, Conn.-based Gartner Inc. "Getting the most out of SCEM requires a clear strategy and business case that lays out how, where and why SCEM will help you improve supply chain performance."
Dominy suggests manufacturers answer the following questions before selecting an SCEM provider:
- Where do we have challenges in the supply chain process and how will SCEM help us address the pain or enable our strategy?
- How will supply chain performance improve if we start tracking supply chain events? If we track and share events with our suppliers, will that enable them to plan better and lower their operating costs? If so, does that translate into savings for us or some other benefit, such as shorter lead times?
- What events should we track? All of them across all SCM processes, or just those for order fulfillment or internal operations? What about events occurring at supply chain partners?
- How will we use the event information? Will we feed events in real-time to other systems or to our supply chain partners? Will we analyze those events to drive better plans?
- Will we use the SCEM capabilities that are tied to each of our SCM applications, or should we use event management capabilities available from a platform or integration vendor?
Armstrong agreed with the need to prioritize supply chain events. "As a manufacturer, you have to define your KPIs [key performance indicators] and get those plugged into the system and tracked," he said. "Metrics like time delivery percentage, damage ratio, inventory accuracy within warehouses and stock to dock, to name a few. So out of maybe 30 possible metrics a tool can track, maybe six of those are really important."