The supply chain execution market is becoming increasingly complex as suppliers have added functionality to the systems. Many now offer a complete suite of software encompassing warehouse management, transport management and labour management, as well as broader supply chain visibility solutions to offer customers a one stop IT shop.
Industry trends such as global sourcing and multi-channel retailing are having a significant impact on the market.
Hugh Murphy, European marketing manager at 3M Supply Chain Solutions, points out that as internet sales have now grown, companies have been going back to the drawing board to re-think how they fit within an overall strategy.
“Mergers and acquisitions are another fact of life that play in many of the projects we see in the marketplace. When they grow by acquiring a series of different companies with different cultures and processes, several businesses we work with are using IT as a driver or a catalyst to bring the different businesses together and create a common set of business processes that will allow them to compete successfully.
“The other group of trends is around where global business is in the cycle of implementing big global ERP systems. I think we are starting to see what you might call ‘the era of compromise’ coming to an end. Most global businesses have been through some big ERP implementation, and often with visibility and impact right to the highest levels. So business people – not just IT people – are now getting to know what ERPs can do, and what they can’t. This in turn means that some big companies which previously had an ‘ERP-fits-all’ IT strategy are allowing their operational teams more flexibility to invest in a best-of-breed system that can really do what they require.”
BCP supply chain director Tony Beales points out that a lot of current products are reaching the end of their life cycle. This is the result of the busy implementation period prior to Y2K. In addition, some existing suppliers have changed their corporate focus moving from SCE into other areas.
Steve Corbet, vice president – business development for EMEA at CargoWise EDI, says innovation is driven by being able to provide the infrastructure and functionalities required by the marketplace today, allowing companies to keep ahead of the technology curve – being at the “leading edge” not the “bleeding edge”. “The buzz is still around visibility tools, web enabled communication and collaboration tools.”
And James Hannay, managing director of Zetes UK, says he is seeing increasing numbers of companies looking to optimise their supply chain processes, for instance by securing an additional one per cent efficiency gain through deploying wireless technologies to enhance performance levels, which, over a large volume can translate into big financial savings.
“Use of wireless voice recognition systems within the supply chain will become much more widespread. Zetes has found the UK to be slow to adopt voice until now compared with continental Europe, but this year has seen massive interest which will continue throughout 2008. In addition we will see the coupling of complementary technologies as companies seek to make even greater efficiencies. For instance, for companies who have already invested in voice systems, there is a very sound business case for implementing RFID in addition. Or vice versa, for companies who have already made a case for implementing RFID in the future. This is because combining these two real time technologies will fully optimise productivity and accuracy because the voice system can act as a means of verification for fully automated RFID. Another benefit is the ability to simultaneously communicate and handle product with hand and eyes free operations.
Zetes is also working on the integration of voice technology within SAP warehouse applications and has completed a project of this type with Coca Cola. In this application, the technology enables the workers in the distribution centre to communicate directly with SAP by speaking and listening.
Hugh Murphy of 3M sees a number of technological innovations coming to market over the coming year. 3M’s newly-launched HighJump Warehouse Advantage-45 product allows smaller businesses to use the same technology that traditionally has been reserved for tier-one companies.
Tony Beales of BCP sees closer integration between the systems operated by the various participants in the supply chain to improve efficiency and reduce costs. For example, electronic transmission of price changes, new product details, shipping notifications, invoices and so on from supplier to customer and electronic ordering by customers.
Chess argues that specialist WMS packages are likely to offer more functionality, features and benefits than the warehouse components of “total solutions” supply chain and ERP packages.
Alex Mills of Chess says: “The first objective for any WMS is to support accurate and efficient stock handling and management. There are many reasons why systems may fail to achieve this apparently simple objective. Some businesses use older or unsuitable solutions which may be impractical or too expensive to enhance.
“Others use ERP-based solutions, or bolt-on modules from an ERP supplier, which may have a place but generally do not include the advanced features of the best standalone WMS from the specialist vendors,” says Mills.
A key added value service, says Beales, is sector specific knowledge. Niche products have an advantage over generalist offerings because implementers have experience and understanding of the industry in which they are operating. Good suppliers will evaluate new technologies, filtering out inappropriate ones while developing and tailoring those which can benefit their clients.
Ensuring that a system provides an adequate return on capital is critical. Steve Corbet points to a clear Service Level Agreement for both parties to understand their responsibilities, combined with continuous quality improvement approach.
This involves being realistic on short term ROI and focusing on mid to long term ROI as the result of the process engineered and standardised approach that a modern system will bring to their whole organisation.
James Hannay argues that time spent at the outset to define the project is always beneficial in ensuring an adequate return on investment. “From the start it is critical to understanding what are the real benefits – direct and indirect – of implementing a system. Direct benefits are speed, efficiency, accuracy.
“Indirect benefits are lower staffing costs, less damage, fewer returns. Another aspect is to involve the users as early into the commencement of the project as possible, because their buy in is important to the acceptance and overall success of the implementation.”
Assessing potential suppliers can be a difficult issue for some. Howard Turvey, managing director of Proteus Software, believes it is important to consider the ‘soft factors’. “Sometimes the selection process becomes a victim of what we call the ‘iceberg effect’. In comparing alternative solutions there are three items that are very visible; price, functionality and technology, just like the top of the iceberg. The process must give due weight to the other aspects that are below the line, those that are less visible, and less easy to measure.
One difficulty is that the ease of measurement has almost an inverse relationship to the importance of those items to the long-term success of the system. Unless care is taken the incorrect items will be given priority within the selection process because they are more visible and easier to measure, says Turvey.
“You are not buying a pair of shoes that can easily be thrown away. One of the dilemmas in the selection process is that any functionality assessment is completed at an instant in time, and the result may not reflect the relative merits of the systems over their lifespan. Systems are always leapfrogging each other in functionality terms as the release cycles for suppliers are different. What is important is to assess the long term commitment of the supplier to the solutions they are proposing and your market.”