The role of the supply chain execution system has become critical as organisations seek to improve the speed and efficiency of their supply chains. But, what are the strategic imperatives in the selecting right system.
The aspiration for integrated IT systems to provide complete visibility and control of the supply chain is increasingly becoming a reality. Supply chain execution systems have grown out of the core warehouse management system with new functionality being added every year.
Having an extensive customer base and one single logistics platform enables systems to be executed on one database, ensuring that data is uniform and centralised, says Andy Murden, business development consultant for logistics at Kewill. “This also drives the speed of interaction and decision making.”
Mike Tatara, product marketing manager at Epicor Software, highlights the importance of visibility, control and agility. “A correctly deployed SCE should be able to represent reality and provide information in real-time, this means you can be extremely responsive and agile, as well as move to a much more lean manufacturing operation.”
Claire Umney, general manager of AEB International, picks out the cost saving benefits: “Software can deliver cost-savings in key areas of supply chain execution, e.g. order fulfilment, stock optimisation, distribution planning, freight cost control and regulatory procedures. This helps companies gain a competitive edge. When used in conjunction with a business intelligence solution, the cost reductions achieved via such systems can be even greater.”
But customers are always looking for the latest innovations in the development of the technology. Stephen Szikora, IT director at NFT says: “Automation of processes via workflow solutions, exception management by event alerts and trending analysis are where the main players focus in innovation. Wherever possible, the risks attached with very lean flows should be reduced or made consistent by automating, thereby enhancing the opportunity to remove altogether.
“Advancements in process design and workflow to system engineering drive efficient, reproducible methods, which, like neuro pathways, become embedded. I feel that the key innovation in this area is the ability of systems to be flexibly configured to allow change without requiring major modification and the associated pain of implementing upgrades.”
Murden, argues that: “Pushing out the boundaries of the four walls and receiving information flow back from the field (delivery updates) to offer instant customer visibility has always been important. With the advent of smartphone, applications are being designed to allow updates from these devices instead of stock units from traditional equipment sellers.”
Jan-Paul Boos, vice president sales EMEA at RedPrairie, says: “From a labour perspective, the emergence of accurate labour forecasting, budgeting and scheduling engines are enabling companies to align labour resource with demand and to ensure that they have the right people, with the right skills, doing the right things, in the right way, in the right place, at the right time.”
Umney, points out that with many mature SCE suites available on the market, innovations are mainly geared towards meeting new business requirements, e.g. with regards to software delivery options such as SaaS, hosted systems or client installations, all of which cater for different business models, strategies and requirements, and also with regards to more modular architectures with functionalities that customers can pick and choose in accordance with their business processes and investment capabilities.
“Innovative solutions today also consider the different financial business strategies and offer various models for software licensing, financing options, and the possibility to rent software on a transactional basis rather than to invest higher upfront costs. Such financial options additionally enable companies to gain agility and secure cash-flow.
“Other innovations can be found in the area of e.g. transport management, which is an integral part of any supply chain execution. These nowadays address the increased awareness of supply chain impacts on the environment and are focused on reducing the carbon footprint by lowering carbon dioxide emissions,” says Umney.
Software as a service has gained a significant foothold in the market but AEB sees more growth for hybrid technologies. “In this scenario, client server solutions will be complemented by relevant SaaS modules that extend existing functionalities to fit specific business needs with minimal investment and no system installation efforts,” says Umney.
“To what extend SaaS solutions will continue to be deployed for supply chain management processes depends on a company’s level of process standardisation, because SaaS solutions are not ideally suited for highly customised and complex processes, and on how critical these processes are to competitiveness.
“The two most important factors that need to be considered when implementing SaaS solutions relate to how well SaaS solutions are integrated into existing workflows. Companies deploying SaaS solutions successfully are more likely to be deploying applications that support smooth interfacing between the existing IT landscape and the SaaS application. They are also more likely to work out clear process definitions between the SaaS application and the existing IT structure.
“Both preconditions are critical to success: SaaS solutions should not just be an add-on but, rather, an add-in to enable continued optimisation and facilitate growth potential,” says Umney.
With companies coming under increasing pressure to control their carbon footprints, they are looking to supply chain systems not simply to provide visibility of their carbon usage, but also to manage it.
“Warehouse management systems can minimise the use of packaging by directing pickers to pack products efficiently into shipping cartons as they pick,” says RedPrairie’s Jan-Paul Boos.
“In addition to reducing the amount of packaging, this can also eliminate the need for separate packing stations, removing a potential bottleneck from the fulfilment process and reducing shipping costs by more efficient use of carton space.”
Murden, highlights the role of transport and freight systems in selecting a correct vehicle type for loads and optimising the miles travelled.
Innovative transport management systems can contribute significantly to reduce carbon footprints and enable companies to save costs, says Umney.
“It’s important for such solutions to fulfil both requirements: Lowering the impact on the environment and at the same time streamlining operations and reducing costs.
“Optimising the distribution network, consolidating shipments and allowing firms to select more energy efficient modes of transport seems the logical choice.
Umney argues that the most effective approach is a combination of supply chain management (SCM) software and software that calculates CO2 emissions. SCM software, which includes TMS and other supply chain execution systems, allows companies to collate data about mileage, transport routes, stock levels, distances and delivery requirements, which can then be reconciled with the relevant emissions benchmarks to help estimate the overall carbon footprint.
Looking ahead, Ian Roper of Access Delta points out that despite its high visibility and physical presence, warehousing remains an undervalued area of strategic supply chain planning and execution, “an SCE Cinderella, if you will”.
However, the growing trend to embed best of breed WMS systems in an integrated ERP environment is already having a positive effect, he says. “Increasingly, warehouse management technology allows warehousing processes and workflows to be continuously and measurably improved to enhance supply chain performance.”
Roper points out that warehouse business process improvement can only be used to boost supply chain performance and cut costs meaningfully if the relevant WMS database and application interfaces are open and can be integrated with any SCE or ERP system; and if the WMS environment incorporates metrics that allow the organisation to track its warehouse performance, in real time, against user-defined customer, warehouse, supply chain and other KPIs.
“Better also that this type of KPI or ‘performance dashboard’ management tool can be plugged into any ERP, SCE and WMS system,” says Roper.
Case study- Wincanton focuses on speed and agility
Wincanton has worked with Manhattan Associates, to develop a warehouse management system specifically for use in its shared user sites.
Craig Sears-Black, managing director of Manhattan, points out that the market has been changing with the emergence of businesses focused on multi-channel retail.
That has put the onus on logistics providers to respond quickly, economically and in a safe way. “The market is forcing people to be more reactive,” he says.
The idea is that it increases speed to market and minimises upfront investment while providing all the core functionality of a large-scale WMS including inventory management, item tracking and performance reporting. And of course it avoids the costs of a large-scale system implementation.
Simon Deane, information services director of Wincanton, says: “Rather than bespoking solutions for individual customers we have moved to a shared platform to support multiple customers from a single instance.
He highlights the work Wincanton has done with Kiddicare, which last year chose Wincanton to provide logistics services as it moved from a predominantly online retailer to a full multi-channel operation challenging Mothercare.
Using the shared user technology enabled Wincanton to deploy the system in 16 weeks for Kiddicare. It can work that quickly because it is able to adapt existing template rather that having to start from scratch, says Deane.
This success was not lost on Morrisons, which bought Kiddicare in February 2011. So the system is now being deployed in another part of the business – the rapidly expanding convenience store operation. When Morrison’s chose Wincanton to operate its first dedicated UK convenience distribution centre in London, this IT platform was part of the deal.
Wincanton has also used the system in contracts with Premier Foods and the Aircraft Carrier Alliance. It offers standard operating procedures combined with standard integration points for systems such as Oracle, as well as legacy systems, says Deane. “It’s a very interesting product for a lot of retailers.” Wincanton has been working with Manhattan on an extension to the system, supplier performance, which it is now starting to deploy.
Sears-Black points out that a lot of work has gone into developing standard operating models over the years. “The Wincanton approach is broad enough to be standard out of the box.”
Wincanton is also talking to smaller multi-channel businesses as it is able to offer something “close” to pay-as-you-go.
Sears-Black points out that the Wincanton-Manhattan approach offers a level of flexibility that is not available with conventional PAYG systems.