The concept of big data is becoming increasingly important in the supply chain as organisations seek to make use of the massive amounts of data coming their way from customers. How will ERP systems cope, asks Malory Davies.
Big data is rapidly becoming the IT issue of the year. Only last month, Forbes, the US business magazine, carried an article entitled “How big data helps stores like Macy’s and Kohl’s track you like never before”.
Companies have been dealing with increasing amounts of data for years, but the rapid growth of the internet and the arrival of sophisticated mobile devices means that companies are collecting massively more data than even five years ago. That’s Big Data.
It’s now estimated that 80 per cent of all the world’s data has been generated in the past two years. Those who can manage this data and make use of it stand to gain a significant competitive advantage. For example, it allows retailers to personalise offers to customers rather than simply push out blanket promotions.
Clearly, the impact of this will be felt all along the supply chain. John Hammann, industry value engineer for manufacturing at SAP, says: “There is no doubt that the amount of data organisations are collecting is growing all the time, and as machines and devices start talking to each other in what is known as machine-to-machine (M2M) communication, this is set to grow even further. Sales of smartphones and tablets have now begun to exceed those of PCs so connectivity between these devices will become more important than ever if organisations are to gain the maximum benefits of improved visibility and agility.
“The impact of analysing big data within the supply chain is that it enables organisations of all sizes to make the most of the untapped information within their systems, thereby giving them the opportunity to improve customer service, productivity and ultimately, profit.
However, to achieve this insight, businesses need a platform that has been specifically designed to handle the high velocity and large volumes of data that can be generated from M2M-connected assets.
Malcolm Fox, vice president of product marketing for Epicor, points out that analytics can help create a clear picture of these benefits including how the business is performing, and competitive aspects such as customer behaviour and production capabilities.
Managing data more efficiently can lead to potential increase in revenue while being able to manage supply chains more effectively.
And Benoît Gruber, ERP market specialist at Sage’s Mid-Market Division, says: “The need for tools to facilitate decision-making is the number one driver for new software systems in businesses, or for re-working existing systems. And with good reason, since the current economic climate leaves no margin for uncertainty. It is now essential for all enterprises, irrespective of size, to equip themselves with effective business management tools.
“Decision support, integrated into ERP, empowers companies to intuitively exploit the richness of their management data. Instant queries and results, in real-time, optimise responsiveness. Predictive analysis functions help anticipate upcoming trends and fine-tune action plans. So all personnel, in any business area, can make informed decisions based on reliable and customisable indicators for their own activity-related needs, such as changes in revenues and expenses, client rankings, and stock rotation.”
SAP has developed the HANA platform to provide the processing performance and algorithms to conduct real-time analysis. Hammann says: “Beyond big data, predictive analytics is now offering supply chain organisations the ability to use historical data to predict future events and market trends and report this back to the wider business. The end result of this is that organisations can respond to incidents quicker and more proactively, for example shortening timescales for warranty and returns processing.”
Access Group has developed Insight, a business intelligence product that links easily with the its Access Delta WMS. Access’s Ian Roper says: “One can readily look at, say, 12 weeks of data, map this onto trend analysis graphing, and identify and drill down to any anomalies – such as an unusually large order, pre-Christmas stocking by a customer.
“If you have real-time visibility of your stocking and warehousing, you can start using Business Intelligence tools: you can analyse trends, identify seasonal fluctuations, and develop true forecasting of forward stock needs based on analysis of historic data and, derived from that, the likely impacts of proposed marketing, promotional and other activities.”
ERP systems act as the central core connecting all areas of the supply chain – procurement, manufacturing, sales and transport for example – and bring all this information together to provide enhanced visibility of the entire chain.
However, says Fox, businesses today face increased pressure to modernise the user experience as mobile, analytics, social web interaction, and the cloud have increased user expectations. Likewise, organisations place greater demands on their business software as they look to: establish themselves as preferred trading partners; remain nimble in times of economic uncertainty; or extend services and products to new markets and geographies.
“The role of ERP will see opportunities to extend collaboration to the company’s supply chain and external customers as a result of new technology forces impacting the way users interact with systems and emerging models for software deployment. With the proliferation of smart phones and tablet computers, prevailing attitudes lean toward being able to access and interact with information anywhere that Internet or cellular network coverage is available.”
And Fox argues that this means that business software must contain embedded business intelligence, be device independent and provide tools to support the development of purpose-built applications.
If big data is one supply chain challenge, there are plenty of others. Gruber points out that the ERP field can be slow to change, “but the last couple of years have unleashed forces which are fundamentally shifting the entire area.
Hammann agrees: “Volatile markets and growing logistics complexity mean that supply chain professionals are under constant pressure to manage and maintain their supply chains. Organisations must adapt to new business models – and the technology that supports them – to keep pace with market changes that are underway. They need business processes that are more flexible, supply chains that are more dynamic and faster access to data, which has a direct impact on their ability to orchestrate and execute their supply chain effectively.
“Organisations today are operating in far more competitive markets than ever before. This is being driven by a number of factors, one of which is the demand for customisation. For example, in the manufacturing industry, customers are demanding products that are highly customised, if not specifically tailored, to their individual needs. Manufacturers are therefore seeing a rise in the ‘batch of one’ orders. As lot sizes shrink, manufacturers find that moving production to emerging countries with cheap labour costs may no longer be the path to long-term success.”
Gruber says: “Adoption of ERP systems has in the past been inhibited by a lack of acceptance on the part of users. Now, users have a different relationship with technology as individuals, and are quicker to see the operational benefits.
“In the coming year businesses will quickly embrace mobile ERP, not just for reports and dashboards, but for conducting key business processes.
“Traditional siloed ERP systems, will be replaced with technology that is as fluid, interconnected, social and mobile as the front office has become within the last year.”
Strategy: Can you do ERP in the cloud?
The concepts of cloud computing and software as a service took their time to gain traction in supply chain, but in many areas they are now the accepted ways of operating.
But putting the ERP system in the cloud? That’s a bet-the-company decision and not surprisingly organisations have been cautious of jumping too soon. Epicor’s Malcolm Fox says: “For some time organisation have been hesitant to house critical data in the cloud mainly due to the perception that this valuable information is more secure on-site rather than the intangible space outside their realm of control.
“However businesses have been willing to host systems with a smaller footprint such as CRM, HCM and sales force automation, and this has been demonstrated through the quick adoption of these cloud-based solutions as opposed to ERP involving manufacturing or warehouse operations.
“Now, SaaS deployments are starting to gain traction but large businesses are cautious to deploy the SaaS model for core business systems such as ERP due to the complexity in the range of different applications. In fact there is almost a direct correlation between business process complexity and the adoption of SaaS deployments,” he says.
Cloud technology is not a revolution, it’s an evolution that materialises the maturity of the internet, points out Gruber, who reckons that “adoption of the cloud is a long journey, but it will certainly become a standard in one or two decades. The cloud has been advancing steadily into the enterprise for some time, but many ERP users have been reluctant to place the company’s crown jewels in the cloud. However, those reservations have gradually been evaporating as the advantages of the cloud become more apparent.”
Hammann is even more confident. “I would argue that all supply chain organisations are looking at cloud, and I would even go as far as to say that most of them now have a cloud-first policy when it comes to implementing new systems.
“The use of cloud within the supply chain will allow for better and broader decision-making. The integration enabled by cloud-based applications and processes will enable faster and more effective cross-enterprise and extended supply chain analysis and reporting. The explosion of apps will also drive further adoption of cloud within the supply chain as more and more apps are delivered to both staff and customers through the cloud,” he says.