Industry Update: SCM

As in many industries these days, controlling costs is foremost on the minds of manufacturers in the market for supply chain management (SCM) technology. As the global supply chain continues to expand, companies are looking to employ software that can help manage their transportation networks as a single entity — for cost as well as control and visibility reasons, says AMR Research vice president John Fontanella. According to AMR's recent study, "The Supply Chain Management Spending Report, 2006-2007," U.S. manufacturers juggle more than 30 contract manufacturing relationships on average, and to help manage this complex web of relationships, 27% of firms with $1 billion or more in revenue review their supply network on at least a semiannual basis. Following a boom in the late 1990s, the SCM market experienced a downturn; today, the approach to SCM is "pragmatic," according to AMR, "with most companies building an SCM infrastructure based on a foundation of ERP investments," according to the recent report, "The Supply Chain Management Applications Report, 2005-2010." Fontanella says that major ERP vendors including SAP and Oracle appear to be "doubling back and refocusing" on gaps in the supply chain execution area in particular. He cites as examples Oracle's new global trade module and enhanced transportation management features and modules expected from SAP later this year in the latest release of its mySAP.com e-business platform. On the planning side, Fontanella says the ongoing recovery of SCM purveyor i2 Technologies is the big news these days, as the company continues to grow its market share as well as its revenue and profitability. Market Trends
"Manufacturers are facing increased complexity and risk, which is hindering their ability to grow profitably," says Ken Ramoutar, director of applications product marketing at SCM vendor Sterling Commerce. AMR's Fontanella agrees that risk remains a big issue for manufacturers, especially in terms of inventory optimization: where and how much to hold are paramount concerns, he says. Fontanella also calls out global trade management and the need for compliance with government regulations as major trends in the SCM space. Nicole German, vice president of marketing and communications for SCM vendor Descartes, echoes this, pointing to global adoption of standards-based logistics practices both for improved communication and streamlined business processes. Other trends Descartes has identified include:

• The procurement of end-to-end (source-to-consumer) solutions that can be implemented application by application to prove value and fund each successive step of implementations.
• The adoption of pay-as-go-you, subscription-based pricing, and on-demand, software-as-a-service offerings that reduce operational and financial risk. AMR's Fontanella contends that growing interest in software-as-a-service (SaaS) supply chain applications is due mainly to manufacturers' desire to reduce cost complexity in their software deployments, as well as increase speed to implementation.
• The procurement of multimodal, multi-process logistics networks that manage multiple channels (air, ocean, truck, contract carrier and private fleet) and multiple business processes through the same network, globally.
• The continued trend of moving from manual or paper-based practices to digital or electronic for end-to-end supply chain management. Fontanella says that some manufacturers today can count their supply chain partners in the thousands — for these companies, using technologies and services that allow electronic transactions with their trading community has become a necessity.
• A focus on business compliance through streamlined customs and border control document administration and business process management.

Ramatour adds that Sterling Commerce has noted the following with regard to increased complexity and risk in the supply chain for manufacturers:

• Increased outsourcing, offshoring, and onshoring efforts have created more complex, and often extended, supply chains. The result is more complex tradeoffs in sourcing costs, lead times, and logistics costs.
• Rising energy costs have added complexity to efficiently managing logistics operations and the traditional customer service-versus-cost tradeoff.
• Increased demand for a unified cross-channel experience. Retail cross-channel efforts are putting increased demands on consumer goods manufacturers serving those retailers. Additionally, some savvy manufacturers are incorporating cross-channel processes into their supply chain operations to compete directly with retailers.

1. IFS Applications, the vendor's suite of more than 60 Web-based components (86% of MA's SCM functionality supported)

2. Oracle Applications, the vendor's integrated ERP package comprising sales, service, supply chain, and other modules (100% of MA's SCM functionality supported)

3. Plexus Online, the vendor's on-demand "manufacturing performance system," including quality management, materials and inventory purchasing, and receiving/tracking modules (79% of MA's SCM functionality supported)

4. SAS Institute's SAS Systems, which enables strategic sourcing through an integrated set of data management and analytic applications designed specifically for the procurement professional (44% of MA's SCM functionality supported)

5. IQMS's EnterpriseIQ manufacturing suite, which combines real-time front office and shop floor data with SCM, accounting, CRM, and other functions in one database (30% of MA's SCM functionality supported)

6. Information Builders ' WebFOCUS 7, the vendor's integrated enterprise business intelligence platform, makes manufacturing data available, accessible, and meaningful to every person or application that needs it, on demand (17% of MA's SCM functionality supported)

7. GE Fanuc's Proficy Enterprise Asset Management, a set of configurable and diverse modules that use the Microsoft Project interface, providing reporting and monitoring functionality (10% of MA's SCM functionality supported)

8. Visibility Corp.'s VISIBILITY.net ERP suite, targeted to order- and project-based manufacturers, a scalable suite of integrated modules complemented byservices promoting rapid return on investment and low total cost of ownership (25% of MA's SCM functionality supported)

9. Abacus Data Systems ' ADAMS ERP package, designed for discrete, mixed-mode manufacturing companies, with a single-source solution including manufacturing, distribution, financial, and customer relationship functions (35% of MA's SCM functionality supported)

10. Apriso Corp.'s FlexNet system, a platform that extends ERP functionality by linking the plant floor to the warehouse and supply chain, based on a service-oriented architecture (58% of MA's SCM functionality supported)