As in other areas of their business, many manufacturers are finding that applying technology to automate their supply chain processes can help improve their cash-to-cash cycle management, keep customers and partners happy, and increase opportunities to improve overall profitability in transportation and logistics, the last link in the supply chain.
One prominent trend in the supply chain space is the continuing growth of demand for inventory optimization and sales and operations planning (S&OP) technology, according to market research firm AMR Research. Manufacturers and suppliers are recognizing the value created by inventory optimization tools, such as better performance at the store-shelf level, reducing inventory while maintaining high customer service levels, improving working capital, and reducing risk, AMR has found. Universal factors, such as managing costs and pressure to increase competitiveness in a global marketplace, are driving demand for supply chain execution (SCE) applications. Especially in light of today's volatile fuel costs, transportation in particular has moved to the front of executives' minds in terms of cost reduction.
Logistics, warehouse, and transportation management software provider Accellos Inc. has noted an uptick in interest from its manufacturing customers for transportation management and optimization tools. In the face of rising fuel costs and a scarcity of drivers, among other factors, manufacturers are looking to these tools to help facilitate a better return on their freight dollars, says Ross Elliott, executive vice president and chief technology officer at Accellos.
Supply chain software provider Logility reports similar interest. In particular, customers are looking to improve transportation and freight accounting processes to realize cost savings. Since many companies typically lack a strong audit process, they have tended to outsource the function, says Karin Bursa, vice president of marketing at Logility. However, with the use of freight audit and payment software, customers can bring the function back in house and, in many cases, reduce their billing variance thresholds significantly.
Another key to reducing overall cost while improving customer service is the availability of performance management capabilities within transportation planning and management software, Bursa says. Such tools collect performance data and can alert workers in the case of an unplanned event so they can notify customers to expect a late delivery or a split order, for example, saving both time and angry calls from surprised customers.
Some SCE technology vendors also have incorporated dashboards into their offerings to track a company's "carbon footprint" and other environmental impact metrics, as many manufacturers begin to implement green initiatives and look to track transportation costs -- regardless of whether they're shipping across the world or to the next state, says James Le Tart, director of marketing at supply chain optimization software provider RedPrairie Corp.
Another area requiring better supply chain visibility concerns the shift from a "push" to a "pull," or demand-driven, economy. In pursuit of this model, manufacturers are looking to gather demand signals to determine how much of which products to produce and ship to retailers. If you're not the ultimate retailer, Le Tart says, then you must collaborate with the retailer to pull signals in to the demand forecast. Technology that addresses visibility from this "last yard" of the supply chain (from the backroom onto the store shelf) looks at the store shelf from a point-of-sale standpoint, passing accurate store data back up to manufacturers and suppliers.
The recent spate of product recalls has translated to renewed demands for supply chain visibility. As such, applications for product genealogy and tracing have been in particular demand from RedPrairie's customers, Le Tart says. In the event of a recall, it is important to know which lots are affected; if this information is not available, supply chain managers can be forced to pull an entire shipment, resulting in a costly and logistically disadvantageous situation.
A related trend RedPrairie has identified is a greater emphasis on quality assurance testing both at the source and at the destination, especially in food-related industries, in which a second test is required to ensure that no contamination occurred during shipping. In a typical supply chain scenario, a product created at a manufacturing facility is touched by multiple hands before it ends up at a distribution center. Since holding a shipment up at the source until testing is complete ultimately results in extra inventory, one answer is to keep the shipment "on hold" while it continues to move through the supply chain, but before it's shipped to the final customer.
Manufacturers that produce goods offshore, meanwhile, require visibility at the container level and need to manage the receipt of goods at the warehousing stage; these manufacturers typically are most interested in point-of-origin and destination-tracking technology, including RFID, and in many cases EDI or VAN (value added network) services, according to Accellos' Elliott.
Finally, maintaining positive relationships with carriers can help buffer the bottom line, Logility's Bursa says. Logility customer McCain Foods recently implemented processes to become "carrier-friendly," with a goal of becoming more attractive as a customer to the carriers it works with. This involved optimizing load, reload, and turnaround time for carriers. Better relationships with carriers, the thinking goes, will lead to happier customers as well as better leverage when it comes time for rate negotiations. Improved predictability in their scheduling process tool also helps McCain and other customers work toward helping carriers achieve zero "dead head" miles (empty trucks) and increase the number of productive miles on their rigs, Bursa says.
Here's a look at the 10 most-often compared supply chain execution (SCE) products within the Product Comparison Tool on ManagingAutomation.com (6/1/07 - 8/31/07), with information on the degree of SCE functionality that each product supports, according to MA's directory database:
1. IFS Applications, a suite of 60 Web-based components including production execution and warehouse management functionality (90% of MA's SCE functionality supported)
2. Oracle Applications, Oracle's platform including order management, warehouse management, and transportation management (78% of MA's SCE functionality supported)
3. Infor ERP SyteLine, which ties manufacturing operations and core business processes together with suppliers and customers (86% of MA's SCE functionality supported)
4. FlexNet by Apriso Corp., which includes WMS functionality for managing cross-docking, receiving, warehousing and shipping operations, while streamlining the flow of materials through the extended supply network (60% of MA's SCE functionality supported)
5. Plexus Online, by Plexus Systems, an on-demand manufacturing performance system containing SCE modules such as customer shipping, shipping labels, packaging, warehouse picking and staging, customer returns (RMA), drop shipping, and auto invoicing (54% of MA's SCE functionality supported)
6. CMSi5 from CMS Software, an integrated ERP package for supply-chain intensive manufacturing applications, with features for security, supplier collaboration, customer collaboration, shipping schedules, and advance shipping notices (58% of MA's SCE functionality supported)
7. iristaWarehouse, from HK Systems, which prioritizes, directs, and confirms activities based on the real-time conditions and constraints of space, equipment, inventory, and personnel (47% of MA's SCE functionality supported)
8. TCM, from WorkWise, with supply chain functionality for purchasing and receiving materials, managing multiple warehouse inventories and processing customer orders from initial entry through shipping and invoicing (66% of MA's SCE functionality supported)
9. Ramco Enterprise Solutions, which supports catch weight, lot tracking, attribute management, shelf life, multiple pack sizes & containers, product costing, and product conversions applications (54% of MA's SCE functionality supported)
10. DLx Warehouse from RedPrairie, which provides enterprise-wide logistics visibility, event management, performance measurement, logistics command and control, and supplier collaboration (40% of MA's SCE functionality supported)