Efficient supply chain execution depends on having well integrated systems. But how do you take the complexity out of integration? By Nick Allen
Research results just published by analysts, Gartner, predict that supply chain software revenue will reach $10 billion in 2014, 12.2 per cent up on 2013 and the fastest rate of growth since 2011. These are pretty impressive figures, but what do we expect to see in terms of the structure and function of supply chain IT?
And in particular, with the increasing demands placed on organisations to fulfil orders quickly and efficiently, what will be the shape of technology that supports supply chain execution?
Well, Gartner say that organisations that adopt supply chain management (SCM) software still prefer hosted or on-premises applications, due in large part to software-as-a-service SCM solutions having not yet reached functional parity with leading on premises offerings. So for the time-being at least, don’t throw out the server.
Interestingly, the report finds that near on 60 per cent of the revenue from the supply chain software market will come from existing implementations – just 16 per cent of SCM investments were first time adopters and this figure is expected to drop to less than 10 per cent by 2018.
Clearly, the trend for the future will be companies purchasing add-on functionality. But what will this do for complexity and issues around integration?
The report seems to hold clues here too: “43 per cent of the supply chain professionals surveyed indicated that, to deal with rising levels of integration complexity, they were strongly committed to a single underlying technology platform that would improve the visibility of internal processes and enable more effective communication and collaboration with suppliers and buyers.”
Chad Eschinger, research vice president at Gartner says, “this trend toward a unifying application platform is growing and will further drive sales of supply chain solutions as more companies adhere to a platform strategy.”
It would appear that companies are keen to avoid issues of integration.
Ian Roper, supply chain divisional director at Access Group, believes that companies looking to invest in supply chain execution software should seek a single underlying technology, but says: “That does not mean they should go for one product”.
He says sourcing different “best of breed” solutions from a single vendor – where the underlying technology is the same – is the best approach.
Roper explains: “We talk to a lot of organisations that say, ‘we want one supplier that does everything – we want a relationship with one technology supplier’.” He cites a common problem where clients using multiple vendors have difficulty defining the boundaries of responsibility.
“Access’s approach has always been centred on our acquisition strategy for buying “best of breed” applications. We ask ourselves, is the technology right? Is it the same as ours? Can we own the integration? Can we do the integration?
“So it’s buy, build and make better,” says Roper.
He points out that having a “best of breed” solution that can be deployed either by itself, or integrated with other applications, offers the best of both worlds. The company’s portfolio of products spans solutions for ERP, finance, HR, payroll, supply chain management, warehousing, business intelligence, professional service automation and manufacturing.
Access Delta is the company’s established warehouse management software solution. A graphical warehouse map enables accurate, real-time inventory management, and KPI technology can be used to manage warehouse and wider supply chain performance.
Systems have been developed for all types of warehouse operation including bonded, distribution, third party and manufacturing.
Roper explains that there are two key requirements driving the market at present. “People want increased efficiency and increased collaboration across their supply chains,” he says. “That means having visibility of information from the sales force, to what’s in manufacture, what’s in the warehouse, and what’s on order.”
In terms of improving execution efficiency, Roper says a growing number of organisations are looking at voice picking technology to enhance pick and order accuracy.
“We have just built full voice picking technology into our warehouse management solution, which means warehouse operators can now have two hands free for tasks. By fully embedding it into the next release of Access Delta, there’s no middleware and no integration issues,” he says. “It’s all about giving the operator more flexibility.”
Roper says: “Three years ago the technology was price prohibitive for small to medium size organisations – but now the price threshold is coming down making it far more accessible for smaller companies.”
Order accuracy is particularly important in the e-commerce arena, where miss-picks can be expensive to rectify and may impact customer service.
Martin Tanner business development manager at Business Computer Projects (BCP) sees the rising challenges of omni-channel operations.
He says, “Our customers’ customers are looking to do business in any one of a number of ways, whether it’s visiting a cash and carry, ringing up telesales, placing orders over the web, or even sending a fax, and they want a uniform offering regardless of how they do business,” he says. “So you need a single product file and a single view of the customer.”
He says omni-channel and big data are coming closer together. Customer preferences on delivery, packaging, re-order type, is all within the system, as every sale is recorded, and this information can be used in a far more automated fashion.
There is a tendency to use a single database as the core of the system, accessible in real-time to a big supply chain system, rather than relying on data transfers.
“If I’m setting up a web ordering operation I need to be able to give them [customers] stock availability, I need to be able to calculate their prices based on their contracts and any promotions, all in real-time – so a single database is key,” he says.
“In the wholesale distribution division we have functionality that allows buyers to buy products based on expected demand or historical demand. We also have a suite of functionality that allows customers to deliver promotions and mix and match schemes, and complex pricing algorithms based on contracts,” he says.
BCP has a highly functional warehouse management system using voice technology to facilitate efficient picking and processing of sales orders.
Paul Archer, associate at consultancy Oliver Wight, describes the importance of good planning in achieving optimum execution.
He says: “This involves an accurate view of demand and that should include the product changes, the promotional activities, and the ability to respond to the order variation – so you need to be good at supply planning, material planning, inventory planning, and distribution planning.”
He explains that the key is “to build in the planning rules and settings you need to enable the intelligent planning systems to function – the level of variability, the correct lead times, the appropriate batch sizes, the sku pack sizes… and then people’s job is to understand what would need to change to give the system a bigger opportunity to give us a better solution. And if we could make changes would it deliver a better solution and offer more accurate execution.”
He says that systems are normally arrived at in two ways: “One is as part of a planned maturity journey, but more often we inherit something, so often we are not aligned to the overall logic of best practice.
“It’s all about joined up plans that are in the system, so we must use compatible systems that seamlessly interface. We are looking to exploit the intelligence and interface of systems to calculate, re-calculate and plan, re-plan across multiple planning points to give us the best solution possible.
“The future is about information flow, so that plans are amended in your system when change happens and plans are reconfigured within set parameters – so you get a continuous flow and updated view,” he says.
Global Trade Management (GMT) solutions take supply chain execution to international levels. Amber Road, specialists in GMT, has a single centralised platform for managing the cross-border movement of goods for 139 countries.
Companies such as General Electric, Monsanto, Honeywell and Tyco use it globally.
Despite Gartner’s finding that companies still have a preference for on-premises applications, Ty Bordner, vice president of solutions consulting at Amber Road, suggests otherwise.
“We provide a SaaS solution, but we will also install the software if companies choose to deploy it that way. Ten years ago the weight between those two options would have been 90 per cent on-premise and ten per cent SaaS, today it’s the opposite,” he says.
The company has four main modules. “Export” provides the capability to validate the exporting government’s regulations, to make sure that you are not doing business with denied parties – the bad guys,” he says. “Also, executing the regulations from a product perspective ‘Export Controls’ to ensure you are legally allowed to ship it from country A to country B.” Particularly relevant given the current sanctions being levelled against Russia.
Bordner points out that one of the biggest challenges, and the focus of significant investment for Amber Road, is the task of incorporating and updating country specific regulations – “its one of the areas we have developed. We have 110 people whose sole job it is to maintain those regulations across the world.”
He explains that the export module then goes on to generate the export documentation, filing the export entry record within the country of export. With regards to “Import”, “if people are using both ends of it [the software] then we take that transactional data and turn it into the import customs entry record,” he says. “Import regulations are probably ten times more complicated and deeper than export regulations.”
From a logistics perspective, the system offers tracking and supply chain visibility. Bordner says: “Transport management allows a company to model all their logistics contracts within the system and then select which air or ocean vessel you want to book and our software communicates directly with those carriers, gets an acknowledgement and then we freight audit the bill, comparing it with the contract to check accuracy.”
Amber Road also has a Duty Management module that takes advantage of free trade agreements, ensuring all the rules are followed to benefit from a reduced duty rate.
Output management specialists, LRS, has recently developed “Intelligent Document Bundling” to reduce time in the final outbound logistics process by automating manual processes and electronically bundling documents together to remove human error. This ensures the required documents are complete, avoiding rejected deliveries and SLA penalties for non-compliance.
CASE STUDY: Bespoke system controls the popcorn
Tangerine Confectionery, whose brands include Butterkist and Barratt, has gone to Reflex Business Planning for a bespoke stock management system.
Reflex Business Planning has recently started work on their six-month, £100,000 project for Tangerine Confectionery, a £100m turnover firm famous for brands like Butterkist and Barratt.
The £100,000 project will result in a supply chain management system to enable Tangerine to track orders for more than 2000 products, assessing demand from retailers around the country and ensuring it has the correct levels of products and ingredients in stock.
The aim to improve customer service levels, because it will always be able to satisfy orders, and reduce wastage caused by manufacturing too much stock.
Tangerine turns over some £100 million a year and the new system could reduce Tangerine’s working capital by between 10 and 15 per cent a year, as it will operate with fewer finished goods on the shelves and lower packaging costs.
Reflex Business Planning managing director William Capjon said: “We have experience of working with food manufacturers and distributors, and know how vital it is for them to have accurate data. Our system will enable Tangerine to accurately predict demand, ensuring they have the right amount of stock and avoiding the scenario of having money invested in products with limited shelf life sitting in their warehouse.”
IMPLEMENTATION: Five steps to WMS success
The key to delivering a smooth logistics operation is a warehouse management system that offers better visibility and control of activity from receipt of goods through to delivery. Simon Fowler, managing director of Advanced Business Solutions (Commercial Division), offers five tips on assessing the current WMS and selecting a new system:
- Carry-out a thorough systems review: Conduct a thorough internal assessment of the system that is currently in place, identify where more support is needed and where improvements could be made. Key considerations should include, are you using a paper-based system that is no longer able to fulfil its function? Or, does your existing system supplier have the capability to assist you as you grow and evolve?
- Be specific – Draw up a list of specifications: What is essential, what is not important and what is ‘nice to have’ – not just for the features of the WMS, but also for the relationship with a future supplier as well. It is also worth bearing in mind any compliance issues such as local, national or international regulations or key performance indicators in terms of picking accuracy etc.
- Know your project: Assemble a team with designated individuals who can take responsibility for the project, and consider whether any elements need to be outsourced. Think about whether a formal framework would be useful to identify areas of risk, contingency planning and outline systems of control. Set out realistic budget and time limits, including initial set-up and future maintenance payments and the time taken for analysis and implementation. Don’t forget to consider the compatibility of your new technology with the old system.
- Choose your supplier carefully: Be structured and thorough when considering suppliers. Start with a wide selection and narrow it down through a process of tendering, demonstration, shortlisting and secondary meetings. Once a preferred supplier is chosen, the contract requirements and final payment terms should be reviewed carefully.
- Think about the future: As well as the functionality of the WMS, it is important to consider the sustainability of the relationship with the supplier. Look at their financial stability, their commitment to investing in the product and their ability to offer upgrades as standard. You need to be able to work in partnership with them for a long time and so make sure you are in sync with what needs to be achieved and that you can tolerate them on a daily basis.
“To thrive in the logistics sector, businesses need to have a firm grip on controlling costs, the flexibility to meet customers’ needs and a highly efficient operating system,” says Fowler.
“The right WMS is critical to achieving this as it enables complete visibility of your operation and easy access to accurate information.
“With a quality WMS in place, companies can have a clear view across their business, boosting efficiency and enhancing profitability.”
CASE STUDY: James Hall chooses Accord for new acquisitions
SPAR wholesaler James Hall & Co has gone to BCP to replace the IT systems at companies that it acquired last year.
It chose BCP’s Accord Distribution for GAP, the forecourt and convenience distributor, and Clayton Park Bakery.
James Hall serves 500 independent and company owned stores across NW England from its distribution centre on the outskirts of Preston.
The acquisitions in 2013 were prompted by James Hall’s aim to improve the breadth and depth of its offering to its customers.
GAP Convenience Distribution specialises in the distribution of brand leading products to the national and independent forecourt and convenience market, with a traditional focus on motor accessories and, more recently, also toys and foodservice.
Clayton Park is a specialist baker of cakes, bread and pies. Customers include retail and foodservice outlets including Blackburn Rovers FC, Liverpool FC, Everton FC, Lancashire CC and Sale Sharks RC.
Both companies continue to supply their own customers as well as now supplying James Hall’s SPAR customer base.
Dominic Hall, IT director at James Hall says: “The acquisition of GAP and Clayton Park Bakery has broadened the range we can supply to our own retail customers to help them compete successfully in an ever more competitive convenience market, as well as opening up new markets for us. However, we needed to standardise IT systems to provide a solid basis for successful operation and future growth. It’s early days yet, but, Accord is, as anticipated, proving well up to the job and will scale up easily to handle expansion in all divisions.”
Telesales is key to driving new business at both of the new businesses and the roll out included Accord’s Telesales module in addition to the purchasing, sales order processing and ledger functionality operating at James Hall.
In addition, the GAP implementation included Accord’s Voice WMS, which is already used at James Hall.
Clayton Park Bakery went live overnight earlier this year, while GAP went live over the course of a weekend in 2013, a full stock take being undertaken to ensure stock figures in the new Accord Voice WMS were accurate from the start.
James Hall now has three different businesses, each with differing business models, operating on a single integrated platform and network, managed and supported centrally. While GAP and Clayton Park still operate to a large extent autonomously, there is business-wide transparency and seamless interaction across all operations.
The company is already looking at additional Accord functionality for GAP and Clayton Park Bakery to meet their differing business requirements. Mobile/web ordering functionality is already on trial for both companies while kitting is on the agenda for GAP and more extensive manufacturing functionality under review for Clayton Park Bakery.
MARKET: Accellos and HighJump merge
Supply chain software suppliers Accellos and HighJump Software are to merge. The merged company will operate under the name HighJump and continue to use the Accellos brand for mid market supply chain execution technology.
Accellos founder and CEO Michael Cornell has been appointed CEO of the merged business.
The aim is to create a business providing a range of technologies, including networked trading partner connectivity, warehouse management, transport management, and route delivery.
“Discussions with our customers have made it clear that omni-channel is a catalyst for rethinking their supply chain and its underlying technology,” said Cornell.
“This combination brings extremely complementary technology to both Accellos and HighJump customers. Our collective supply chain execution product portfolio is one of the broadest and most adaptable in the industry, and covers the unique needs of large enterprises, 3PLs, and SMEs.”
CASE STUDY: Raben rolls out multi-modal system
International logistics provider Raben Group is rolling out the Kewill MOVE supply chain platform across its transport network.
The company has 130 locations in ten European countries, offering logistics services and multimodal transport to customers across a range of sectors, from technology to chemicals, automotive, FMCG and fresh products.
It decided to invest a single transport management software system to connect its operations, automate key processes and integrate with other key operational systems and RFI/on-board devices to deliver the visibility and control it needs, as well as ensuring optimal efficiency.
MOVE, which is designed to handle transport, logistics and trade compliance – had already been implemented during a pilot project within Raben’s Fresh Logistics business unit.
Raben Ukraine, Fresh Logistics and Raben Polska are now live with the Kewill software, with roll out to the remaining Raben operations due by the middle of 2015.
“Service excellence forms the basis of our customer relationships, and investing in technology that will ensure we continue to deliver in this area is key to our strategy,” says Sławomir Pawlak, CIO at Raben Group. “Our users tell us that the Kewill software is fast and easy to use, and we now have much more detailed and verifiable information about shipments in real-time available across our operations, allowing us to consistently meet or even beat agreed service levels and exceed our customers’ expectations.”
Originally printed in Logistics Manager 09/2014
