Supply Chain Management is not new, electrifying it is. But as Mike
Hardwidge explains, technology is no nearer solving some of the
more fundamental Supply Chain issues.
A supply chain is a simple thing. For example: there's the bloke,
oh all right, the person, who digs the metal out of the ground,
whose company supplies it to the people who smelt and refine it and
who pass it on to the others who do whatever it is they do; it is
thence sold to wholesalers, who sell on to retailers and, in its
eventual form, it reaches the punter who pays the price plus vat on
the tins, tools, nuts and bolts.
Supply chain management is not new and neither is the notion that
it is an application for which computers can be handy. Barrie
Webster who runs Midlands based Mercia Software says: 'Pundits
discuss supply chain management as if it were something new. Names
have changed; previous incarnations were called things like
materials management and finished goods inventory control, but
supply chain management has certainly existed for all of my working
lifetime of about 30 years and probably for long before'.
Webster points to sophisticated software available on early '70s
time sharing networks, such as Robert Goodell Brown's CMCS
(comprehensive manufacturing control system), and claims the
fundamentals have not changed. 'Sure', he says, 'there are new
names being bandied around, but no amount of hype should be allowed
to disguise the fact that the difficulties of implementing such
processes are rarely associated with the systems themselves, but
are more about achieving true co-operation between individuals
within the same company and between different companies. In other
words,' and Mr W does not enshrine word mincing, 'you're up against
the good old human issues of power, greed, territory and self
interest.'
Barrie Webster has a point, although he concedes that what has
changed is the delivery mechanism. Time sharing worked, it was
relatively secure, but it cost a lot. Internet linked PCs cost a
lot less. 'It's a bit like Elvis impersonators. It's the same old
stuff, it's often not as good as the original, but it's much
cheaper and it's easier to get'.
IBM's supply chain segment manager, global small and medium
business, north region, is Jonathan Young, whose job it is to
maximise what his company does in supply chain projects. IBM
hardware is unsurprisingly preferred but Mr Y says they're 'vendor
neutral, and as far as e-business goes we're strictly hardware and
middleware, so you could say we're really the plumbers of the IT
world'. Having said that, Big Blue knows its way around supply
chain management, claims 'fantastic relationships' with major
supplierslike 'i2, Manugistics, E3, EXE, Manhattan Associates, IBS,
Synquest, to name but a few,' and, although there is naturally a
price for this, will happily trot along to perform a neutral
consultative study.
Young is in basic agreement with Mercia's Webster on problems
facing the putative installer, claiming 'wherever you've got a
chain, you'll get friction'. He also makes the point that what he
calls 'the bull whip effect, a smallish arm movement resulting in a
considerable crack at the other end' is only likely to happen if
the entire chain is in a state of harmonious collaboration. This,
he reasonably asserts, 'is easier to achieve if you're someone like
Ford and it's your bat and your ball, but not so simple if you
happen to be one of the lesser links in the chain.'
Ron Bligh who, since you ask, is descended from the famed captain,
is throughput product manager at software vendor Mapics, which
specialises in iSeries based solutions. EDI, he says, is 'pretty
crude and there are better ways' and, whilst agreeing that
harmonious collaboration of all involved is 'the Holy Grail', he
emphasises that partial collaboration is preferable to nothing.
'Just because something's not perfect, it doesn't mean it's not
useful, and it doesn't mean it won't make a positive contribution
to your bottom line.'
Isotrak is in Milton Keynes and organises what chief technical
officer Brad Cooper calls the 'often invisible' transport chunk of
the supply chain. 'Ownership changes as stuff gets carted from one
bit of the chain to another, and it's profitable to be able to find
out what's where and, more importantly, if everything is happening
as you wanted it to happen'. Isotrak software is said to be
integrable with 'the 12 top scheduling systems such as DTS, Paragon
and SAP' and, for concerns whose fleet sizes exceed fifty trucks,
to offer a 'five fold payback'.
UNSPSC (United Nations standard products and services
classification) is just one of several international standards
whereby bits and pieces, in theory at least, maintain consistent
descriptions throughout their supply chain metamorphosis. German
owned Poet Software majors in linking the differing codes which
inevitably surface, and UK country manager James Spooner says
'contracts' can be set up so that one 'master catalogue' is
accessed in such a way that individual customers or suppliers
receive not only their expected product description, but also 'get
quoted the particular price structure you want to offer them'.
This, he reasonably points out, 'can be a big help when you're
trying to create collaboration'.
So, supply chain management has been around for aeons, there's a
slew of solutions out there, and, unless you're big enough to boss
around the rest of the chain, the biggest hurdle is likely to be
getting the various tribes to march side by side. Croydon based TBC
was IBM pSeries partner of the year 2000 and recently entered an
agreement with US based software supplier EXE. TBC alliances
manager Stefano Liberati perceives a growing market in which the
two companies will co-operate, with software from EXE and hardware
from TBC. What happens if a punter contacts TBC but he's already
got hardware? 'We pass them on to EXE and vice versa, so yes, you
could call it a supply chain that works.'
Case study - Powerhouse
Powerhouse Retail calls itself
'the UK's largest independent home appliance retailer'. Competitors
provide constant price competition, customer expectations of
service are rising steadily, and these twin pressures combine to
focus retailers' minds on finding more new ways to take costs out
of the business. E-commerce seemed an initial panacea but, in fact,
merely shifted business from the stores to on-line.
'E-business,' says IT director John Levicount, 'is more promising
as, theoretically, the automation of relationships within the
supply chain offers much more than streamlined procurement in that
it could lay the foundations for real business-to-business
e-business in which the manufacturer makes informed resource
planning decisions based upon information supplied by customers
further up the chain.'
Powerhouse had 50 regular suppliers, which complied with the '28
rule', whereby 20 per cent of suppliers accounted for about 80 per
cent of the business, and for the key 80 per cent, the requirement
was 'a move from manual to some form of electronic processing. For
me,' says Levicount, 'all the hype surrounding complex B2B
transactions is overstated. I had a straightforward business
requirement to meet.'
Integration was vital and one option was participation in a trading
exchange where retailers and suppliers subscribe to a centralised
web based purchasing operation which facilitates on-line
communication between subscribers. 'The prospect of all suppliers
using the same technology was attractive,' says Levicount, 'but
there was no back end integration with our JDA enterprise system,
and it seemed the real beneficiary was the company operating the
exchange. What was very important to us was streamlined data
transfer without the burden of data re-entry. Basically, replacing
our fax machine with someone else's web site wasn't much of a
solution.'
EDI (electronic data interchange and a Ansi standard on which
royalties are collected) was considered and rejected. 'The more
business we did, the more it would cost; it would have meant
investing in technology that's already perceived to be on the wane;
and its inflexibility with multiple file formats meant that, even
if we used EDI, many of our suppliers couldn't or wouldn't.'
Along with vacuum cleaner supremo Dyson, Powerhouse plumped for
Oxon based Astech Consultants' B2B4Retail where, says John
Levicount, 'the appeal of the solution lies in its integration with
the customer's back end system and the variety of file formats it
accommodates - essentially EDI, fax, email and XML.'
Powerhouse kit includes an IBM iSeries 400 box running outsourced
OS/400 V4.2 and a Microsoft NT Lan. Its JDA Enterprise business
management system covers merchandising, financials and
distribution, and the Astech B2B4Retail purchasing module is said
to provide 'the collaborative supply chain management solution'.