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"IBS
supply chain software helps to prepare your company to take advantage
of opportunities and challenges with fast and effective integration and communications. It offers flexibility
in managing legacy systems and information from mergers and acquisitions."
Source : IBS
Delivering Supply Chain Excellence
Supply Chain is also known as :
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Supply Chain Management Review,
Supply Chain Info.
Introduction
The proliferation of IT systems has transformed the face of business. There is
very little in terms of the operational processes within an enterprise that is not
affected by IT and taking full advantage of the benefits they can offer
invariably involves significant cultural change. For virtually any scenario, if
there is a definable process, there is an IT solution that can automate it. But
where does this automation take a company? And is it to a good place?
This document concentrates on IT’s contribution to Supply Chain Execution
and Management. Most companies, for better or for worse, have implemented
software solutions to help automate their supply chain processes over the last
twenty years. Invariably, these systems have had a massive impact on how
companies operate, both internally and with their suppliers and customers.
Business processes, expectation levels and system requirements are likely to
have changed significantly and in five years time, they are sure to have
changed again.
All companies are different. They may sell the same products and services to
the same people in the same volumes. But it is the very culture of companies
that dictates how this is done.
The Modern Supply Chain
Integration
After decades of investment in IT systems large and small, many companies
are now faced with a frankly daunting array of hardware, software, operating
systems, processes, tools and methodologies. Some work, some don’t and
with many, no-one has any idea what they do. However, one thing is clear. If
all these systems could talk to each other, share data and open up to internal
and external systems, companies could generate significant productivity gains
through minimal investment.
Today’s successful businesses are expanding to include markets and
business partners from all over the world. As companies grow and business
becomes more sophisticated, the need to connect and optimize integrated
systems and information increases – inside and outside the organization.
Integration of information gives a vital competitive advantage. Mergers,
acquisitions and global markets require integrated information from all
systems and business partners to provide a competitive edge. And it has to be
quick - when business terms have been agreed, the last thing anyone wants is
to wait for respective business systems to be able to speak to each other.
There are now many integration solutions available in the market, but to be
effective they have to be affordable, fast to deploy, platform-independent and
easy to use, customize or change. To put it simply, an IT integration solution
should make it easier to do business and gain a fast ROI on IT investment.
More importantly, it needs to be unobtrusive, allowing business partners to
keep preferred routines and systems, rather than forcing them to adapt.
Integration solutions allow companies to maximize existing investment while
also helping to implement new systems and technologies faster and more
effectively. The application of integration has no boundaries, with hundreds of
companies around the world already using them to deliver seamless solutions
to specific business problems.
The power of integration can be seen in the depth and variety of applications
for which it can be exploited. For example:
- Creating seamless links between bill of materials and supply to ensure
minimal stock wastage and efficient manufacture/assembly
- An enabling tool for companies wishing to migrate to new enterprise
wide systems in stages
- Allows modification to be made to core systems that can be transferred
to new version, ensuring companies remain eligible for standard
upgrades.
- Improve customer service by allowing orders to be received in
customers’ preferred format and automatically converting and
delivering these into core systems
The list is potentially endless, with the only restriction being imagination.
The effect of this capability for rapid change to the automation of businesscritical
processes, is very much a cultural one. It is now fairly straightforward
to enable connections and utilize functionality across multiple and crossbusiness
systems and this means companies are able to offer services that
they couldn’t before. This alone impacts other areas of the business and so
the whole ethos of company operations comes under scrutiny.
This is why IT systems must be flexible, and remain flexible throughout their
lifespan. Integration between applications and trading partners opens
companies up and systems must be ready and able to adapt to ensure
maximum benefit is achieved. There is little point in allowing customers to
check stock levels prior to ordering if this information is inaccurate; it would
cause more damage than good.
I believe the proliferation of integration has been the most significant
development in IT in recent years. Properly implemented within the supply
chain, it has already reaped massive efficiency and profitability benefits for
companies all over the world. It is only going to get bigger and I recommend
companies yet to look closely at this technology should do so at the first
opportunity.
Business Intelligence and Performance Management
With integration driving so many changes within organizations, traditional
methods of measuring business performance need to be augmented.
Organizations must not only perform well: they must be able to identify how
they perform, well or poorly – and why. Internal information isn’t enough:
companies need to look at and analyze information from business partners all
along the supply chain.
Business intelligence and performance management are processes that
provide your company with the ability to retrieve and act upon businesscritical,
timely information from throughout your operations.
Today’s companies need business intelligence software that captures,
processes and analyses information from all events and transactions, across
functions, departments and organizations. This data must be integrated for
feedback to operations systems.
As businesses increasingly search for the best ways to maximize supply chain
performance, important answers may lie in a unique model called SCOR.
In the relentless search for ever improving returns on investment and market
competitiveness, some of the world’s biggest corporations are applying a
model that is known as SCOR — the Supply-Chain Operations Reference
model — to maximize supply chain efficiency.
Siemens, Hewlett Packard, Intel, BASF, and Coca-Cola all use the SCOR
model, because they know survival in today’s fierce markets demands
detailed scrutiny and reengineering of every link in the supply chain — from
the supplier’s supplier to the customer’s customer. Recognizing the strength
of the model, many supply chain software companies are developing stand
alone software products to manage and analyze supply chain performance
based on SCOR. For the record, IBS was the first company to achieve formal
acknowledgement by the Supply Chain Council for its solutions being
compliant with the SCOR model
The SCOR model is the supply chain industry de facto standard model for
providing Business Process Modeling data, metrics for evaluating Performance Management and Best Practices information derived from
practitioners’ experience. It is entirely vendor and technology independent and
is the only real independent in-depth reference model for the complete supply
chain of all companies.
SCOR makes it possible to make supply chain performance comparisons
between companies by industry. It also provides mapping processes to make
more effective relationships between partners, suppliers and customers: it is a
tool for revitalizing the supply chain internally and externally. Companies
deploying SCOR have dramatically cut costs and boosted returns. Using the
SCOR-model, Siemens Medical, for example, has been able to cut costs by
30 percent, reduce inventory by 60 percent, and cut order lead-times from 22
weeks to just two.
The SCOR model is organized around five key management processes: Plan,
Source, Make, Deliver and Return. Each of these processes is examined on
three levels of detail. The first level is strategic, what the company wants from
each process area. The second level maps out exactly what is currently
happening within each process area. The third level examines the operational
level of the process areas, the area where execution can be altered.
SCOR doesn’t tell you what changes to make but it maps out where the weak
links are. It is then necessary to apply appropriate execution adjustments
specific to the particular chain. Successful supply chain management is about
consistent scrutiny, getting real time information so you can react to less than
optimal performance. It also means getting quality business intelligence.
Companies that will be successful in the long run are those that realize the
answer lies in maximizing supply chain efficiency.
Automation
For many years, companies like IBS have enabled businesses to manage and
control their operations at a much higher level. The reality of this is that their
ability to carry out repeatable processes is much more effective and supply
chains have adapted to meet these improvements. A company that, five years
ago, delivered to customers on a weekly or monthly basis, is now able to manage that relationship at a micro-level – in many cases being able to
deliver on daily basis.
In order to remain competitive, many companies are expected to provide
higher service levels, executing higher numbers of individual transactions with
customers on a higher level of frequency. However, the flip side is that often
the volume of actual business is not increasing and more frequently the actual
real value of the business is decreasing due to continuous pressure on prices.
This results in continued pressure on the bottom line margin.
In order to meet these exacting demands, companies are being forced, more
than ever, to look at their supply chain operations and processes to identify
how they can reduce the overall cost per transaction to its lowest level in order
to maintain profitability.
Once again, this is evidence of the way that effective IT systems both forces
cultural change on a company and can be used to assist that change. The use
of IT to provide Business Process Automation is helping to reduce operational
transaction costs and maximize efficiency as well as providing the ability to
monitor all aspects of the business and supply chain performance. This
impacts the business in many positive ways, but it means the organization has
to adapt not only its culture, but also its understanding of the business
processes across the supply chain in order to fully realize the benefits.
Supply Chain Systems
ERP versus Best-of-Breed
The argument for a holistic ERP solution against best of breed point systems
to handle organizations’ supply chain execution and logistics requirements
has waged for many years and is almost a religious argument. ERP’s case
has always been about implementing a common technology platform and
solution that can deliver a fully integrated system across an entire
organization, generating cost savings and reduced implementation times. Best
of breed argues that companies need the additional functionality and expertise
that can only be achieved by working with specialists in a particular field.
The answer, as is so often the case in business, is somewhere in between.
Why should companies sacrifice functionality for the significant benefits and
cost-savings to be gained from an integrated system – and visa versa? There
is no real right or wrong – it is all about identifying the Business Drivers and
how best to meet them.
Not all ERP companies are the same. IBS, for example, has an established
ERP system but it is a supply chain company by heritage, rated as one of the
top supply chain vendors in Europe and globally by AMR. This means the
functionality and multi-location, multi-country and vertical specific capabilities
of each element of the system holds up well, and often more favorably,
against many of the best of breed suppliers. Even we, with our functionally
rich solutions, have to concede that the largest extremes of warehouses or the
most complex transportation requirements can probably only be handled by a
specialist advanced best of breed system where the total ROI stacks up, but
the reality is that these form a small percentage of the market. Most
companies need to look very closely at the bigger business benefits of
implementing an enterprise-wide integrated system, against the advantages to
be gained from having the odd extra feature or capability. Indeed IBS has
significant experience working with RF, automated material handling and
picking solutions in markets such as pharmaceutical wholesaling also
developing solutions for areas like RFID.
The functionality of ERP systems has risen dramatically over the years and
the gaps between them and best of breed applications are becoming less and
less. The decision between the two may come down to companies’ overall IT
strategies. If it is already fragmented then it makes sense to add best of breed
applications for specific operational areas. However, if the strategy is to move
to a more rationalized common operating platform that can enable faster,
more cost-effective deployment, as well as complete integration and visibility
that provide comprehensive means for measuring the business, Supply Chain
ERP is a clear winner.
Having several best of breed applications inevitably creates silos of
information across a business. Whatever best of breed vendors claim about
their applications’ ability to integrate with other supply chain execution
systems, there is simply no comparison with ERP. The whole principle of ERP
is that it is already integrated – best of breed simply can’t win this argument.
Often each best of breed application has its own reporting tools, its own
database management system and its own specific means of operation or
integration. A good ERP system has a common solution for each of these
across the whole organization.
ERP also has an advantage when it comes to adding further applications and
functionality. For example, IBS with its supply chain focus has recently
created a Parcel Carrier Integration application that allows companies
seamless integration between the supply chain systems and the parcel
carriers own systems as well as customer services. In doing so, PCI allows
customers to save time within the warehouse, provide increased carrier
flexibility, reduce errors, improve customer service and increase overall
profitability. To add this functionality using a best of breed application would
require considerably more in terms of time and cost to implement because it
would have to be integrated with existing systems – if it were even available –
indeed most warehouse management system do not have their own transport
systems and often partner with other best of breed solutions. As part of an
ERP system it is already integrated and can be implemented and working very
quickly.
We believe that where an ERP company can bring specific industry expertise
and high levels of supply chain execution functionality, the argument for going
best of breed is a hard to one to win. For the sake of selective localized productivity improvements, companies are adding significant costs, increasing
implementation time and risk and missing out on the massive benefits gained
from complete integration and lower costs of ownership. We don’t expect
companies to settle for either option, we want them to know that they are
getting a system without compromise. At the end of the day the secret is
delivering business benefits and increased profitability and finding the right
supplier who can provide this today and is committed to delivering it in the
future.
Managing Change in the Supply Chain
Much is said about having flexibility in software systems to ensure they can
meet the specific requirements of a company. However, many systems are as
malleable as putty during installation, but set like concrete once they are
implemented. This gives companies no room to develop and forces them to
discard and replace their software like a crab that has outgrown its shell. And,
as is nature’s way, that crab is no more vulnerable than when it is waiting for
its defence to re-form.
Companies have to change how they operate in order to grow and flourish, so
flexibility must be built in to the very core of their IT systems. Mergers,
acquisitions, new product lines, new target countries and territories are all part
of the on-going development of an organization and it is vital that existing
systems can be adapted to cope with these scenarios.
Global Thinking
Rolling an IT system out across several new and existing countries is a major
operation and one that needs careful planning and the right software.
Companies need to decide on the right approach to adopt, focusing on the
business drivers it wants to achieve in each country and on a global basis.
They must create a master environment which can be rolled out across
different territories that is flexible enough to meet the specific requirements
and standards of each country. They must understand the different
operational needs of individual businesses and be able to manipulate he
system to meet these needs without breaking it and losing the benefits to be
gained from a global system.
Customer Case Study:
IBS delivers global ERP and supply chain solution for Maxell
Maxell Europe has completed its European and Asia Pacific roll-out of its IBS
Enterprise integrated ERP and supply chain software solution. IBS was
selected by Maxell for its comprehensive international capabilities and ease of
implementation.
Maxell’s European headquarters are based in the UK and provides support to
all subsidiaries and distributors throughout Europe. The company employs
more than 350 people in Europe and has a European turnover of EUR 280
million. Martyn Lloyd is Maxell Europe’s Senior IT Manager and was
responsible for the roll-out of IBS in Europe. He comments, “Because of the
success of IBS Enterprise in Europe, Maxell decided to adopt the system as
its world standard. We have already implemented the software in Malaysia,
Hong Kong, Shanghai and Mexico.”
He continues, “IBS as a company is extremely easy to work with. We have
confidence in the capabilities of the software and consultants to deliver the
best possible solution in every country we have worked in. The software does
everything we need, meeting the local accounting standards of each country
to ensure a smooth roll-out and transition to the new system. We identified in
the selection process that IBS would provide a much lower cost of
implementation for each territory. Their honest and capable approach ensures
projects do not get stretched out unnecessarily. We estimate that had we
selected an alternative system from a larger ERP organization, the length of
implementation, and therefore the cost, would have been at least three times
as much.”
The global implementation at Maxell is a clear example of the international
capabilities of IBS and its software. We are able to deliver a world-class
solution that meets the requirements of multi-national organizations
significantly faster and at, even more significantly, lower costs, than any other
major ERP and Supply Chain vendor. IBS’ philosophy is to invest heavily in its
software and its staff to ensure the product is continuously improving and is
capable of supporting our customers well into the future.
Since the European implementation was completed, the company has seen
significant and tangible benefits. “We have made considerable savings in
administration areas due to the increased automation IBS has given us. In
addition, the IBS supply chain tools will allow us to reduce our inventory costs
and will make a big difference to the efficiency, productivity and profitability of
our overall supply chain,” says Martyn Lloyd.
He concludes, “We were delighted to find a software company that could
match our requirements in every country throughout the world but without the
huge costs and lengthy implementation associated with many of the larger
vendors. With other vendors we would become reliant on them for even the
smallest of changes. IBS’ philosophy is to give control to us, which helps us
keep costs down and speed the implementation.”
New Technologies – ‘The Next Big Thing’
There is so often a dramatic lag between press and analyst coverage of a new
technology and the actual wide-spread usage of it. Nowhere is this more
evident than in RFID.
Today, everyone know the benefits of RFID, but the fact remains that it is cost
prohibitive for the vast majority of supply chains. There is little doubt that its
time will come, but for now there are far more immediate and cost-effective
technologies that companies can benefit from.
IBS is committed to developing solutions to meet the demands of our
customers allowing them to take advantage of the latest technology and
working practices while ensuring that business operations are able to operate
effectively, efficiently and deliver maximum return.
These aims are reflected in our policy for development, where we utilize the
best development environments available to ensure that our solutions provide
the functionality and performance that best serves our customers and areas of
expertise.
Within IBS we consider the single most important asset within our R&D
department to be our people; their skill, knowledge and experience combined
with close interactive relationships with our customers allows us to constantly
work on the development of new releases of our software solutions to ensure
that we support these changing needs and continuously deliver measurable
business value.
Contact IBS today:
www.ibs.net
info@ibs.net