By John Desmond
Analysts and vendors in the supply chain software community point to several trends, including:
- Inter-enterprise integration
- Cultural change
- Industry adoption
Inter-enterprise Integration. This is an extension of the supply chain into front-end planning, such as of new products in the electronics and computer manufacturing industries. The Gartner Group calls this the "collaborative commerce framework," or c-commerce, which is an extension of e-commerce.
E-commerce today, says Gartner's Burdick, "usually means wiring up your existing business partners. C-commerce means dealing with cyber partners, establishing many more relationships much more frequently—relationships that may be unknown when you initiate a request for commerce. Anybody out there who can provide a value-added product or service can participate."
This article concludes an in-depth look at characteristics that are key to today’s supply chain software. The first article explained how changes in supply chain software are improving e-commerce. This content originally appeared in the September issue of Wiesner Publishing's Software Magazine and appears on TechRepublic under a special arrangement with the publisher.
This trend is forcing some changes in the supply chain. "The traditional supply chain was manufacturing through delivery. Now we see that extended to product design, marketing, and sourcing the product parts, and all the way to obsolescence," explains Hollis Bischoff, senior program director, electronic business strategies, Meta Group, Burlingame, CA. Firms may share CAD-CAM designs that in the past they would treat as deep secrets. Now, suppliers can get involved in the design stage instead of only competing to fulfill a completed design. "The artificial lines between the intranet and extranet are going away," she suggests. "The Web is enabling this to happen much more quickly."
The move toward increased partnering creates many challenges, including the need for more technology support.
"For critical suppliers, where you do more than order out of a catalog or fulfill a replenishment trigger, we expect to see technology support for how the companies work together," says Julie Fraser, principal and director of market strategies, Industry Directions, Newburyport, MA. "The challenges there are big. From a technology standpoint, companies are starting to partner up with each other. On the back end, we need a way to link to core business systems, which is generally done by middleware ties to the ERP systems. This is tricky. Small companies need to figure out how to be cost-effectively part of these e-chains."
Procurement. While only a small percentage of companies are selling products via the Web today, procurement is a major focus.
Says Fraser: "Many people are trying to figure out how to buy commodities more rapidly, like office supplies, but not a high percentage of companies are selling their own products that way. So far, dealing with customers more aggressively over the Web has been less of a focus for many manufacturers, but that's starting to change. In some cases, they are getting pressure from their customers."
Cultural change. Change is being forced on many companies in industries that experience an adversarial relationship between customers and suppliers.
"In some ways, the technology is leading the business relationships," says Fraser. "But in general, companies are stepping into this gradually, doing full-blown supply chain e-enablement with a few trusted partners."
Industry adoption. Adoption rates of Web-enabled supply chains vary widely by industry. "Industries slow to adopt Web-based supply chain management include the process industries, for example, chemicals," says Industry Directions' Fraser. "Retailers have been forced into it."
The adaptation of Web-based technology varies among the supply chain product suppliers. Oracle started three years ago rewriting its applications to be Web-enabled, and Baan is just releasing its initial Web-enabled products.
Recommendations for IT managers
For IT managers, John Fontanella, research director, supply chain execution, AMR Research, offers the following advice:
- Evaluate supply chain execution (SCE) systems with e-business performance standards and requirements.
- Select future SCE systems that will support your e-business direction.
- Start thinking about a supply chain information backbone.
- Beware the effects of disintermediation on SCE systems requirements.
- Consider Web hosting as an alternative to licensing SCE software.
- Include international trade and logistics in your e-business planning.
- Treat technology like your .com competition will.
In addition, Meta Group's Bischoff recommends that companies decide on a common e-business infrastructure that includes security, a common architecture, and content management. The Meta Group calls its framework "corp.com," the merging of the intranet, Internet, and extranet.
Finally, says Industry Directions' Fraser, IT managers should take a step back and look at issues from an enterprise view, which now includes trading partners: "Ask yourself, 'Will this work for my trading partners?' You will have to take educated guesses about what [technologies] your industry will standardize on. Very few companies have thought through a business process along with their trading partners."
How will the software industry respond to the needs of e-commerce this year? Which trends will reshape the software industry? Post a comment below or send us a note.