More flex in the chain

Supply chain management suites blend planning, execution, and event management

Sidney Hill, Jr. Executive Editor

Supply chain management suites blend supply chain planning and execution functionality into solutions that keep demand and supply in better balance. These suites—which tend to be more loosely coupled than enterprise systems—are offered both by major enterprise suite vendors and software companies that grew out of the supply chain planning space. The suites typically combine various planning applications that use advanced planning & scheduling technology with event management and notification engines, and order management and fulfillment.

The advent of supply chain management (SCM) software—which happened just over a decade ago—was supposed to make manufacturing operations more efficient. And it has, which is why industry analysts estimate that manufacturers purchased nearly $6 billion worth of SCM software in 2002.

David O'Brien, an analyst with Boston-based AMR Research, expects SCM software sales to top $13 billion by the end of 2006. He also says that vendors hoping to capture a significant portion of those sales will have to offer solutions that bridge what is now a glaring gap between planning and execution.

Currently, most manufacturers manage these two phases with multiple systems. Planning applications coordinate long- to medium-term activities, such as lining up resources and mapping production schedules to build and deliver the exact products customers are expected to buy over a period of days, weeks, or months. Execution systems balance the multitude of tasks that must be performed as the ultimate delivery dates draw closer. These tasks include generating short-term production schedules, monitoring and controlling production equipment, tracking finished goods stored in warehouses, and arranging for goods to be transported to the customer's door.

Manufacturers now are insisting that vendors make it possible to pass data between planning and execution applications in near-real time. Fortunately, technological advances are making that possible. Neil Hooper, a group vice president with Manugistics, an SCM software vendor based in Rockville, Md., concurs. "The Internet is giving companies greater access to a wide range of execution-level data that wasn't available before," says Hooper.

If they harness all of this newly available data properly, manufacturers can generate new production, inventory, or distribution plans on-the-fly in response to unexpected events, creating what industry analysts refer to as a real-time enterprise. And SCM software vendors are rushing to build software suites that aid that endeavor.

That race began in earnest a couple of years ago with the emergence of supply chain event management (SCEM) software. These packages, billed as virtual supply chain monitors, typically connect to execution-level applications, and are programmed to send alarms when something happens that threatens to delay customer orders.

But it quickly became apparent that simply knowing about potential problems wasn't enough. "SCEM has been positioned as an isolated system that sits on top of your execution systems, but that doesn't work very well," says Cyrus Hadavi, CEO of Adexa, a Los Angeles-based SCM software supplier. "If all you are doing is monitoring your execution-level systems, you get a lot of messages, but the real question is what to do with all of those messages."

Industry analysts generally agree with Hadavi's assessment that SCEM does not offer enough functionality to be considered a stand-alone software application. The general consensus is that SCEM is a feature that should be incorporated into a more comprehensive SCM package. Both SCM and ERP vendors most of which also have supply chain planning applications have taken this idea to heart and incorporated SCEM capabilities into their software suites.

Hadavi says Adexa has merged SCEM with the planning, modeling, and analysis capabilities built into its enterprise Global Planning System or eGPS software suite. "We call it an enterprise global planning system because you can use it to set specific goals and work out a plan to reach those goals. When you run into a roadblock, you can quickly re-evaluate your plans, and go down another road that will lead to your original goal."

This level of maneuverability is critical for OFS Optics, a manufacturer of optical fiber and cables based in Norcross, Ga., which uses Adexa's eGPS suite. Because the glass fibers that OFS works with are easily damaged, the need to redo production runs is the norm rather than the exception. Says John Hosford, a member of OFS' technical staff, "The Adexa system generates a plan that is seen on the shop floor, where execution begins. When something happens that requires a job to be reworked, that information goes to the planning system in real time. The planning engine makes adjustments and sends a new production plan back to the shop."

Manugistics' Hooper says the vendor has incorporated intelligent agent technology into its suite to accommodate what he refers to as adaptive planning. "An agent is something that watches both planning and execution-level systems, and gains intelligence about how the supply chain should be working," Hooper explains. "The agents can use the increasing amount of real-time data that can be made available over networks to constantly create optimal plans for managing and moving inventory."

Jeffrey Simpson, CEO of Viewlocity, an Atlanta-based SCM software supplier, argues that "the compelling story of bringing supply chain planning and execution together" enticed investors to put up the $30 million that was needed for Viewlocity to complete its recent merger with SynQuest, another Atlanta-based software supplier. Simpson says Viewlocity is taking this idea of blending planning and execution a step further by creating out-of-the-box solutions that address specific business processes. One solution, a finished vehicle delivery application, is being used by a major European carmaker.

"A planning engine looks at all cars in the network, assesses all of the transportation capabilities, and then determines the best way to get each car to its final destination by the promised delivery date," Simpson says. "If a customer decides they want the car delivered later, a message goes to the planning engine, which generates a new plan for delivering that particular vehicle."

Dallas-based i2 Technologies also is blending planning and execution functionality inside its suite. According to Andy De, an i2 spokesman, i2 enables what it calls distributed order management through a special layer of intelligent software that can be linked to multiple ERP systems. This intelligent backbone will scan the entire network for existing inventory or available production capacity and then decide which parts of the order should be filled by individual facilities. "It also will send alerts to the appropriate people to ensure that any problems are taken care of before they become customer-service issues," says De.

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