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Supply Chain Management using Information technology

INTRODUCTION: Supply chain management (SCM) is concerned with the flow of products and information between supply chain members of an organization. It is must for any service oriented company to keep its supply chain management in the right direction and SCM is all about orders, inventories, sales trends, etc. The concept of supply chain management is of great use as it enables you see how you can manage the supply chain to optimize revenues, cash flow, and customer satisfaction. There are great numbers of processes within SCM which can guide you towards better integration of activities keeping core business function as important. Companies need better SCM for reducing costs, improving their cash flow, and making sure materials and products are in stock when needed to meet customer demand. Whether it is a big company or a small company we need to focus on the SCM as it tells us what inventory to keep and information about reorder level and the lead time. It saves your time and money and proper resource utilization. SCM is a vast field and ranges from: bills of materials, product descriptions and pricing, inventory levels, customer and order information, supplier and distributor information, current cash flow, and balance between suppliers, transportation vendors, subcontractors and other parties. As a solution for successful supply chain

management, sophisticated software systems with Web interfaces are competing with Web-based application service providers (ASP) who promise to provide part or all of the SCM service for companies who rent their service.

The importance of information in an integrated supply chain management environment: Supply chain management flows can be divided into three main flows: The product flow The information flow The finances flow

The product flow includes the movement of goods from a supplier to a customer, as well as any customer returns or service needs. The information flow involves transmitting orders and updating the status of delivery. The financial flow consists of credit terms, payment schedules, and consignment and title ownership arrangements. Prior to 1980s the information flow between functional areas with in an organization and between supply chain member organizations were paper based. The paper based transaction and communication is slow. During this period, information was often over looked as a critical competitive resource because its value to supply chain members was not clearly understood. IT infrastructure capabilities provide a competitive positioning of business initiatives like cycle time reduction, implementation, implementing redesigned cross-functional processes. Several well know firms involved in supply chain relationship through information technology. Three factors have strongly impacted this change in the importance of information. First, satisfying in fact pleasing customer has become something of a corporate obsession. Serving the customer in the best, most efficient and effective manner has become critical. Second information is a crucial factor in the managers' abilities to reduce inventory and human resource requirement to a competitive level. Information flows plays a crucial role in strategic planning. Recent developments in technologies enable the organizations to avail information easily in their premises. These technologies are helpful to coordinate the activities to manage the supply chain. The cost of information is decreased due to the increasing rate of developments in technologies. In the integrated supply chain model (Fig.1) bi-directional arrows reflect the accommodation of reverse materials and information feedback flows. Manager needs to understand that information technology is more than just computers. Except computer data recognition equipment it is also inclusive of communication technologies, factory automation and other hardware and services.

There are two main types of SCM software: planning applications and execution applications. Planning applications use advanced algorithms to determine the best way to fill an order. Execution applications track the physical status of goods, the management of materials, and financial information involving all parties. Some SCM applications are based on open data models that support the sharing of data both inside and outside the enterprise (this is called the extended enterprise, and includes key suppliers, manufacturers, and end customers of a specific company). This shared data may reside in diverse database systems, or data warehouses, at several different sites and companies. By sharing this data "upstream" (with a company's suppliers) and "downstream" (with a company's clients), SCM applications have the potential to improve the time-to-market of products, reduce costs, and allow all parties in the supply chain to better manage current resources and plan for future needs. Increasing numbers of companies are turning to Web sites and Web-based applications as part of the SCM solution. A number of major Web sites offer eprocurement marketplaces where manufacturers can trade and even make auction bids with suppliers. IT infrastructure capabilities provides a competitive positioning of business initiatives like cycle time reduction, implementation, implementing redesigned cross-functional processes. Several well known firms involved in supply chain relationship through information technology. Three factors have strongly impacted this change in the importance of information. First, satisfying in fact pleasing customer has become something of a corporate obsession. Serving the customer in the best, most efficient and effective manner has become critical. Second information is a crucial factor in the managers' abilities to reduce inventory and human resource requirement to a competitive level. Information flows plays a crucial role in strategic planning.

Supply chain organizational dynamics: All enterprises participating in supply chain management initiatives accept a specific role to perform. They also share the joint belief that they and all other supply chain participants will be better off because of this collaborative effort. Power with in the supply chain is a central issue. There has been a general shift of power from manufacturers to retailers over the last two decade. Retailers sit in a very important position in term of information access for the supply chain. Retailers have risen to the position of prominence through technologies.

Selection of an SCM software::


SCM is a vast field and ranges from: bills of materials, product descriptions and pricing, inventory levels, customer and order information, supplier and distributor information, current cash flow, and balance between suppliers, transportation vendors, subcontractors and other parties. Also, the use of a proper MIS (management information system) helps a lot in maintaining the proper SCM. Types of software for SCM are: stand-alone software, software that integrates with enterprise resource planning (ERP) systems, software for specific industries from retail to construction and transportation, software to solve specific problems such as logistics, product information management, and cash flow management. The prices also vary, depending on the functionality you need, the licensing model, and the services and maintenance options you may choose. Depending on the size of your operations and the number of users, you may run SCM software on your existing server, on a dedicated server, or you might choose to start with a hosted application that integrates with your in-house information system. Prior to the purchase of software make sure your business information is complete, consistent, current, and accessible. Make sure product, customer, order, and financial information is in server-based databases, centralized and secure. Set up secure mobile and remote access so that sales and service people or project managers in the field and in other business locations can view and update information immediately. It should be such that employees can access and it will allow them to see current inventory levels, orders, cash flow, etc. It is much faster than a manual process. So choose a SCM solution that fits your needs and also measure the return on investment for the chosen SCM solution.

Five tips for selecting supplier management software

Supplier management software helps manufacturers become more efficient in procurement by reducing costs, improving decision-making, building tighter linkages with internal business units and reducing supply chain risk and potential disruption. More on supplier management software Read how Hyundai improved its supplier relationship management Find out how to build a supplier risk management strategy Learn the importance of supplier risk management Supplier management software is not a single category of application. Nor is it a single functional business area involving individual stakeholders or stewards for the types of information that supplier management tools provide. This broad set of capabilities and charter make it challenging for procurement and supply chain organizations to analyze and select the best supplier management software for their needs. Here are five issues to consider when choosing among options.

1] Understand the diverse assortment of supplier management tools available in the market. Manufacturers need to understand all of the supplier management tools that exist today. These include individual supplier information management (SIM) tools for basic data collection and workflow, supplier performance management, supplier risk management, spend and supplier visibility as well as broader suite components including supplier relationship management (SRM), e-sourcing and contract management. 2] Rise to the analytics challenge. Many companies believe that they collect enough supplier information already. While this is not typical, even in the best case, for those organizations that have access to significant amounts of data, it's doubtful that the bulk of the insights contained within it never surface. Organizations need to put in place an analytical/business intelligence (BI) infrastructure to make better decisions based on the supplier management data available to them. 3] Integrate supplier management software with transactional and strategic decision tools. Supplier management cannot be a silo. Companies must strive to integrate both transactional and decision- support procurement tools with their supplier management tools. If manufacturers do not have the ability to act on supplier information in the context of routine tasks or important decisions, then they will have wasted all of their supplier management software efforts. 4] Identify systems that can create a virtual system of record. In other words, move beyond the ERP vendor "master." The concept of a single supplier system of record is almost laughable given how much supplier information is contained outside of an organization. It's critical that all of the source systems come together to create a true picture of your supplier.

5] Don't forget integration with the back-end. Given the number of back-end transactional systems that interface with supplier management tools (shop-floor ERP/MRP for quality and on-time performance information), it is essential for IT leaders to develop a supplier management systems integration strategy that takes into account all of the internal and external source systems that a company will need to pull from and push information into.

Supply chain globalization leads to boom in demand for SCM software


Supply chains are not new, and neither is the concept of supply chain management nor the software that automates and optimizes this function. What is new, however, is that supply chains are getting increasingly complex as manufacturers outsource portions of their business and deal with suppliers around the world. "The globalization of supply chains has driven [the SCM software] business," said Mark Symonds, president and CEO of SCM vendor Plex Systems. These increasingly complicated supply chains have not only created a boom in the market for SCM software, they have also led to demand for many different forms of SCM applications. "This is a disorganized part of the market," Symonds said. "We end up competing with lots of people -- ERP vendors as well as people who just sell supply chain stuff." Along with enterprise suite vendors offering on-premise SCM as additions to ERP systems, there are on-demand SCM products and specialized solutions available. "The supply chain planning market mirrors the ERP market," Gupta said. "To compete in the supply chain space, you've got to be able to plug into other people's ERPs," said Nigel Davies, vice president of supply chain at mid-market ERP provider CDC Software. SCM software facilitates distribution process Supply chain management software promises to simplify and optimize the entire process of building and shipping goods. "[A supply chain is] anything that allows you to design and build and distribute products to customers," said Anil Gupta, vice president of marketing at Bristlecone, a supply chain consultant and reseller. And SCM software facilitates the entire process, from the first step of demand

planning to executing the plan, which may include inventory optimization, warehouse management and tracking inventory, among other functions. The manufacturer who doesn't want to gain such SCM benefits is rare. That's why some manufacturing companies are implementing new versions of SCM software to replace legacy supply chain applications and old electronic data interchange (EDI) systems. But for many manufacturers, their new SCM software is merely a big step up from Microsoft Excel spreadsheets. "We joke that Microsoft Excel is the most successful SCM application as far as usage," said Mark Averskog, director of solution management for SCM at SAP. Symonds agrees. "People solve problems however they can," he said. "We're replacing spreadsheets and paper," along with old vendor packages and point solutions. "Our goal is to replace Excel interactions, since they're not tied to an end-to-end perspective," Averskog said. He acknowledges that getting off Excel is a tough task for many manufacturing businesses, which is one reason SAP offers several Excel interaction packages designed to let companies use SAP without giving up Excel. ERP giants build closed supply chain loop It was back in the late 1990s that SAP and the other dominant ERP vendor, Oracle Corp., ventured into SCM territory. "The big ERP guys have invested heavily in supply chain planning and execution software," Gupta said. "They build a closed loop" that enables customers to integrate all their enterprise data with linked systems. Averskog said that the demand and supply planning piece of SCM can often be performed by a basic function in most ERP packages. "When you talk about SCM," he said, "you're talking about advanced features that can do things mathematically, software-wise." On-demand or Web-based supply chain software can stand alone or augment a company's existing ERP or SCM tools. Either way, the goal is to ease communications between a manufacturer and its suppliers, which can be an increasingly difficult proposition with multiple, far-flung suppliers having different levels of technological know-how. SAP offers a Web-based collaborative tool, Supply Network Collaboration, as one of the modules in its SCM application. Plex Systems' offering, called Plex Online SCM, is entirely Web-based. Manufacturing businesses want the big picture when it comes to their supply chain. According to Davies, "What's hot and emerging in manufacturing supply chain is the principle of enterprise event management, which is the ability to do collective monitoring of end-to-end processes." When a company buys SCM tools, "the bulk of value comes down to cost reduction," Averskog said. "[This entails] running a business faster and with [fewer] errors, no matter what supply chain application you look at." SCM challenges for manufacturers these days include globalization as well as shorter product lifecycles. "Supply chain is a big issue," Gupta said, "whether it's to the CEO down to the procurement person." Companies these days must innovate and do R&D much more quickly than in the past, according to Averskog, and they must maintain a supply chain that can stand up to that. "The faster

you're trying to do all this, the harder it is," he said. "All those things working together put tremendous pressure on SCM systems."

Supply chain management software selection for manufacturers

ERP and SCM integration Integrating best-of-breed SCM applications with ERP, as opposed to relying on the innate SCM functionality in some ERP systems, provides a manufacturer with specialized SCM features

Supply chain risk management software This supply chain risk management software will help you understand SCRM software and SCRM best practices and how spend management fits in.

Warehouse management systems software This warehouse management systems software will help you understand WMS software and how to select it, plan implementation projects, train users and more.

SCM and CRM integration

SCM and PLM integration

Incorporating and using RFID in Logistics

Green supply chain management technology This green supply chain management technology will help you select green SCM software, learn green SCM best practices, use green SCM in manufacturing and build a sustainable supply chain. Manufacturers can make their operations more environment friendly and lower costs by adopting green supply chain technology.

ERP SCM integration expands manufacturing options


A growing number of manufacturers are turning to ERP supply chain management (SCM) integration. Integrating best-of-breed SCM applications with ERP, as opposed to relying on the innate SCM functionality in some ERP systems, provides a manufacturer with specialized SCM features, according to Holger Kisker, senior analyst at Forrester Research. This two-way information exchange enables manufacturing companies to optimize processes across the product lifecycle. For example, they can forecast supply and demand based on algorithms for specific industries or on factors like seasonal variations. When beginning an ERP SCM project, the first step is an initial upload of basic ERP customer and product information that the SCM system doesn't typically have, said Kisker. For maximum effectiveness, it's important to keep data consistent and key fields, like customer ID, continually synchronized between the two systems. For example, the ERP system can provide the SCM application with inventory information such as current availability of materials or parts coming out of the production system or warehouse. The SCM application, in turn, would provide ERP with information about planned and actual movements of materials, parts and products, so that inventory stays up to date. ERP platforms' growing support of service-oriented architecture (SOA) is also making it easier to set up dynamic collaboration between SCM and other manufacturing applications. "When the supply chain application wants to update an order because of a schedule change, it calls up the SOA service from the ERP system, brings up the object in the CRM system, and changes it," Kisker said.

This broader SCM integration with ERP delivers greater efficiency and responsiveness to the entire manufacturing process. If, for example, a company is scheduled to deliver an order to ten clients tomorrow but the SCM solution calculates it can only deliver to five, ERP can pull data from the CRM system to determine which orders should be fulfilled. "The SCM application puts the five in one bucket and sends it on to the ERP system for next day," said Kisker. "So not only is there movement of information, but order triggering between the two systems."

SCM integration with ERP simplifies, speeds manufacturing processes Total ERP and supply chain management (SCM) integration is a goal for most manufacturers, but companies take different paths to achieve that integration. Some manufacturers buy a complete packaged ERP system that includes all the SCM tools they might need. Other companies choose a third-party SCM package with best-of-breed functionality to plug into their existing ERP system. Still other businesses have performed some system integration, but are transferring data between ERP, SCM and other systems. Auto parts manufacturer Magna Powertrain has made huge advances toward complete system integration in the past few years, according to quality engineer Greg Palmer. Magna Powertrain uses the Plex Online Saas ERP for its Quality Assurance systems, and SAP ERC ECC 5.0 for its back-office ERP. "We looked at SAP for the Quality side and it didn't have the functionality," Palmer said. Palmer considers Magna Powertrain's current ERP/SCM setup a big improvement over the previous implementation. "Until 2006, it was rows of file cabinets," Palmer said. "We had to walk to the back of the plant to look up" on paper all the supply chain-related information. Getting down to only two systems has made Palmer's job much easier. "The ultimate goal was to integrate SAP and Plex where they needed to be integrated," he said. "But we haven't spent the time and resources to do that." Single-system SCM vs. on-demand SCM Purchasing a complete package that combines ERP and SCM to replace siloed systems is an alternative to manual integration. For instance, midmarket ERP software vendor Epicor doesn't often run into customer integration issues, according to Rodney Winger, senior director of product marketing. "We completely eliminate that headache because it is one system," he said. "There are none of the best-of-breed or black box issues. We're not hooking different capabilities from different vendors together." But a single-system approach isn't always possible. Adding on-demand SCM tools has become another method of improving supplier relationship management and system flexibility across global supply chains. According to Palmer, Magna Powertrain's new online supplier portal is "the strongest part of the system," allowing the manufacturer's 400 suppliers to request changes and fix quality issues. A manufacturer that needs a complex system with certain industry-specific features might have to look outside its ERP vendor, said Anil Gupta, vice

president of marketing at Bristlecone, a consulting firm that focuses on supply chain management. "If they have a regular warehouse, it might be SAP," Gupta said. "But if it's a very sophisticated warehouse, they might go with a vendor that specializes in that area." Gupta gave as an example a company that would want specialized functions to deal with import and export regulations. "They're giving up on data integration, but what they're getting is specific functionality sooner rather than later," he said. "It might be on SAP's roadmap, but [some customers] are not willing to wait two or three years." Smaller SCM software vendors might provide niche functionality to augment software from ERP giants SAP and Oracle -- or vice versa. "We find companies that have legacy or inherited systems, that might have gaps from a supply chain standpoint," said Maha Muzumdar, vice president of supply chain marketing for Oracle. "And we have companies coming from a competitor to us and facing certain gaps. It works both ways." SOA tools aid with SCM integration Oracle uses its standards-based Application Integration Architecture (AIA) software to ensure integration with other vendors' SCM tools, according to Muzumdar. "When we build applications, we ensure that industry standards are met." AIA includes building blocks and templates to integrate Oracle and nonOracle applications using service-oriented architecture (SOA) technology. As for SAP, most of its SCM customers are existing ERP customers, according to Mark Averskog, director of solution management within SCM for SAP. "People have integrated [SCM] with other ERP vendors," he says, "but it's auto plug and play with ours." SAP Supply Network Collaboration (SNC) tool is built on SOA technology to allow supplier collaboration. "The general strategy is to try to unify user interfaces," said Averskog. "And interface technologies all will eventually be Web-based." ERP roadmap leads to smooth ERP/SCM integration It's not always technology-related issues that complicate integration. "Software as a Service (SaaS) providers have figured out how to integrate with ERP systems" using well-tested integration adapters," said Nari Viswanathan, vice president at research firm The Aberdeen Group. According to Viswanathan, Integration is often really about preparedness and planning. "The challenge happens when ERP systems and projects get delayed because parts of the ERP roadmap that are supposed to be implemented are postponed. For companies that have figured out how to align the processes they have with the softwareintegration becomes really easy." Issues do come up when systems aren't totally integrated, said Palmer. But he said that Magna Powertrain is dealing with them. "A perfect world would be one system. Our goal was to get to as few systems as possible."

Supply chain risk management software


To be successful in a constantly-evolving global marketplace, manufacturers need to keep their supply chains running at top form. Being able to identify -- and swiftly respond to -- supply chain risk is critical. By implementing supply chain risk management (SCRM) software, manufacturers can stay ahead of changes and problems in their supply chains. In this supply chain risk management software guide, you'll find introduction to SCRM software, read some SCRM software FAQs, learn SCRM management best practices and discover how spend management software works in manufacturing. Browse all of the sections of this supply chain risk management software guide, or jump directly to the section that interests you most: Introduction to supply chain risk management (SCRM) software Supply chain risk management FAQ: The role of the IT manager Best practices for managing supply chain risk management technology Introduction to spend management software

Getting started with supply chain risk management software -- which involves a systemic process to identify, evaluate, monitor and respond to risk conditions that will significantly harm an individual business or product -- means identifying the different types of risk involved in your supply chain. SCRM software can help you evaluate supply chain risk and successfully respond to it. One of the biggest challenges in implementing SCRM strategy lies in determining where the responsibility for supply chain risk rests within a company and within the overall value-chain network. To maintain the integrity of their supply chains, manufacturers need to know how to plan for and respond to risk. Companies that are proactive in mitigating and managing supply chain risk will avert supply chain failures that become front-

page news or adversely impact the bottom line. To begin, manufacturers need to identify who will be in charge of managing new SCRM technology projects and define IT's role in the management process. SCRM technology helps manufacturers plan for and handle disruptions in the supply chain. Companies that invest in the emerging field of supply chain risk management technology are less likely to sustain costly supply disruptions or negative press as a result of the actions of their suppliers. Familiarizing yourself with some SCRM IT management best practices will keep the technology -- and your supply chain -- running smoothly. Manufacturers can use spend management software to reduce expenditures, make cost-effective decisions and gain a better understanding of their suppliers and purchases. Effective spend management technology should provide a better understanding of what manufacturers are buying and the suppliers with whom they are doing business. It should also put in place a mission control system to reduce overall expenditures, spend more effectively and drive internal users to make better business decisions.

Warehouse management systems software


Warehouses are the centre of manufacturing organizations. To run a successful operation, managers need to ensure that materials, good and products flow effortlessly throughout the warehouse. Manufacturers can achieve this with the help of warehouse management systems (WMS) software. In this guide to warehouse management systems software, you'll discover the benefits of WMS for manufacturers, learn how to plan a WMS project, read tips for evaluating WMS vendors, find WMS implementation best practices and build WMS training strategies. Browse all of the sections of this warehouse management systems software guide, or jump directly to the section that interests you most: Understanding warehouse management system benefits for manufacturers Planning for a warehouse management software (WMS) project Evaluating warehouse management system (WMS) vendors and software Top warehouse management system (WMS) implementation best practices Getting started with warehouse management system (WMS) training

WMS software can help you move and store inventory at maximum efficiency and minimum cost. Faster order cycles and cost savings are just some of the benefits of WMS for manufacturers. WMS software's greatest benefit comes from streamlining processes to move items faster and store them more efficiently, leading to reduced inventories and labor costs, increased accuracy and customer satisfaction. Any WMS project brings big changes to your IT and business processes. Implementing WMS software not only changes your IT architecture, it can revolutionize your distribution system as well. Learning some best practices for

avoiding pitfalls and creating a warehouse management software plan will help WMS projects succeed. Building a WMS business case is a good project starting place. WMS software comes in many flavors. WMS software is a major cog in most supply chains, but it's just one part of a complex, interconnected system. Begin the WMS vendor selection process by learning the varieties of WMS software systems, how they differ from such related tools as inventory management software, and what features different vendors have to offer. WMS software helps manufacturers run a productive warehouse. To optimize this technology, keep in mind that WMS is an IT system, albeit one designed to improve warehouse processing. Best practices for WMS implementation include selecting componentized software, assigning a project manager, interleaving tasks, integrating with mobile systems and using voice-recognition technology. Effective WMS training must cover WMS users' interaction with mobile devices and software, as well as new ways of moving goods safely and efficiently through the warehouse. The time and effort needed for WMS user training increases as you move up the scale from bare-bones inventory management and WMS modules to dedicated, high-end WMS software. Training on WMS software is typically provided by the vendor or a third-party consultant. Since its such an established technology, you may be thinking that theres absolutely nothing new going on in the warehouse management systems (WMS) space. Well, youd be wrong. Although the developments havent been as dramatic as they were 10 years ago, much progress has been made to enhance operations and reduce cost of ownershipand more warehouse/DC managers are beginning to make the move to upgrade. The WMS market is going through a metamorphosis. Users have systems that are eight-plus years old and too expensive to maintain and upgrade, too difficult to configure, and have outdated functionality. The solutions have matured, and thats why were seeing more replacements. While the changes have been more evolutionary than revolutionary, they range from enhanced functionality and better integration with other supply chain systems to new modes of delivery and use. Heres a deeper look at the top five trends that are the driving the evolution of WMS.

Evaluating warehouse management system (WMS) vendors and software Selecting a warehouse management system (WMS) vendor is an important decision for any manufacturer. WMS software is a major cog in most supply chains, but it's just one part of a complex, interconnected system. The first step in evaluating WMS vendors is to understand the varieties of WMSs and how they differ from such related tools as inventory management software. WMS software is sold either as a standalone application or an optional module in a suite from a major ERP vendor such as Oracle or SAP. Standalone products, in contrast, are often called "best of breed," according to Steve Banker, service director for supply chain management at ARC Advisory Group. Some best-of-breed players include High Jump, Manhattan Associates and Red Prairie, while Infor is a hybrid ERP and best-of-breed vendor. Banker noted that

while most WMSs are rule-based, a few of the independent vendors, specifically, High Jump and Sterling Commerce also sell a more flexible kind that applies business process management (BPM) logic to warehouses. Although inventory management software handles one of the primary tasks of a WMS, it is more narrowly focused. It is also more of a planning tool and doesn't provide the live, real-time monitoring of a WMS, Banker said. ERP suites have long had inventory management tools, but ERP companies have moved their inventory logic into a WMS, or purchased one. Manufacturing vs. Retail WMS software Some WMS software packages are more oriented to either manufacturing or retail warehouses. ERP-based WMS tends to go into warehouses attached to factories, according to Banker. Large distribution centres, in contrast, handle finished goods and are typically best served by best-of-breed WMS. Still, in this article on ARC Advisory Group's blog, Logistics Viewpoints, Banker writes that simple distinctions have started to blur as WMS heavyweights like Manhattan have added ERP-like human-resource features, and Oracle, for example, sells its WMS to aerospace customers who like its integration with Oracle's enterprise asset management module. The most highly automated facilities also have a warehouse control system (WCS) that controls conveyor belts, carousels, and other materials-handling systems. It's important to pick a WMS that can integrate with your WCS at both the technical and process level, Banker said. "The WMS is sort of the order logic," he said. "They know that this customer has an order, they know the SKUs. The WCS is more the move logic." Selecting a WMS vendor Once you've narrowed your focus to vendors that sell the right kind of WMS, the usual advice applies: Look for those that seem financially viable (and therefore likely to be in for the long haul), have recently invested in their software, offer strong consulting services, and are experienced in your industry. Other tips from WMS software analysts and consultants: Ask how easy it is to add optional modules, such as yard management and slotting optimization, as your needs grow. Beware of lowball software pricing. It can mask higher overall costs for implementation, training, customization, and maintenance. Scrutinize the thoroughness of the integration between WMS modules and the vendor's other offerings. Some WMS software that came into the portfolio through acquisition is not as well-integrated as software developed in-house. Asking about a WMS's history can smoke out a legacy product that could soon be discontinued and replaced by the vendor's own brand. Ask for references to customers with similar needs as yours and talk to them.

Determining the ROI of a WMS upgrade How does a company know when it's time for a warehouse management system (WMS) upgrade? How can it determine WMS ROI? Richmond Cold Storage, of Richmond, Va., provides freezer warehousing to food processing companies. The company provides SKU-intensive case picking programs and blast freezing to its customers through 16 U.S. facilities, totaling approximately 40 million cubic feet of warehouse space. The company also has a logistics division that provides 3PL transportation and logistics services, including rail service and cross-docking, in five mid-Atlantic states. Some of Richmond Cold Storage's customers want to enter orders online via the Web, track orders, and generate reports. Others want case picking, cross-docking or a variety of fulfillment services. Whatever the customer wants, Richmond Cold Storage needs a WMS and logistics management system that can handle it. "Every customer has unique requirements," said Joe Knausdorf, vice president for information technology at Richmond Cold Storage. Even with established customers, Richmond Cold Storage often finds itself scrambling to meet their requirements. "A customer will make a change in its SAP system, so we have to change the system on our end," Knausdorf said. WMS software customization poses challenges In 2007, the company realized that the WMS software it had been running for more than a decade was no longer up to the task. "We needed something that would give us adaptability and control," Knausdorf said. The cold storage provider also needed a WMS that could easily adapt to all its customers' requirements without having to go through a slow and costly customization. The need for customization has long posed a challenge to WMS users. "WMS has always needed to be customized and then integrated with back-office systems," noted Greg Aimi, director of supply chain research at AMR Research in Boston. Richmond Cold Storage was at a turning point. "We could get involved in a costly upgrade of our old WMS or replace it," Knausdorf said. Since the company had not looked at the WMS software market for years, it was not clear whether the best action was to upgrade the existing system or replace it. Define WMS software requirements prior to upgrade At this point, Richmond Cold Storage brought in a consulting firm to perform the initial review of its existing WMS environment and help define its WMS requirements. "We wanted the consulting firm to act as a buffer," Knausdorf said. "[The consultant] would take our requirements, contact WMS vendors and filter the sales calls." We knew that doing nothing was not an option, and we were talking about hundreds of thousands of dollars no matter what. Joe Knausdorf vice president, ITRichmond Cold Storage Knausdorf knew that his company was facing a major financial investment whether it performed a WMS

software upgrade or brought in a new system. "We knew that doing nothing was not an option, and we were talking about hundreds of thousands of dollars no matter what," he said. With that kind of money involved, top management expected the WMS selection team to perform a formal ROI. For this ROI analysis, Knausdorf again turned to the consulting team, who had experience in warehousing and WMS systems. The team had an existing ROI model, against which it applied Richmond Cold Storage's spending levels, industry benchmarks and likely productivity gains. The ROI analysis looked beyond the initial acquisition cost to include post-deployment costs, such as maintenance and customization. More manufacturers deploying new WMS systems The decision was made to go forward with a new WMS system, a decision that more and more companies are making. In general, "we see WMS generating a payback in less than one year," observed Steve Banker, service director for supply chain management at Dedham, Mass.-based research firm ARC Advisory Group. The consultants scanned the WMS market and brought back an initial list of six vendors. Further analysis narrowed the six down to a shortlist of two. We see WMS generating a payback in less than one year. Steve Banker service director for supply chain managementARC Advisory Group In the end, Richmond opted for the HighJump Warehouse Advantage WMS from HighJump Software. "HighJump had a higher upfront acquisition cost, but it would save us much more in the long term by avoiding the need for customization," Knausdorf said. Building WMS processes requires SQL skills The HighJump Warehouse Advantage WMS allows users like Knausdorf to build a new process in the WMS. The customer can define the new process using the HighJump toolset, which in turn requires the user to have basic SQL skills. "HighJump is the only vendor [that] has something like this that is affordable," Knausdorf said. He noted that Yantra Corp., a supply chain software vendor recently acquired by Sterling Commerce "has something similar, but it costs more and has nothing pre-built. With HighJump, you have a large base of pre-built parts. You take the pre-built part and start modifying it as needed using your coding and SQL skills." At Richmond Cold Storage, this reconfiguration of the WMS, which HighJump refers to as adaptability, is done by Knausdorf's staff, though he said he thinks he could do it. Since Richmond could change the HighJump WMS through configuration rather than customization, the company figured it could respond to the various customer requests more quickly and at a lower cost while avoiding the need to charge customers for customization. It is too early for Richmond to have quantified its ROI, but early indications suggest it may not take long. Knausdorf recounts a prospective cold storage

customer that had high case picking volumes. To accommodate the customer's requirements, some processes in the WMS needed to be modified. With the previous WMS, that adaption would have posed a problem. With the HighJump WMS, it was simple enough to do, and Richmond Cold Storage won the company's business.

SCM and CRM integration


Supply chain management (SCM) and customer relationship management (CRM) software are not usually mentioned in the same breath -- let alone SCM CRM integration -- and with good reason. SCM software chugs along, ensuring that materials and information flow through the supply chain with the highest possible efficiency and the lowest possible cost. Meanwhile, CRM software focuses on the identification, targeting, acquisition and retention of customers, and on the building of strong relationships between the business and its customers. Thus, the two tools tend to sit at opposite ends of the enterprise and deal with different sets of data albeit with the same end goal. There have been exceptions -- notably Dell Inc.'s famous skill at building to order, which was based in part on tight integration between customer-facing functions and supply chain elements. For the time being, however, most organizations are not run like Dell so "connecting SCM and CRM is not an integration challenge in the traditional sense," said Simon Ellis, an analyst with Manufacturing Insights. "CRM and SCM need to function in adjacent spaces and there needs to be a process that connects them loosely." Still, even loose SCM CRM integration can be important. "We have all watched the economy over the last 18 months and it is clear that consumers are looking to get the best possible deals and they want to stretch their dollars further," Ellis said.

One implication of this trend has been the rapid increase in store brands or private label brands -- a trend that Ellis said can be offset by aligning sales and production, leveraging information to increase innovation and better management of the post-sales element of the customer relationship. "Those things are a sweet spot for CRM and SCM integration," said Ellis. Hyundai boosts supplier relationship management process with Seeburger Communicating with a diverse network of suppliers is one of the toughest challenges facing manufacturers. Tasks such as scheduling deliveries, standardizing requirements and tracking order shipments become more daunting when dealing with many suppliers in many countries. To keep its supply chain flowing smoothly, auto maker Hyundai turned to business integration software. In 2004, the management team at the Hyundai Motor Manufacturing plant in Montgomery, Ala., was looking for software that would allow it to improve its supplier relationship management processes. The plant does business with a network of around 80 manufacturing suppliers, some in North America and others as far away as Korea.

SCM and PLM integration


There is a natural overlap between product lifecycle management (PLM) and supply chain management (SCM). In the past, the two areas have rarely been integrated. But today, many organizations are deciding that the two perspectives cannot be kept entirely separate any longer and are turning to SCM PLM integration. "Increasingly, you must understand what your supply chain looks like when you are managing the design and development decisions," said Noha Tohany, an analyst at AMR Research. "It is a matter of being cognizant of the limitations and knowing what you are looking for when you design the product and when you select suppliers." In other words, a company like Motorola may want to know how they will design their supply chain network not only to support product development and design, but also to make sure they can serve emerging markets and be the fastest to market. In the past, this integrated thinking was often missing, said Joe Barkai, an analyst at Manufacturing Insights. The result was that companies were surprised when problems surfaced in manufacturing -- problems like cost, reliability and manufacturability -- that were then expensive to fix.

Today there still isn't much integration between SCM and PLM software products, according to Barkai. But he says the more crucial issue is process integration making sure the people talk even if the applications don't. "In point of fact most of the information in a PLM system applies to design considerations while most of the information in SCM applies to manufacturing," Barkai said. "The PLM information becomes less important when you move into volume production -- it is only relevant to the SCM side in development or as you ramp up to production." The bottom line is that companies need to focus on integrated thinking rather than integrating software, although that can have a role. In other words, it is not so much about tight integration of tools as it is about being able to access data across SCM and PLM. That way you can maintain a single version of truth and decision makers can make use of either perspective. While there is a natural overlap between product lifecycle management (PLM) and supply chain management (SCM) software, the two have rarely been integrated -until now. Based on discussions with analysts, here are answers to some frequently asked PLM questions on how to think about, prepare for, and conduct integration between SCM and PLM.

Bottom line benefits of integrating PLM and SCM software


SCM PLM integration can have a positive impact on costs when it leads to rationalizing procurement. For example, leveraging the visibility provided by both PLM and SCM could allow a manufacturer to identify opportunities to reduce the number of chemical suppliers or standardize on a smaller number of components. Both of these hypothetical examples should result in lower purchasing costs, greater leverage with suppliers, and probably a more robust supply chain.

Strong selling points for SCM PLM integration


One of the arguments for integration, something that is growing in importance, is increasing regulation and the related topic of sustainability goals. Mandates such as Europe's Restriction of Hazardous Substances (RoHS), Registration, Evaluation, Authorization and Restriction of Chemical (REACH), and End of Life Vehicle (ELV) mean that the Wild West days of sourcing are over. Companies need to be able to document and track what goes in to their products, where it comes from and, often, what happens to it after it reaches the customer. The PLM side of the equation provides a viewpoint based on the creation and manufacture of the product while the supply chain management view offers the opportunity to ensure traceability from cradle to grave.

Complexity and time consumption


Integration can be complex but fundamentally, the most important aspect of integration is on the process and practices level rather than bits and bytes. In other words, it is not as critical that PLM and SCM applications be tightly integrated as it is that the design and manufacturing operations learn to work together and share their most important bits of information. Integration is not usually something that can be implemented overnight. Usually, there are a large number of business processes that have to be assessed and understood first. Sometimes there are good reasons for the way things are and

sometimes it's just a matter of old habits. Systems and applications also need to be assessed to determine the feasibility of integration.

The barriers to getting design and manufacturing and PLM and SCM to work together
The barriers are mostly cultural. But it takes more than better sociability to get these two perspectives together. There are complicated tradeoffs that have to be thought through by management. For example, quality and cost are sometimes mutually exclusive. Design and manufacturing need to come together to determine where and when to compromise and with what end goal in mind. Likewise, choices about how things are designed and manufactured need to include a look at whether to make or buy and what level of granularity to impose.

Incorporating and using RFID in logistics


A few years ago, Wal-Mart sent the supply chain management (SCM) logistics industry into a tizzy when it declared radio frequency identification (RFID) to be its supply chain and logistics standard. Software vendors scrambled to build functionality for RFID in logistics, SCM, warehouse management, and transportation software compatible with RFID. Today most of SCM software products have RFID capabilities. Since then, Wal-Mart has backed off its demand for RFID from suppliers, according to Greg Aimi, research director for supply chain at AMR Research, and RFID in the supply chain simply hasn't evolved as initially envisioned. Originally the idea was to put RFID tags onto every individual item as it was manufactured -- tubes of toothpaste, sweaters, industrial parts, anything -- as well as on the pallets and containers that moved them around. This would enable visibility of a product at every point in the supply chain where it passed near an RFID reader. The result would be nearly perfect supply chain visibility for each individual product, the Holy Grail of SCM. Initially, the cost of the technology, particularly the RFID tags, was too high. But the tags were just one part of the problem. "What really was lacking was a pervasive network of readers around the world," said Aimi. Readers were needed

on every loading dock, terminal, and warehouse where items would pass. By contrast, bar code scanners are everywhere. Even third-party logistics (3PL) providers that have implemented SCM-logistics systems that can handle RFID are not reporting great demand for RFID from customers. There is, however, some RFID action with the various containers that move things around distribution centers in closed-loop asset tracking situations. "You put an RFID tag on a piece of warehouse equipment and get multiple trips out of the tag," said Simon Ellis, practice director for supply chain strategies at IDC. The cost of each tag gets amortized across multiple trips. Someday the cost of RFID tags will drop to a few pennies or less and RFID readers will be pervasive around the world. Then, a supply chain manager could track an item from its manufacture in China to its arrival at a distribution center in North America and, ultimately, as it passes through checkout at a store in Boston. But that kind of visibility remains a long way off.

Green supply chain management


Browse all of the sections of this green supply chain management guide, or jump directly to the section that interests you most: Set goals before choosing green SCM software Top green supply chain software best practices How to use technology to build a sustainable supply chain Four ways to apply green supply chain technology to manufacturing

Interest in environmentally sustainability or going green has skyrocketed in recent years. Manufacturers have responded by investing more time and money into initiatives to reduce their carbon footprint, cut production waste and improve the environmental efficiency of their supply chains. In this green supply chain management (SCM) guide, youll find tips for selecting green SCM software, learn some green SCM best practices, discover how to use green SCM in manufacturing and read advice for building a sustainable supply chain. Set goals before choosing green SCM software Selecting the right green SCM software will help ensure that supply chain sustainability initiatives run smoothly. There are a number of factors to look at during the green SCM software selection process. Before getting started, it is

essential to understand both what your organization's corporate goals and objectives are around corporate social responsibility (CSR) as well as what are your company's specific program goals to achieve these objectives. Opting for an installed versus Software as a Service (SaaS) deployment is a secondary consideration. Top green supply chain software best practices Green supply chain software is a valuable tool for cutting waste and costs. To get the most out of their green supply chain software, manufacturers should familiarize themselves with some industry green supply chain software best practices. Top green SCM best practices include leveraging the tools that you already have, using technology for communication between stakeholders and suppliers, avoiding unnecessary and wasteful activities and encouraging customers to also go green through their purchases. How to use technology to build a sustainable supply chain In response to regulatory requirements and customer expectations, many manufacturers are looking to sustainable supply chain technology. Having the right technology in place will help drive supply chain sustainability. Besides helping product development, procurement, and supply chain teams meet CSR requirements, implementation of so-called green supply chain programs, in many cases, is also lowering costs. Four ways to apply green supply chain technology to manufacturing Manufacturers can make their operations more environment friendly and lower costs by adopting green supply chain technology. The most beneficial green supply chain technology creates sustainable environmental benefits as well as improves company bottom lines. That's why, across industries, companies are extending CSR and green activities to their suppliers. Manufacturers have a variety of choices when it comes to applying green SCM, including packaging engineering and redesign, materials substitution, certification and logistics optimization.

Global supply chain management trends promote visibility, flexibility


Already struggling to keep systems integrated and up to date, manufacturers are facing new pressures on their supply chain management (SCM) operations resulting from globalization and the recession. While software vendors are quickly bringing new software as a service (SaaS) logistics and transportation management offerings to market, other trends are affecting global supply chain management trends. Outsourcing and ever-shortening product lifecycles, along with globalization, have put a new kind of pressure on supply chains, according to Mark Averskog, director of solution management within SCM at SAP. As manufacturing has shifted overseas, supply chains have become longer, with more time between when suppliers make products and when they're delivered to the manufacturer. "The pipe is very long, and there's a lot more inventory in the pipe," said Anil Gupta, principal of Applications Marketing Group. "A lot of companies are going through the conversion of making changes in technology to make the supply chain more flexible."

Manufacturers want a better handle on how their supply chain is working and how it will respond to future changes, especially after the global economic downturn. "More and more customers are asking about visibility," said Elinor Price, director of product marketing at Aspen Tech. "It's in two areas: the visibility of what the supply chain [will look] like in the future and the visibility of what's happening in the supply chain right now." Price also sees the supply chain acting as a foundation for business intelligence platforms. "We're seeing a lot more people looking at the supply chain with an end vision around analytics and business intelligence," she said. Global supply chain trends include event management, systems integration Companies are looking for more flexible and responsive supply chains, according to Nigel Davies, vice president of supply chain at CDC Software. "What's emerging in manufacturing supply chain management is the principle of enterprise event management -- the collective monitoring of end-to-end processes," Davies said. Enterprise event management lets manufacturers monitor what's going on in real time, he said, "and take corrective action before it's too late." Integrating SCM with other systems is still a top priority for many manufacturers. "A lot of companies don't have a fully integrated solution," said Robert Axenrod, president of Millbrook Consulting Group. "They are able to cobble pieces together, but it's not seamless." He said, for example, that customs-related tools in international shipping are often not well integrated, and many companies don't have warehouse actions tied in well with the rest of supply chain management software. "At the end of the day, tying them together can be a costly endeavor," Axenrod said. "People don't make the investment." Other manufacturers are happy with the options offered by their integrated SCM implementations. Before implementing SYSPRO's SCM software, "anything manufacturing was done on paper or in a separate system," said Richard Gordon, president and CEO of Glenview, Ill.-based Chocolate Potpourri, a maker of gourmet chocolates. The next step for the small business's SCM software will involve adding more functionality to round out information within the system -adding photos to product descriptions, for example. SaaS playing its part in future of supply chains SaaS or cloud computing has also made a splash in the SCM market. "There will be a move toward a cloud computing approach," Axenrod said. Cloud computing can help improve applications that might not all be functioning at the same level. "Certain parts [of a supply chain software implementation] are best in class," he said. "But the trouble with a fully integrated ERP system is that every module is not best in class. You're going to make sacrifices, and supply chain is an area where you can't make sacrifices." "[At SAP] the general strategy is to try to unify user interfaces," Averskog said. "Interface technology will all eventually be Web-based. It's kind of a mixed bag right now."

But SaaS isn't necessarily for everyone. Chocolate Potpourri's Gordon said his company's network does what he would want a SaaS product to do. "The key people in the company, if we're at a computer with Internet we can get to SYSPRO using the VPN or remote desktop," he said. "We're kind of there without doing the SaaS approach." Gordon admits that SaaS could help them with multi-location facilities, letting all systems be centralized. He advises using technology only where it's appropriate. "Don't get sucked into the bells and whistles of the software," he said. "They're cool, but are they relevant to running your business?" Chocolate Potpourri has software modules that might do 30 different things, Gordon said, "but we're only using one of those because that's where the business need is. We're just using our software for things that run the business."

Demand-driven supply chains help AMR Research's top 25 trump recession In a year marked by bailouts and bankruptcies, demand-driven tactics have helped the 25 companies ranked by AMR Research as having the best supply chains survive the recession. The top 25 companies -- which this year include Apple, Dell and Procter & Gamble -- weren't immune to the economic downturn. The Dow Jones Industrial Average for the group fell an average of 29% in 2008. But by building and maintaining flexible, demand-driven supply chains, the companies were able to adjust to fluctuations in demand, according to Debra Hofman, vice president of the AMR Supply Chain Top 25. As such, they outperformed the market -- the Dow Jones Industrial Average fell 34% overall in 2008. "They're all having trouble," Hofman said. "The lesson is resilience and flexibility in response to a huge, falling off the cliff of the economy in the middle of the year." AMR annually ranks the supply chains of Fortune 500 retailers, manufacturers and distributors. The companies are ranked based on their financials return on asset, inventory turns and revenue growth as well as opinions of peers and AMR researchers on how closely their demand-driven supply networks fit the AMR ideal. The defining characteristics of ideal demand-driven supply chains are managing demand, not just responding to it. There is a networked, not linear, approach to global supply, and they have an ability to embed innovation in operations, rather than just keeping it isolated in a laboratory. All of the companies on this year's list, named "flight-to-quality" -- a play on investors moving their money away from riskier investments to safer investment vehicles -- have deeply established reputations and long histories. Most companies on this year's top 25 supply chains -- the fifth year AMR has ranked the supply chains of Fortune 500 companies -- are its old stand-bys.

New to the list this year were Colgate-Palmolive (20), Unilever (22) and Intel (25), which bumped off Anheuser-Busch, Royal Ahold and Johnson Controls. "There weren't as many surprises," Hofman said. "The companies that were in a better cash position and had a more flexible supply chain were better able to cope with the economy." Once again, Apple (ranked first last year), with its focus on building and delivering value with ideas rather than strictly products, took the lead by a wide margin -- more than two points ahead of second-place Dell. In turn, Procter & Gamble's flexible supply chain allowed it to shift its strategy to producing lower-cost items by relying on external partners for half of its product innovation. Supply chain management software is key to the success of these companies, Hofman said. For instance, Cisco, which jumped from eighth to fifth this year, leverages technology for better operational performance, including a three-layer system for demand planning. It includes a "customer value chain management" structure that combines quality, customer fulfillment and the traditional supply chain, according to the report. Hofman is also seeing much more interest from clients around demand forecasting software. "You can't do this without software," she said. "It requires communication, collaboration, the demand and supply of products being integrally connected." Companies that want to emulate Apple and the other 24 companies on the list must approach supply chain management (SCM) more as a way to add value than a way to cut costs. They are demand-driven, meaning that they sense demand, shape it and orchestrate a profitable response, according to the report. AMR blamed the success of Apple's iPhone for knocking down the rankings of Nokia (ranked second in 2008 and sixth in 2009) and Sony Ericsson (ranked 16th in 2008 and 23rd in 2009). "The success of Apple's iPhone continues to change the playing field for mobile devices," the report states. "Even more important, it is changing the rules for software and consumer information services."