Embrace An Upgrade, Avoid A Makeover

Supply chain application integration is becoming increasingly sweeping in scope. From shop floor manufacturing through back office accounting to customer-facing order fulfillment activities, companies are working to connect nearly every aspect of their businesses. Consequently, a complete supply chain solution comprises an expanding array of software tools. For example, many ERP (enterprise resource planning) suites, even those designed for the midmarket, offer integrated WMS (warehouse management system) and CRM (customer relationship management) modules. Or, if they don't, they at least support tight integration with such tools via EAI (enterprise application integration) interfaces.

But, even as supply chain suites are being designed to do more, companies must carefully determine how much standard, off-the-shelf functionality fits their enterprise needs, as well as how much customized functionality will be required. In addition to considering how well the software will serve them, organizations should also examine how well it will serve their customers and trading partners. "Many companies are competing just to keep their existing customers," says Charlie Allieri, director of marketing for supply chain software vendor Lilly Software Associates, Inc. (Hampton, NH). "They want end-to-end integration so they can gain a competitive edge by offering value-adds, such as custom labels generated by a WMS." The "competitive edge" factor is particularly important at companies where customers and partners already expect some supply chain functionality to be extended to them.

When Will You Need Web Services?
Supply chain software vendors acknowledge that their customers' customers and trading partners want more direct communication paths. In supply chain execution terms, that means "collaboration." In supply chain software terms, it increasingly means the rollout of applications that 1) support XML (extensible markup language)-based information exchanges, 2) are built on the Microsoft .Net framework, and/or 3) offer Web services interfaces. "There is definitely a drive out there to simplify intercommunication," says Paul Dorius, president of ERP vendor eXegeSys Inc. (Salt Lake City). "You can see that in efforts to share information via XML, which is basically the next generation of EDI [electronic data interchange]." Says Allieri, "We see tremendous promise in .Net and Web services. In fact, all of our future development will be in the .Net framework."

However, companies don't need to push the panic button and move to complete Web-based collaboration right away. That's because relatively few partners are ready to move with them. "We're still seeing plenty of companies connecting new trading partners via traditional EDI," says Terry Cline, EVP for supply chain software vendor IQMS (Paso Robles, CA). "We believe that XML and Web Services will eventually be the way to go. But, right now, we're seeing only a handful of companies using XML to download information to customers." Allieri agrees. "EDI is definitely not dead - especially in the midmarket," he says.

Pin Your Customers To The Floor
Whether or not an organization is prepared to extend supply chain visibility outward to customers, it should work toward having its own visibility reach inside and outside the enterprise. In a manufacturing environment, for instance, a thorough view includes granular shop floor processes, as well as broader customer service issues. The connection between the two - production and customers - is often missed. Companies typically run point-specific MES (manufacturing execution system) software separately from their ERP tools. "A standard ERP system probably doesn't have the capability to monitor the quality checks that should be going on during manufacturing," Cline says. "A focused manufacturing system may have that capability yet have no view of the bigger picture of inventory levels, sales demand, shipping, CRM, and so on."

ERP systems with built-in MES and CRM modules or ones designed to integrate with MES and CRM can eliminate the disconnect. For example, in responding to a customer complaint about a product, a service representative can use a CRM interface to pull up the quality control history for that product. The system can reveal whether any corrective actions have been taken on the production floor and when the customer can expect replacement shipments.

Don't Break The (Source) Code
As companies study their internal processes to determine their software needs, they should, Dorius advises, examine how much software customization is required to accommodate the company's current business practices. And, they should assess how many of those practices must be altered to accommodate the software. The goal, of course, is to avoid heavy lifting in altering either the software or the business. But, says Dorius, many software packages don't guarantee light lifting. "Application developers typically include parameters for the range of choices they anticipate users making - including common needs for particular vertical markets," Dorius says. "But, if your business processes require a choice outside of those preset parameters, you either have to change your process, open the source code to customize the software, or handle the process in a separate, nonintegrated application."

Dorius advises companies to look for what he calls "service-oriented architectures," or, software designed to allow for 5% to 20% of the users' processes to be handled by customized yet smoothly integrated subapplications. "A service-oriented architecture expects updates to be added and protects users' customized processes from one version to the next," he says. "It allows users to temporarily stop a standard routine, run a subapplication they want to integrate, and pick up the application's standard routine where it left off."