Supply chain execution proves a rich niche for best-of-breed solutions

If the tendency for most manufacturers is to settle on a single enterprise suite standard for a wide range of functions, the warehouse remains a resolute exception. “We looked at warehouse management systems [WMS] from the major enterprise vendors,” says Chris Moore, Uponor VP of information technology, “and decided that our needs were too rich.

By Malcolm Wheatley, senior contributing editor May 1, 2008

If the tendency for most manufacturers is to settle on a single enterprise suite standard for a wide range of functions, the warehouse remains a resolute exception.

“We looked at warehouse management systems [WMS] from the major enterprise vendors,” says Chris Moore, Uponor VP of information technology, “and decided that our needs were too rich. Their offerings were just too basic for us.”

In the upstream supply chain, for example, Uponor wanted the facility to take into company inventory the resins and brass fittings that were shipped direct to its New Brunswick plant from Europe. Located near an Atlantic seaport, shipment to Saint John made more sense than the longer journey to Minneapolis, says Moore. The WMS applications Uponor first looked at struggled to cope with the multiple receiving locations and scenarios that this entailed.

The downstream supply chain was just as problematic. Some customers wanted packing lists sorted by order; some by part number—but the systems being looked at only sorted items one way. Some customers wanted their own part number description to appear on the packing list, as well as Uponor’s, while others wanted “license plates” attached to pallets of product destined for them: a single bar-code label for one-swipe acceptance of everything on the pallet into inventory.

Finally, a drive to go paperless was thwarted by the discovery that warehouse wireless capabilities could come at a premium.

But with HighJump Software ‘s Warehouse Advantage WMS—eventually chosen by Uponor—those wireless capabilities came built-in.

While the HighJump integration with the enterprise backbone was at times painful, concedes Moore, it was worth it. “We couldn’t compromise,” he says. “We needed functionality that went beyond the very basic set of capabilities that is otherwise on offer.”

Not the lone ranger

Uponor, it turns out, is far from alone in having execution requirements that demand an application out of the ordinary, observes Chad Collins, HighJump’s VP of global strategy.

“It’s something we see quite often,” says Collins. “Customers go to the major enterprise suite vendors and find the functionality on offer isn’t mature enough or as feature-rich as they’d like. They’re coming to a best-of-breed vendor like us to plug the gap.”

And in fact, that need can propel the staunchest enterprise suite supporter into the arms of any best-of-breed vendor with an application possessing the requisite richness.

“Execution is more important than ever,” says Larry Welch, former VP of global indirect and services procurement at Palo Alto, Calif.-based Hewlett-Packard (HP). In the battle for market share and profitability, he observes, supply chain planning is the entry ticket, “but if you don’t have the execution capabilities to deliver on that planning, you’ll lose out to competitors that do.”

It’s a theme close to his heart. A few years back, seeing no offering on the market that met HP’s rich procurement execution requirements, Welch led an initiative within HP to construct one from scratch, linking applications and pieces of functionality from vendors including Ariba and VerticalNet .

As manufacturers looking for richer supply chain execution capabilities find solutions, the spotlight should shift back to having plans that actually deliver. Failure can no longer be obfuscated based on yesterday’s excuse of flawed execution.

For St. Petersburg, Fla.-based contract electronics manufacturer Jabil Circuit , the Kinaxis RapidResponse application is blurring the distinction between planning and execution by creating plans that are immediately capable of being executed to deliver the desired result.

“Within a few minutes of getting a new forecast from a customer, we can go back to them and say: ‘Here are the implications of this’,” says Andy Joyner, Jabil planning program manager.

It’s a capability in tune with marketplace needs. Once upon a time, customers were happy with a one-week response time, Joyner notes. Then they wanted it within a day. Now—thanks in part to parallel investments in faster servers to run its supply chain applications—Jabil can offer a response in a fraction of the time it used to take.

As outsourcing is adopted to achieve optimal resource efficiency, the supply chain execution project gains complexity. What’s needed is the means to impart visibility and accountability across multiple enterprises.

“We can compare our master schedule to a customer’s latest forecast in minutes, and see not only that there’s—say—a million dollars of purchased parts that need expediting, but the individual part numbers and purchase orders involved,” says Joyner. “It’s our belief a company that can effectively manage this information, make fast and intelligent decisions, and then execute to those decisions is going to win in the marketplace.”

Growing complex networks

It’s tempting to regard rich execution capabilities as necessarily synonymous with rich execution applications. But there’s a difference. Sterling Commerce , for instance, sees multi–enterprise service-oriented architecture (SOA) as a way of creating and managing flexible business processes that can span global value chains.

“As businesses globalize, the number of trading parties involved becomes larger, and you need integration and rich execution to make it work,” says Lorne Jones, general manager, distribution and logistics industries, Sterling Commerce.

But talk to manufacturers about the extended supply chain, Jones adds, and relatively few can point to significant numbers of supply chain partners that are integrated with their own operations.

Bolstered by SOA, Sterling’s Gentran Integration Suite—with its high–volume electronic message exchange, complex routing capability, translation functionality, and flexible interaction with multiple internal and external systems—enables that integration faster, and with less IT resource.

“Rich execution,” enthuses Jones, “is about enabling things to work as efficiently within the extended supply chain as they do within the four walls of the factory.”

The vision of multi–enterprise SOA encompasses business process integration and B2B collaboration to extend revenue–generating processes to trading partners within the supply chain—regardless of the technologies and standards employed within their different domains.

For Walnut, Calif.-based ViewSonic , a manufacturer of computer monitors and digital projectors, turning that vision into reality has earned the company a reputation as “easy to do business with,” says Paul Gonzalez, ViewSonic senior business solutions specialist. “They’re not just empty words,” he stresses. “Sterling’s description of multi-enterprise SOA really has been our experience.”

The company processes more than 1.5 million transactions each year, and sources components from hundreds of suppliers around the world. It delivers finished product to an equally diverse mix of retailers and channel partners.

“We no longer worry about setting up interfaces with new partners—it just happens, with smaller companies as well as bigger ones,” says Gonzalez. “In the intensely competitive marketplace in which we operate, that’s a real benefit.”

Boeing at the crossroads

Supply chain execution also plays into the intensely competitive tussle for market share taking place between Chicago, Ill.-based Boeing and Toulouse, France-based Airbus . For Boeing, the new 787 Dreamliner aircraft represents a fundamental shift in manufacturing philosophy and approach. Working closely with more than 100 major structural component and systems partners around the world, coordinating the end-to-end supply chain across these various businesses is paramount to the program’s success.

In its efforts to build the 787 Dreamliner as cost-effectively as possible, Boeing made a bold commitment to increased outsourcing, which, at least in the initial stages, has led to supply chain execution problems.

It’s a capability provided by the Exostar supply chain management solution, powered by E2open software, which manages the complete order life-cycle and returns process across multiple partner tiers, while also tracking planning schedules and consumption, and managing replenishment for Boeing’s partner-managed inventory program with Tier 2 partners.

Designed to allow Boeing and its partners to collaborate on planning schedules, issue purchase orders, track purchase order changes, exchange shipping information, manage returns, track shipments, and manage inventory consumption across the multiple tiers involved in the manufacturing process, the system also monitors events and process exceptions that occur between partners, and evaluates the impact of these events against the master schedule using synchronized, time–sequenced information.

“It’s crucial that all of the major subassemblies arrive at Boeing for final assembly at the same time,” says Lorenzo Martinelli, senior VP at E2open. “If a subassembly is late or missing, there is very little time or space for Boeing to store the other large components. If a partner cannot meet an expected delivery date, then Boeing must adjust the schedule and potentially delay arrival of the other assemblies.”

Unfortunately, as any software vendor can tell you, an application can’t do the work for you. Assembly of the initial instances of the 787 has been plagued by delays in delivery of outsourced work, and there have been complaints about lack of transparency into outsourced operations.

Moreover, Airbus too has been plagued by assembly problems due to poor communication of design changes impacting work at multiple locations.

This only demonstrates that as manufacturing operations become more highly distributed, there will be ongoing demand for supply chain execution solutions that deliver visibility and accountability. And with any fundamentally new business process supported by emerging technology infrastructure, achieving productivity benefits is a change-management and human-capital management project that can be of significant duration.