Supply Chain

Is the Supply Chain a viable method for moving products in the twenty first century? It was developed so long ago, I am not sure anyone can pin point the exact beginning. The chain represents a linear process that moves raw materials and resources from extraction through a manufacturing capability through logistics and warehouses to an end user.

The traditional supply chain is like an old fashioned audio or video tape. You have to start at the beginning and move to the end in a linear fashion. There are no short cuts, although you can sometimes speed up the process.

Then we went from tape to discs to CDs and DVDs and MP3 players. Now you can get to any point of the recording at anytime. Why can’t we figure out how to do the same with our supply process?

One reason is that it scares many people in the industry. The word “disintermediation” jumps to mind. What if we could go around distribution? Could it be eliminated? Can we buy direct?

Of course the answer is yes. In some industries, where distribution added no value other than sending an invoice, it has been eliminated. The new world will no longer tolerate actions that add cost but not value.

Distributors that expect to survive will need to have a value proposition that can be justified by the customer. It may be supporting a “Just In Time” operation by keeping stock close at hand and delivering it as needed. Some users will pay for a middle man who will purchase product in manufacturer’s quantities, but repack and ship in smaller user quantities. For some customers, the value will be engineering and support. There may be components of training and safety education. Rental, repair and support are other value added capabilities.

In each case, it is important to know how to measure (quantify) the value so it can be justified. Be prepared to break down what you do into measurable functions. It is the only way to survive in a random access world. Then you can run your business to deliver value for a fair price. It is the way of the future.

Available To Promise

What is available to promise? Available to promise (ATP) simply means that a product is in stock and can be promised to a buyer. The Available to Promise (ATP) function provides a response to a customer order with a quantity and delivery date commitment. It helps businesses with supply and demand.

Available to Promise is important in delivering fast access to vital inventory information, including current and future positions. Just think you can avoid lost sales, backorders, dead inventory and poor customer service with information that helps you make the most effective use of your inventory and helps to maximize your profitability.

What does available to promise mean to the customer? We all know how it feels to order something and have it not be in stock or have to wait longer for it to be delivered. In today's tightly controlled supply chains, one item being out of stock can screw up the entire production process and can cost companies money. That is why Available to Promise is so important because it guaranties delivery of the item and helps to exceed your customers’ expectations. A great example of this can be found on this webpage: http://europa.eu.int/ISPO/ecommerce/drecommerce/answers/
000274.html.

As a result it is critical to businesses to have up-to-date ATP information at every step of the supply chain. Now that software supports supply chains, it is clearly necessary that the software takes into account ATP. Many producers of business enterprise software provide ATP components. The advantage of ATP software is you can easily access information on material availability that can be read at a glance for making quick decisions.

This can seem like a simple thing, but really what does it take? Is there software out there to help you with this process and what is the cost? To learn more about the companies that provide available to promise software, visit the vendor pages on our website: http://www.software4distributors.com.

Announcing Exact Software Acquisition to Longview Solutions

Exact Software, one of the world’s leading providers of business software solutions and Longview Solutions, a leading provider of Corporate Performance Management (CPM) software solutions, jointly announced the signing of an agreement for Exact to acquire Longview on September 17, 2007.

This strategic acquisition will strengthen Exact’s business empowerment software portfolio by adding Longview’s powerful CPM platform, and will accelerate Exact’s expansion into the higher end of the mid-market. In turn, Longview will benefit from Exact’s financial strength and geographic footprint as it continues to deliver best-in-class CPM software and services to the enterprise market and further expands into the mid-market.

The planned acquisition contemplates an all-cash purchase price of approximately USD 51.5 million on a cash-free and debt-free basis, representing a revenue multiple of 1.8. The acquisition is expected to enhance Exact’s cash EPS from the beginning, but will have limited impact on Exact’s net result in 2007 due to the transaction date. The transaction is subject to customary closing conditions and is expected to close on or before November 15, 2007.

“The strategic fit of this acquisition is excellent. Longview will broaden our solution portfolio beyond traditional ERP and the complementary market focus facilitates our expansion in the higher end of the mid-market,” said Raj Patel, CEO of Exact. “We are very excited about and absolutely committed to Longview’s proven technology, the quality and knowledge of its employees, and its diverse and distinguished customer base. It also enables our mid-market customer base to benefit from Longview’s experience and expertise in performance management. This is a milestone for Exact in executing our strategy towards becoming the leading business empowerment software company.”

“We are very excited to be joining the Exact family. The two organizations and our respective product suites complement each other very well,” said Mark E. Burton, President and CEO of Longview. “Longview has long been recognized as a visionary and technology leader in corporate performance management. This acquisition will allow us to continue to deliver on Longview’s technology roadmap and accelerate the execution of our sales and marketing strategy. In addition, we believe that a significant number of our customers could benefit from the Exact e-Synergy platform.”

For more information contact Exact Software at http://www.exactamerica.com.

Advantages of Service Oriented Architecture

The advantage of Service Oriented Architecture (SOA) is to make complex software systems simpler. Albert Einstein once said, "Things should be made as simple as possible, but no simpler." Unfortunately software systems do not work that way, some are made too simple to carry out the duties they are supposed to perform. While others are made too complex and the costs of building and maintaining them have rocketed, not to mention the nearly impossible tasks of integrating different systems together. To read more about this, visit this website: http://webservices.xml.com/pub/a/ws/2003/09/30/soa.html.

So as you can see the concept of SOA is not new, but the major challenge is to find a flexible solution that fits well with existing legacy systems. As you may know replacing legacy systems to cope with new architecture is not only costly but it also introduces the risk of malfunctioning. Service Oriented Architecture provides a relatively cheap and more cost-effective way of addressing this major challenge by enabling the upgrade of individual services across different channels and making it not necessary to completely rewrite an application or to keep an existing system that no longer addresses the new business requirements.

Now I will point out the interesting benefits of SOA:

Not just an architecture of services: SOA is the polices, practices and frameworks by which you can ensure the right services are provided and consumed. With SOA it is critical to implement processes that ensure there are at least two different and separate processes for the provider and for the consumer.

Reduce development time and lower maintenance costs: SOA services are easily reused by leveraging existing assets and investments. These can then be rapidly assembled into new composite applications or built on top of existing applications, safeguarding any IT investments.

Higher quality services: A well formed service provides you with a unit of management that relates to business usage and is the basis for understanding life cycle costs of a service.

Lower integration costs: Standardized services know how to work together, enabling disparate applications to quickly and easily connect.

Reduce risk with real synchronization between the business and IT: With well designed services you can improve the communication, by aligning the business and IT processes through a commonly understood architecture.

To dive deeper into these benefits, visit these websites: http://msdn2.microsoft.com/en-us/library/aa480021.aspx, http://www.oracle.com/technologies/soa/index.html.

The goal of SOA then is to allow fairly large chunks of functionality to be strung together to form ad-hoc applications which are built almost entirely from existing software services. The great promise of SOA, is that the marginal cost of creating the next application is zero, as all of the software required already exists to satisfy the requirements of other applications.

Companies have longed to integrate existing systems in order to implement Information Technology (IT) support for business processes that cover the entire business value chain. This helps you deliver new products and services quickly, reduce costs, and extend your network beyond traditional boundaries. By using the Internet, companies can make their IT systems available to internal departments or external customers.

Because of this increasing demand for technologies that support connecting and sharing of resources and data, there is a need for a flexible, standardized architecture. SOA is a flexible architecture that unifies business processes by structuring large applications into building blocks, or small modular functional units or services, to be used by different groups of people in and outside the company. The building blocks can be one of three roles: service provider, service broker, or service requestor. To learn more about these roles, visit this website: http://en.wikipedia.org/wiki/Service-oriented_architecture.

Enterprise architects also believe that SOA can help businesses respond more quickly and cost-effectively to changing market conditions. In traditional IT architectures, business processes, applications and data were locked in independent “silos” that absorbed an enormous amount of IT budget and staff to maintain. Users would have to navigate to separate networks, applications and databases to conduct the chain of activities that completed a business process. Now after a SOA is implemented, you are delivered the data needed for business process activities. Users no longer have to log into multiple systems, search for relevant data and integrate the results manually. The information appears as a single application, delivered on a single screen, all with a single login. To see more on this process, visit: http://www.sun.com/products/soa/benefits.jsp.

Since SOA has a loosely coupled nature, or in other words the service interface is independent of the implementation, application developers or system integrators can build applications by composing one or more services without knowing the services' underlying implementations. For example, a service can be implemented either in .Net or J2EE, and the application consuming the service can be on a different platform or language. To learn more about the software systems that support SOA, visit the Industrial Distribution Supplement Guide at http://www.software4distributors.com/downloads/2007_industrial

_distribution_supplement.pdf.

Change Management

Peter De Jager of Technobility explains that regardless of what technology, your role or where you work, you are going to be faced with the same kind of challenges when it comes to change. There are 3 stages you will be faced with. The first is resistance, the second is incompetence or chaos and then finally if you are lucky you will reach status quo.

There is a huge misconception with change, it is that the change is difficult. However, we are the ones who make it so difficult. For example, people think that if office politics were to change then bringing about a new technology change would be a piece of cake. This is not always true.

Human beings are the most resistant to change. They recognize the need but often the work involved in that change is over looked. In a corporation, the person making the change will need to know why the change is happening. So, the ability to learn how to change will come through communication plans and training.

Peter gives some great techniques to help people through change. For more information, visit Peter De Jager’s presentation titled “Change Management” in the Education Center at this website: http://www.virtualtechfair.com.

Identify new opportunities ... get your staff involved

By Steve Epner, Founder Brown Smith Wallace Consulting Group

An easy way to identify new opportunities for your computer systems is to get your staff people involved. They know a whole lot more than most executives are willing to admit. These people keep the company operating in spite of rules, policies, and procedures that were often designed to cover up or eliminate the possibility that some long forgotten mistake might happen a second time.

There are two questions that will bring out enough ideas to keep your IT people busy for a long time. Before we look at the questions, it is important to understand one other aspect of the top 100. They are not afraid of making a mistake. It is OK to be wrong as long as you learn from it and you quickly recognize the problem and correct it.

This means, it is alright for your people to question what they do. Without the ability to safely ask, progress will not occur. People who are afraid will not take the chance because they are afraid of being wrong. No one was ever rewarded for being wrong in school; they were either punished (low grades) or made to feel foolish.

The only way the following questions work is if your team feels confident that their answers will be used to help the company and not to hurt them. In some companies, it takes months (or even years) to purge old feelings. Only when people feel free to be honest will the benefits be realized.

The first question – which can be a lot of fun in the right atmosphere – is: “what is the dumbest thing you have to do?” If you spend much time working with line people in any organization, they always talk about the dumb things they do every day. These are all opportunities for improvement.

The second question is: “what is the most difficult thing you have to do?” What is slow, time consuming, keeps you from getting your work done? Allow your people to play with the questions and answers. You will learn where the opportunities are for improvement.

There are many possibilities waiting for you. Not all will require automation to be changed or added. If you find easy fixes by eliminating an operation no one can remember why you started to do it, go for it. Every saving in processing time is an opportunity to do something else; something more important; something that can give you competitive advantage in your markets.

Go ahead, imitate the best. You can learn what they already know – there are many ways to improve operations. Many of them are easy to do and obvious once you open your eyes to the possibilities. Then make change part of your culture – and watch the returns.

Computer system implementations are a continuing process, not a one time project

By Steve Epner – Founder, BSW Consulting, Inc.

A key element in the best companies is an attitude that computer system implementations are a continuing process, not a one time project. It is one of the often repeated complaints about IT departments: “they never get anything done!” Well, that is true. Your business never stops changing, evolving, even morphing into something new. If the systems do not keep up, they will not support the organization in moving forward.

There are some departments that do seem to have a problem finishing projects. Often, they are the ones that are kept out of the important discussions until the last minute. Then, they are forced to drop everything to complete an emergency project. Of course, everyone only remembers the work that was not completed and forgets about the unplanned work that got done and worked to keep the organization operational.

I do not even encourage my clients to consider automation as an “investment.” That suggests a one time expenditure after which, one can measure the return. Computers are more like hiring employees. They require constant care, training (updating), and even succession planning (what will be next). We can measure effectiveness and productivity. Those are more important measures of the successful IT operation.

The successful companies are always looking for more ways to use the resources they have. In a general survey, it was reported that the average distributor used less than 25% of the functions and features of their computer systems. These are capabilities that have already been paid for and are just waiting to be used.

Many of these unused functions were enhancements that some other company wanted to save them processing time, increase accuracy, or solve some other business problem. Each company should be in touch with their software vendor’s support people on a regular basis and ask: “What is the next best feature we could start to use?”

If you are not sure which new features and functions to try, go to the User Meeting sponsored by all major software vendors. Talk to other executives and find out what they are using. Ask key executives: “what are the breakthrough items that have made a difference in their operations?”

The answers should lead you to a gold mine of opportunities. Not all of the functionality will fit your needs, but adding a single function or feature every month will improve your operations and, if you need to use the investment allegory, increase you return on the computer systems.

Top companies use technology to gain a competitive advantage

By Steve Epner – Founder, BSW Consulting, Inc.

Top companies use technology to gain a competitive advantage. These companies are willing to treat it as a strategic resource instead of a simple shared process. It is integrated in what they do, not just added on as a necessary evil. Their IT leaders are part of the long range and strategic planning. IT is active in assisting the company to reach its strategic goals.

If something big is going to occur, it will affect the computer systems and their use. Without input from IT, a great deal of effort may be wasted or unplanned activities will be required at the last minute when they are most difficult to provide. Then, when the work is done under pressure, without long range planning, and it fails, the common view about how difficult it is to deal with IT is reinforced and opportunities are lost. It does not have to be that way.

The top IT person or CIO should be invited to provide input to the planning process. No other executive will have the perspective or knowledge of the systems and procedures which will be affected by any given scenario. No one else will know what is necessary for the systems to support any new initiative.

The top IT executive can tell you what new hardware, software, support, or training will be needed. They can estimate what it will cost and when it can be available. The answers may slow down or speed up a project. But, the rest of the executives will at least know the impact and can plan for (or around) it.

Given the opportunity to be part of the strategic process, the actual implementation of the plans will be much smoother. IT will be seen as a cooperating member of the tam, not some pain in the back end.

In addition, many companies find that their IT executives have a different view of the world, which if encouraged, will help them find new ways to attack old problems. By including people who have to keep systems operational, the team gets a valuable new viewpoint while deliberating the future. All of the major studies on decision making show that a diverse team makes better decisions than one with limited outside experience.

What makes the best companies the best?

By Steve Epner – Founder, BSW Consulting, Inc.

What makes the best companies the best? It is sometimes common sense. It is sometimes a competitive secret. It is always something done well. The next four entries will explore some of the ideas I have seen over the years.

The best companies all have a clear vision of who they are and what they are all about. It has nothing to do with technology, but everything to do with success. Everyone in the organization understands the mission and is ready and willing to support it. Just like the difference between light from a standard lamp and light from a laser. One is unfocused and goes everywhere. The other is extremely focused and can cut steel.

Make sure you can clearly state your strategy. Ask your managers and staff if they can explain the strategy to you? If they cannot tell you what it is, how can they implement it? Take the time to make sure it is clear – to you and everyone else. Then live by it. Use it as a filter when making decisions of what to do. An unused strategy is worse than none at all. It will give you a false sense of security.

Collaborative Technology – Part 2

By Steve Epner – Founder, BSW Consulting, Inc.

Last time I described collaborative technology. This time, I want to talk about its use in the real world. When collaborative technology is used correctly, everyone wins. A simple example is the elimination of paper invoices. In industries that use Evaluated Receipts Settlement, there are no invoices. The customer pays for product as it is received on their dock. They pay based on the agreed to price in the Purchase Order.

Think about the results. Since all payments are made electronically on receipt, there is no need for an accounts receivable department. Since we do not hold invoices for later payment, there is not need for an accounts payable department. Maybe this is why there is so much delay in making ERS work – too many companies are trying to protect jobs.

What if we take the people who are now handling paper and give them more important things to do? Can we be more effective? Can we get things done we do not have time for today? Can we improve the workplace? These are all possibilities, if we want them.

Collaborative technologies take trust that the PO system is working, that trading partners will not try to cheat each other, and that the product was accurately picked, packed, shipped, and received. Trust can be improved with proper auditing techniques, but until two partners can feel comfortable with each other, nothing can happen.Success requires a desire to make sure the trading partners are “on board.” It may be necessary to sell the idea inside and outside of the organization. Enthusiasm is contagious. If it is absent, the process is much more difficult to make work.

Success requires a commitment to implementing not only the technology applications, but the training and manual procedures that can verify the accuracy of the process. We must take the time to make sure that the systems are tested and validated.

The experience of large companies proves the value. The technology is available – and within most systems sold today. All that is required is for the top management teams in our supply chains to get together and make it a reality.

Collaborative Technology -- Part One

By Steve Epner – Founder, BSW Consulting, Inc.

Collaborative Technology describes how companies in the future will share information without human intervention. Actually, the technology is already in place and fully operational. Accountants, regulators, and even the IRS agree on how they are to be operated, how monies are reported, and how audits or tax documentation are to be completed.

Delays in usage are caused by a lack of: Trust; Desire; and Commitment. Until supply chains are able to eliminate these barriers, the hoped for benefits will remain out of reach of all but the largest companies.

Trust is a big deal. Does this sound familiar? “If I give my suppliers all of my customers’ names and addresses, what will keep them from trying to sell direct?” When we have to worry about trading partner relationships at this level, it is difficult to imagine establishing closer ties.

Collaborative technology requires trust. We must be willing to share information with our partners as it becomes available. The information must be complete – nothing can be held back.

Desire is the next issue. Based on data collected for my Master’s research, I found that the vast majority of companies who used the new technology did so only because it was required by a trading partner. They ignored the increased accuracy, speed, and cash flows. Worse, even after implementing it for a given trading partner, having put all of the technology in place, proved the value, they did not spread the use to other trading partners.

We need to want to have this technology in place. We must spread the word that it is good for us. We need to convince our own employees, trading partners, and intermediaries of the benefits. Only then will there be the critical mass so that the benefits are obvious.

Commitment is the last “leg of the stool.” We must be committed to making it work. Sure, the technology is there. The capabilities have been around for over 30 years. Business owners must decide to make it happen. Everyone is waiting for someone else to take the lead.

It is time to stop worrying about who will be the first user and commit to getting it done. We need to let our trading partners know that this will help them as well. We need to get others to join in the commitment to utilize what is already available. Then we will see the results as an industry.

When collaborative technology is used correctly, everyone wins. A simple example is the elimination of paper invoices. In industries that use Evaluated Receipts Settlement, there are no invoices. The customer pays for product as it is received on their dock. They pay based on the agreed to price in the Purchase Order.

Think about the results. Since all payments are made electronically on receipt, there is no need for an accounts receivable department. Since we do not hold invoices for later payment, there is not need for an accounts payable department. Maybe this is why there is so much delay in making ERS work – too many companies are trying to protect jobs.

What if we take the people who are now handling paper and give them more important things to do? Can we be more effective? Can we get things done we do not have time for today? Can we improve the workplace? These are all possibilities, if we want them.

Collaborative technologies take trust that the PO system is working, that trading partners will not try to cheat each other, and that the product was accurately picked, packed, shipped, and received. Trust can be improved with proper auditing techniques, but until two partners can feel comfortable with each other, nothing can happen.

Success requires a desire to make sure the trading partners are “on board.” It may be necessary to sell the idea inside and outside of the organization. Enthusiasm is contagious. If it is absent, the process is much more difficult to make work.

Success requires a commitment to implementing not only the technology applications, but the training and manual procedures that can verify the accuracy of the process. We must take the time to make sure that the systems are tested and validated.

The experience of large companies proves the value. The technology is available – and within most systems sold today. All that is required is for the top management teams in our supply chains to get together and make it a reality.