The supply chain as we know it is made up of a staggering number of connections. Ken Kinlock, a long-time practitioner in supply chain implementations in general, and EDI in particular, has put forth his vision for a set of attributes that could help to improve the efficiency of the overall supply chain.
Kinlock's 2012 Model for Supply Chain Management (SCM) takes into account a variety of factors that address the problems of integrating the mostly external supply chain activities with internal systems including ERP and CRM. The recommendations he puts forth are broad-based and avoid favoring any particular vendors or technological approaches. He does, however, make the point that internally-installed applications should be phased out in favor of cloud-based or software-as-a-service (SaaS) systems that offer a range of advantages particularly suited to integrating widely distributed systems.
Here is Kinlock's manifesto for a flexible and integrated SCM system:
Entire system will be cloud-based.
ERP (Enterprise Resource Planning) and CRM (Customer Relationship Management), if included, are SaaS. Expected modules are: manufacturing, logistics, finance, and procurement.
For "Legacy" Trading Partners, there must be a VAN (Value Added Network) interface. The current externally-configured VAN structure (big solutions, long contracts) is better implemented as a Web Services API (Application Programming Interface). In other words, no faxes to VANs to establish relationships.
This is clearly a long-term plan because any company that has implemented any trading partner connections knows that these take significant time and effort. But I think Kinlock is on the right track with his recommendations. He addresses the underlying issues that cause processing delays and errors because systems are not directly integrated.
Integration of EDI and ERP systems is already a priority for many companies. And, rightfully so, because in higher volume environments, indirect transfers of data can cause problems for both the supplier and the customer.
The recommendation that all systems are SaaS- or cloud-based is still likely to get a push-back from enterprises wary of putting their sensitive data outside the firewalls, but the trend is undeniable. In addition to the known advantages of shared services, the main pain point of integrating systems is entirely eliminated because the application developers are responsible for connecting their respective systems.
I'm not expecting that every application provider is flawless, or that all will work together perfectly. But unlike locally-installed applications that each have their own individual connectivity specifics, possible data modifications, and possibly highly customized setups, regardless of how many client companies are using a SaaS-based system, the application has a single connecting interface.
I'm interested to see how Kinlock fleshes out his vision for a more consistent and functional supply chain, but I'm already encouraged by his initiative.
Scott, what if your supplier's ERP system is outdated and your own supply chain system cannot integrate with it? Surely the system can cater to all the leading ERP systems but there's no guarantee that it will be able to support all kinds of them.
Agreed. But check out item #4 of the Manifesto. That point states that a PO entered into the supplier's ERP system seemlessly moves to the SaaS provider. So there is no upgrading or replacing.
In fact, many ERP providers now offer this kind of interface, and if they don't then the SaaS provider offers the interface.
I do agree that the future is in cloud computing and SaaS and an effective supply chain system will be based on these. However, an issue that most companies is when the trading partners do not want to upgrade their systems. For instance, instead of using flat files as a data sharing mechanism, the system provides a web interface to the partner, the partner has to upgrade the system on his end to handle this. If your company is highly influential such as Amazon or Wal-mart, the trading partners will comply. However, if you are not and have a large number of vital trading partners, it often becomes difficult to upgrade to a new technology.
I respect and agree this manifesto completely. Offering the complete scm services over the cloud is future. This brings down the amount of spending on the hardware, operations and also expertise needed for customiztions. There will be huge growth for the companies who can handle the complete scm system building on the cloud.
Yes, we can go system-to-system through the Cloud. EDI is especially necessary with what I call "legacy" trading partners. That is why we NEED an Electronic Commerce Communications Provider: communicate "seamlessly" to somebody's existing VAN address.
Thank you all for responding. Glad you did not classify me as a "nutcase" for suggesting the whole SCM scenario could be cloud based. Really, I checked with some erudite professionals who "signed off" that it COULD be done today.
The Cloud security issue is already a priority with the industry, even though the most recent security violations of a major nature were NOT Cloud based.
This is manifesto is certainly a lofty goal. I do believe it is attainable once all the key factors are in place. It is interesting that everything is cloud based. And assuming security issues have been addressed, this plan should make for a better managed supply chain with less delays and confusion.
In my opinion , in a truely cloud based scenario the company and its trading partners will work on a single system. There won't be any need for EDI as the vendors can extract their PO schedules or any such document exchange through the main system directly. The purchase will be able to post the purchase schedules in the same system. The suppliers will be able to put in their invoices into the same system.
The ERP.SCM, EDI and CRM developers have to now take such an integrated approach for developing future products for Cloud.
Ken's manifesto is indeed a big plan that would take a long time to roll out. The thing is that it is intended to be a point of discussion and goal to reach. As for security, every player in the Cloud computing space is concerned with security, so that portion of the vision is assumed to be in place.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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