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A Manifesto for Supply Chain Management

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:

  1. Entire system will be cloud-based.
  2. ERP (Enterprise Resource Planning) and CRM (Customer Relationship Management), if included, are SaaS. Expected modules are: manufacturing, logistics, finance, and procurement.
  3. EDI is SaaS.
  4. EDI and ERP interface is “seamless.”
  5. Trading Partner interface can be cloud-based, using an Electronic Commerce Communications Provider (ECCP). Adding trading partners should be done “under program control.”
  6. 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.

12 comments on “A Manifesto for Supply Chain Management

  1. Houngbo_Hospice
    September 26, 2011
    1.  “Entire system will be cloud-based.”

    That is quite a vision. I suppose there is a manifesto for securing the sensitive data in the cloud.

     

  2. saranyatil
    September 27, 2011

    Kinlock's vision is really interesting.

    Especially the idea of making the supply chain completely cloud based. However there will be many short comings to start this initiative. upgradation to the new system next will be.

    Wish this works it will reduce a huge load.

  3. Scott Koegler
    September 27, 2011

    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.

  4. prabhakar_deosthali
    September 27, 2011

    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.

  5. Jay_Bond
    September 27, 2011

    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.

  6. Kinlock
    September 27, 2011

    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.

     

     

  7. Kinlock
    September 27, 2011

    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.

  8. elctrnx_lyf
    September 27, 2011

    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.

  9. Taimoor Zubar
    September 29, 2011

    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.

  10. Scott Koegler
    September 29, 2011

    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. 

     

  11. Taimoor Zubar
    September 29, 2011

    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.

  12. Scott Koegler
    September 29, 2011

    Certainly not every current system will fit the new model. This is a long term migration plan and a goal to strive for.

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