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.
- EDI is SaaS.
- EDI and ERP interface is “seamless.”
- Trading Partner interface can be cloud-based, using an Electronic Commerce Communications Provider (ECCP). Adding trading partners should be done “under program control.”
- 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.