SUPPLY CHAIN MANAGEMENT: 2009

Friday, December 4, 2009

Bolstering the Call Center with Service Resolution Management Processes

0 comments 5:39 AM Posted by amma

To accommodate increasing customer demand for company and product information and for quick issue resolution, companies are now considering the benefits of online self-service systems. Knowledge management (KM) software is the key to such systems, as well as to integrating customer relationship management (CRM) and service resolution management (SRM).

For more background, please see Integrating Customer Relationship Management and Service Resolution Management and Knowledge Management: The Core of Service Resolution Management.

Bolstering Call Center (and Other CRM) Processes

The trend of customer service enablement and the nurturing of customer relationships (which have traditionally been the forgotten stepchildren of CRM) may be overtaking customer acquisition as a main driver of recent CRM deployments. Customer service has historically been provided primarily in person or over the telephone, with limited reference materials available for the customer service representative (CSR). This emerging business model assumes that companies that provide customer service over the telephone will find value in aggregating company knowledge by using the appropriate software, and will be willing to access the content over other channels, especially the Internet. The business model also assumes that companies will find value in providing some of their customer service over the Internet instead of by telephone.

In the past, customers would show a preference for a certain channel of communication with a company, but this is no longer the case. Customers now use several different channels available to ask for support and service and about upgrade issues, or to inquire about or request new products and services. And they expect to receive accurate, consistent information, regardless of the channel they are using. Service that does not meet these expectations is considered a waste of time, and a reason for the customer to seek out competitive offerings elsewhere.

The use of multiple channels for customer service and support, as well as the importance of consistent, accurate, and swift answers, is expected to only increase in the future. Companies are thus realizing that what their customers are seeking is knowledge (which is likely stored somewhere in the company, but more likely, scattered all over the company), and that these customers want it regardless of the channel they choose, be it telephone, Web self-service, e-mail, retail kiosk, or chat.

The logical question a company should ask itself is how it can provide customers with direct access to the knowledge they are looking for when that data may be residing in a variety of places. For example, product specifications, technical support, billing questions, and pricing and policy information can all be found in any number of places, such as CRM databases; legacy KM systems; frequently asked questions (FAQ) lists; intranets; content management systems; billing systems; or an automated response system. The goal here is to analyze the customer's problem, retrieve the information needed to solve that problem, and to do so in whichever contact channel the customer chooses. This process should not only minimize customer frustration and lower the cost of the support transaction, but it should also leave the customer delighted.

Although computer-telephony integration (CTI) systems do a great job at automating call routing and case management, web sites have become ever glossier and animated, and CRM systems do a decent job of handling customer contacts (and possibly preferences) and product information, something is still missing to enable cohesive customer service. The plethora of new self-service technologies, such as natural language search engines, knowledge bases, guided navigation, user forums, collaboration, personalization, multichannel (e-mail, instant messenger [IM], integrated voice response [IVR], call centers), and so on, lead us to the emerging part of CRM software applications, specifically applications that enable customer service organizations to more effectively resolve service requests and answer questions.
Built on KM and search technologies, SRM (not to be confused with supplier relationship management) applications optimize the resolution process across multiple service channels, including contact centers, self-service web sites, help desks, e-mail, and chat.

An SRM system creates a knowledge backbone for the seller company by creating a single interface that pulls vital information and knowledge from wherever it is stored, whether it is in the CRM system, legacy support systems, search engine, web site, document libraries, etc. It allows the company, as a business leader, to evaluate what processes are taking place in its support environment and to then determine how it would like those processes to be handled. With this, the company can guide users step by step through the process of answering their questions, applying the right process to each inquiry to drive the outcome it wants.

Service resolution systems enable the company to harness all the tools and knowledge it has already acquired to solve customers' issues, regardless of what channel they use to tell the seller company about their issue. These SRM applications have to complement, integrate with, and enhance traditional CRM areas like sales force automation (SFA), marketing automation, contact center, and help desk applications by providing knowledge-based solutions that improve service delivery. Although still an emerging software category, existing SRM customers include some of the largest companies in the world, and SRM products have reportedly enabled these companies to reduce operating and service delivery costs, improve customer satisfaction, and increase revenues.

Here is an illustration: A service call (customer inquiry, complaint, etc.) comes in, and the agent fields it by performing a search. A technical bulletin, written by a product manager and stored on a network drive, comes up in the query results because the knowledge base searches both structured and unstructured knowledge. This very issue has been documented, and a resolution has been built to ensure that an answer can be provided. A wizard pops up and prompts the technical support agent to walk the customer through a setup process. The new product can then be used successfully, resulting in a happy customer.

This is the type of service the customer wants and what support systems are really trying to provide—seamless service resolution, which can only be provided by effectively using and managing corporate knowledge (i.e., the knowledge of products and services; diagnostic troubleshooting; information stored in all documents on the network drives, intranets, and e-mail systems; and, most important, the knowledge of the customers and support agents).

Trend Analysis

The markets for KM and SRM solutions are still emerging, and it is difficult to predict how large or how quickly they will grow, if at all. Some companies have found that the productivity of customer service personnel initially drops while CSRs are becoming accustomed to using the software.

Self-service can cause conflicts, since it contributes to a general shift of control and resources away from the call center. Also, exposing some information can be risky. For example, logging complaints into the system and then displaying them on the customer portal can cause some users to regard giving out sensitive information as “hanging themselves." Resistance to the software by customer service personnel and inadequate development and maintenance of the system's knowledge resources, business rules, and other configurations have in some cases made it even more difficult to attract new customers and retain old ones.

Competition in the fragmented SRM marketplace is rapidly evolving and intense, and one should expect competition to further intensify in the future as current competitors expand their product offerings and as new competitors enter the market. One should also expect that competition will increase as a result of industry consolidation, which comes from the need for newer models of customer service, in which a single vendor provides solutions for both internal and external service, technical support, and search.

Knowledge Management: The Core of Service Resolution Management

0 comments 5:39 AM Posted by amma

Today's businesses are faced with the reality of customers expecting and demanding more multichannel information and better service from call centers than ever before. Integrating call center service resolution management (SRM) into customer relationship management (CRM) can help companies retain both their call center agents and their customers.

For more background, please see Integrating Customer Relationship Management and Service Resolution Management.

Knowledge management (KM) is at the core of integrating CRM and SRM. KM software aims at helping to unlock the power of a company's knowledge to improve efficiency, competency, and profitability. It does so by providing an environment in which companies can, more quickly and cost-effectively, create a company-wide knowledge base to store and index documents and to more accurately search for the answers to user questions.

Currently, the key trends in KM tools enable companies to perform the following: 1) target their online information to reflect what is most likely to interest customers, and 2) maintain online forums where customers can share amongst themselves what they know about the company's products.

Hence, KM products typically fulfill two functions. KM accommodates self-service, meaning a customer can access a pool of public information that a company accumulates about itself, without the need for live assistance, to have his or her questions answered. Second, KM software helps call center agents to retrieve information from a repository that is often, obviously, larger than what is available to the public (since the aim of live assistance is the same as self-service—to answer customers' inquiries quickly and accurately, but with the preferred human touch).

The above considerations have marked a fundamental shift away from the time when any company could claim to perform a valuable service to customers simply by displaying information on its web site, without having to take into account who the customers were. Today however, virtually all companies must demonstrate their value to customers by segmenting information that is directly relevant to them.

Customer segmentation is not a new idea, since segmentation was supposed to be the way that—with the help of CRM tools—companies would offer the best possible service to their best customers. The problem with applying overt segmentation to customer service was that it then revealed a hierarchy that placed most customers at the bottom. This was so because, by definition, elite customers represent a small minority (the proverbial Pareto's 80/20 Rule). The premise of segmenting customers reinforced the idea that customers existed to create value for companies, rather than the other way around. Using this logic, most (up to 80 percent) customers were of little value to the companies that they bought products and services from.

By contrast, the practice of KM helps companies establish a bidirectional relationship with customers that rewards them for sharing knowledge (their product and service use experience), and not only for spending money. The latest generation of KM software makes this possible by enabling the company to combine what it knows about customers and what customers know about the company, and to offer this information as part of the resources available on its web site.

As discussed in Making the First Call Count by Greg McFarlane, an astute KM software has to make it easier for agents to author new knowledge when new services, products, or upgrades are in place. This reduces the need for agents (especially novice agents) to escalate calls to the upper service tier. This decreases the costs and the lengths of calls, but more importantly, it gets calls answered more quickly. In addition, the diagnostic search functionality helps resolve customers' issues quickly and accurately with its ability to pull answers from any data source an agent can connect it to, thereby giving agents the right information at the right time. Lastly, the automation of key resolution processes enables new agents to get up to speed more quickly. By pre-populating case notes and pre-establishing workflows and other techniques, the companies can create an environment that allows agents to operate as effectively as possible, regardless of their experience.

Integrating Customer Relationship Management and Service Resolution Management

1 comments 5:38 AM Posted by amma

A customer relationship management (CRM) system that accommodates complex customer-facing processes requires four key factors to give the system a competitive advantage.

The first key factor lies in the application's ability to develop a complete customer profile that supports multiple business units and products. Service organizations need a wide range of customer data, including demographics, financial status, and current and anticipated lifestyle changes (for example, college-age children, retirement concerns, newborn kids, house or condo purchase, changing insurance requirements, etc). To gain a true understanding of customers' needs and wants, any interaction with them must be captured and analyzed.

For example, when a customer with a savings account inquires about a home loan, a full-service financial services company would want the customer-facing employee, whether in the branch or contact center (if not even an intelligent online software agent), to recognize that here lies an opportunity to cross-sell a home insurance policy to the client as well.

Having a complete customer profile enables users to quickly identify key attributes about a customer, such as whether the customer has multiple accounts with the bank, and therefore is a customer the bank would not want to lose. Naturally, customers are highly sensitive to how they are treated; they notice such things as whether their service institutions answer the phone quickly and recognize the customer when he or she calls, or whether the establishments answer questions astutely or resolve issues promptly. Also of importance is whether the institution provides rapid turnaround for specific offerings, such as new account origination, new loan origination, refinancing a home, and so on.

Most customer-serving institutions need software solutions that can deliver services that are personalized to the customer's needs. Take, for example, an insurance company that has many distinct lines of insurance products but no common customer database, leading to the disastrous result of several agents calling on the same accounts. Such disorganization is not only costly and inefficient, but it also creates a great deal of customer dissatisfaction, annoyance, and ultimately, defection. By implementing a unified solution to market more than one product to the right customers, the service company should be able to improve revenues while driving down the costs—and retaining customers.

The second key factor is that the CRM application should provide companies with the ability to customize their solution to address their unique business needs and evolving external requirements. In a dynamic business environment, the service enterprise must be able to sense and react, almost instantly, to changing market conditions. These conditions vary depending on whether they are caused by shifts in market structure, new competitive threats, micro- or macro-economic changes, or other factors. A company must also adapt to its users' needs, since not all users are alike; an adaptable system should provide a personalized interface for the user, based on his or her specific information needs. Ideally, the system should also be able to dynamically modify its behavior, depending on what the user is doing.

Financial industry enterprises—especially those competing with larger organizations—claim that they win and keep customers because they leverage their in-depth knowledge about the client to offer more personalized service. These clients do not want a cut-and-dried solution that looks and acts like the same CRM system that their next-door competitor uses. Rather, they want a flexible solution that they can tailor to their products, services, and business operations.
The third essential factor of a CRM system that accommodates customer-facing processes is that it should offer organizations the ability to adapt to customer and market changes, since most traditional enterprise CRM offerings require users to write lots of expensive, time-consuming custom code as part of their deployment. This often creates many problems, starting with most customers finding that by the time they have completed the development cycle and are ready to roll out the software, something in their business has yet again changed (such as a new, fierce competitor has entered the market; new legislation has been passed; the company is involved in a merger; management has decided to add or drop a new product line, etc.). Thus, these firms may find themselves stuck using their old model and needing to go through another long, expensive software development cycle to add the changes they need. On the other hand, customized environments can be very difficult to upgrade when the vendor comes out with a new release of its software.

The fourth factor is the CRM application's ability to integrate, in near real time, with other complex systems, and its adaptability to users' existing infrastructure. It is not at all uncommon to find dozens of systems in the service firm's back offices, all of which have data that needs to be integrated with the new CRM system. Some of these systems can even go back a decade or more. Many of these systems, although ancient in the IT timescale, still deliver mission-critical services reliably and effectively, day in and day out. Thus, a modern CRM solution must easily and seamlessly share data bi-directionally with these systems, using open industry standards.

As the first factor indicates, an adaptive service enterprise must be sensitive to ever changing customer requirements, and must foster an optimal customer experience by creating and delivering incremental services that customers want and are willing to pay for. This requires an IT infrastructure capable of seamlessly tracking and managing interactions across all customer touch points, such as the retail store, the Internet, e-mail, fax, the call center, etc.

Though CRM mega-vendors often want users to rip and replace their entire IT infrastructure with the mega-vendor's software stack, many clients view their legacy systems as mission-critical, and might prefer a CRM solution that will protect their investment by plugging into their existing infrastructure.

To be sure, services institutions live and die by the services and products they provide to fickle and demanding customers, and they need to be able to change direction quickly in order to meet competitive challenges or to take advantage of emerging opportunities. Only by deploying astute CRM technology will they be able to capture customer and market data, sense and understand how their customer segments want to be served, and be able to analyze and respond to changes in customer needs and wants.

Because CRM processes touch so many parts of a business, they can have a major impact on both cost and revenue. The improvement of sales and marketing processes can bring in new revenue, while call center productivity can drive down the costs of servicing customers, as well as present up-sell and cross-sell opportunities (and maintain customer satisfaction).

The business case for call center applications is becoming increasingly obvious, especially given the recently established National Do Not Call Registry in the US. The revenue driver will thus become inbound customer calls rather than companies trying to generate leads via outbound telemarketing efforts, which have too often proved to be annoying to customers, and ultimately counterproductive.

How Supply Chain Management Helps Today's Engineer-to-order Companies

0 comments 5:38 AM Posted by amma

In today's dynamic manufacturing industry, companies are feeling the squeeze of fierce competition, as goods are being produced more cheaply in developing countries. Because of this, global sourcing for parts is a huge factor in cost reduction.

In the project-based nature of the engineer-to-order (ETO) world's manufacturing processes, specific parts are needed at precise times. As well, because ETO manufacturing must meet stringent milestones and deadlines, it is critical that firms obtain parts on time. Otherwise, project costs go up, timelines are extended, and budgets are blown.

How can these manufacturers mitigate the pressures of this competitive landscape? Supply chain management (SCM) can play a vital role in an ETO manufacturing environment, enabling milestones to be met and parts to arrive on time so that production can continue on schedule.

This article details how SCM helps firms that manufacture ETO goods, as well as how SCM integrates with ETO to improve business processes.

The Role of SCM in ETO Firms

The ETO environment is a very detailed type of manufacturing because it involves many changes in the engineering and design of a product throughout its production. In this manufacturing environment, orders are based on contracts as opposed to work orders, which means it is crucial that the manufacturer meets its project deadlines.

ETO enterprise resource planning (ERP) software manages project deadlines and milestones within the manufacturing environment. However, with today's increasing amount of global sourcing, additional functionality is required, and this is where SCM software comes into the picture.

Because precise components need to be routed from different sources during the process of designing and manufacturing of the product, suppliers need to be made aware of the product requirements in enough time to be able to deliver these requirements to the client.

How can suppliers be linked into the operations of the manufacturing firm, which can make demands on a whim?

How SCM Software Components Relate to the ETO Manufacturing Environment

The main modules of SCM software include the following:

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Warehouse management system (WMS)—enables firms to optimize methods of storing and moving inventory through the warehouse.
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Transportation management system (TMS)—enables transportation firms to manage and optimize any mode of transportation.
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International trade logistics (ITL)—helps organizations with the logistics of importing and exporting, the finances related to these activities, and collaboration between firms across multiple locations.
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Supplier relationship management (SRM)—manages the relationships between suppliers, distributors, and manufacturing firms. SRM is one of the key features that enables manufacturing firms to source products quickly.
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Demand management (DM)—forecasts how much product to move through the supply chain, how much product to produce, and how much product will need to be produced in the future, based on historical data.
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Supply chain analytics—enables supply chain managers to create work-arounds if problems within the supply chain occur. Supply chain analytics is comprised of supply chain optimization, supply chain event management (SCEM), and production and supply planning.
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Order management—enables suppliers (or manufacturers) to take an order, search within their inventory to see if the item is available, and ship the item to its final destination.

SCM software integrates into the ETO software infrastructure, enabling manufacturers to source goods from multiple suppliers. Because of the project-based nature of ETO manufacturing, the need for different and multiple components, as the engineering of a product changes, is essential for the manufacturing project to succeed.

Here's a look at how the seven main SCM modules can be applied to the ETO manufacturing environment:

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Using warehouse optimization techniques built into the software, the WMS will facilitate the quick movement of goods coming into the manufacturing environment in order to get the goods to the workstations as soon as possible.
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The TMS will enable ETO manufacturers to obtain the components as quickly as possible by choosing the most appropriate means of transportation. Also, if a transportation route is blocked, the TMS will help drivers find an alternate route, which ensures and improves delivery times, and enables the project costs of the ETO product to fall within a tolerable range.
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The SRM software will choose the appropriate supplier. (A detailed example is shown below.)
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Finally, because multiple orders are being delivered to the manufacturer at the same time as engineering changes are happening throughout the design of the good, the order management system will integrate with the ETO software to send out the appropriate orders to each supplier. This helps to ensure that suppliers send the correct components needed for ETO production.

Bolstering the Call Center with Service Resolution Management Processes

0 comments 5:37 AM Posted by amma

To accommodate increasing customer demand for company and product information and for quick issue resolution, companies are now considering the benefits of online self-service systems. Knowledge management (KM) software is the key to such systems, as well as to integrating customer relationship management (CRM) and service resolution management (SRM).

For more background, please see Integrating Customer Relationship Management and Service Resolution Management and Knowledge Management: The Core of Service Resolution Management.

Bolstering Call Center (and Other CRM) Processes

The trend of customer service enablement and the nurturing of customer relationships (which have traditionally been the forgotten stepchildren of CRM) may be overtaking customer acquisition as a main driver of recent CRM deployments. Customer service has historically been provided primarily in person or over the telephone, with limited reference materials available for the customer service representative (CSR). This emerging business model assumes that companies that provide customer service over the telephone will find value in aggregating company knowledge by using the appropriate software, and will be willing to access the content over other channels, especially the Internet. The business model also assumes that companies will find value in providing some of their customer service over the Internet instead of by telephone.

In the past, customers would show a preference for a certain channel of communication with a company, but this is no longer the case. Customers now use several different channels available to ask for support and service and about upgrade issues, or to inquire about or request new products and services. And they expect to receive accurate, consistent information, regardless of the channel they are using. Service that does not meet these expectations is considered a waste of time, and a reason for the customer to seek out competitive offerings elsewhere.

The use of multiple channels for customer service and support, as well as the importance of consistent, accurate, and swift answers, is expected to only increase in the future. Companies are thus realizing that what their customers are seeking is knowledge (which is likely stored somewhere in the company, but more likely, scattered all over the company), and that these customers want it regardless of the channel they choose, be it telephone, Web self-service, e-mail, retail kiosk, or chat.

The logical question a company should ask itself is how it can provide customers with direct access to the knowledge they are looking for when that data may be residing in a variety of places. For example, product specifications, technical support, billing questions, and pricing and policy information can all be found in any number of places, such as CRM databases; legacy KM systems; frequently asked questions (FAQ) lists; intranets; content management systems; billing systems; or an automated response system. The goal here is to analyze the customer's problem, retrieve the information needed to solve that problem, and to do so in whichever contact channel the customer chooses. This process should not only minimize customer frustration and lower the cost of the support transaction, but it should also leave the customer delighted.

Although computer-telephony integration (CTI) systems do a great job at automating call routing and case management, Web sites have become ever glossier and animated, and CRM systems do a decent job of handling customer contacts (and possibly preferences) and product information, something is still missing to enable cohesive customer service. The plethora of new self-service technologies, such as natural language search engines, knowledge bases, guided navigation, user forums, collaboration, personalization, multichannel (e-mail, instant messenger [IM], integrated voice response [IVR], call centers), and so on, lead us to the emerging part of CRM software applications, specifically applications that enable customer service organizations to more effectively resolve service requests and answer questions.
Built on KM and search technologies, SRM (not to be confused with supplier relationship management) applications optimize the resolution process across multiple service channels, including contact centers, self-service Web sites, help desks, e-mail, and chat.

An SRM system creates a knowledge backbone for the seller company by creating a single interface that pulls vital information and knowledge from wherever it is stored, whether it is in the CRM system, legacy support systems, search engine, Web site, document libraries, etc. It allows the company, as a business leader, to evaluate what processes are taking place in its support environment and to then determine how it would like those processes to be handled. With this, the company can guide users step by step through the process of answering their questions, applying the right process to each inquiry to drive the outcome it wants.

Service resolution systems enable the company to harness all the tools and knowledge it has already acquired to solve customers' issues, regardless of what channel they use to tell the seller company about their issue. These SRM applications have to complement, integrate with, and enhance traditional CRM areas like sales force automation (SFA), marketing automation, contact center, and help desk applications by providing knowledge-based solutions that improve service delivery. Although still an emerging software category, existing SRM customers include some of the largest companies in the world, and SRM products have reportedly enabled these companies to reduce operating and service delivery costs, improve customer satisfaction, and increase revenues.

Here is an illustration: A service call (customer inquiry, complaint, etc.) comes in, and the agent fields it by performing a search. A technical bulletin, written by a product manager and stored on a network drive, comes up in the query results because the knowledge base searches both structured and unstructured knowledge. This very issue has been documented, and a resolution has been built to ensure that an answer can be provided. A wizard pops up and prompts the technical support agent to walk the customer through a setup process. The new product can then be used successfully, resulting in a happy customer.

This is the type of service the customer wants and what support systems are really trying to provide—seamless service resolution, which can only be provided by effectively using and managing corporate knowledge (i.e., the knowledge of products and services; diagnostic troubleshooting; information stored in all documents on the network drives, intranets, and e-mail systems; and, most important, the knowledge of the customers and support agents).

Trend Analysis

The markets for KM and SRM solutions are still emerging, and it is difficult to predict how large or how quickly they will grow, if at all. Some companies have found that the productivity of customer service personnel initially drops while CSRs are becoming accustomed to using the software.

Self-service can cause conflicts, since it contributes to a general shift of control and resources away from the call center. Also, exposing some information can be risky. For example, logging complaints into the system and then displaying them on the customer portal can cause some users to regard giving out sensitive information as “hanging themselves." Resistance to the software by customer service personnel and inadequate development and maintenance of the system's knowledge resources, business rules, and other configurations have in some cases made it even more difficult to attract new customers and retain old ones.

Competition in the fragmented SRM marketplace is rapidly evolving and intense, and one should expect competition to further intensify in the future as current competitors expand their product offerings and as new competitors enter the market. One should also expect that competition will increase as a result of industry consolidation, which comes from the need for newer models of customer service, in which a single vendor provides solutions for both internal and external service, technical support, and search.

The Channel Management Shuffle

0 comments 5:34 AM Posted by amma

We've all been there at one time or another, in a crowded place or driving while holding a cell phone to our ear in a tight embrace—and why? Because the automated attendant on the other end of the line can not quite make out our "command" to her (or him?) ... usually because of the tiniest bit of background noise or maybe she or he is just having a bad day ... whether it's trying to book a flight, find out the status of a flight, or check the status of an order or place a new order, the frustration can be massive. The flight from Atlanta to Austin can be twisted into the flight from Atlanta to Boston, and incorrect information given out to the unsuspecting party or the maze of options, keys to press, frequent flyer, or shopper numbers to enter can be daunting. And, let's not forget the other frequent headache that many of us encounter daily—trying to return an item purchased online to the retail store ... only to be told "sorry, but we don't stock or accept that item here". And, how many times have you received an "invitation" in the mail to join a "frequent somebody" program that you are already a member of? And last, the age old nightmare of trying to get reliable tech support for that laptop or camera we recently purchased only to be put on hold (or bounced around to countless different "desks") for an extended period of time and when we do get a "live individual", they are fifteen time zones away and speak another language as their "mother tongue" with English as a distant second. A very distant second.

All is not negative, as some positive experiences do occur, but it seems that those are few and far between, and in many instances those positive experiences only occur after a very bad experience has occurred and only occur then as a means of "making it up to" the innocent consumer, thus not really even seeming positive.

We may all chuckle at the horror stories mentioned above, but it is no laughing matter. Especially when horror stories like the ones above cause a consumer to "tell all of their friends" or more importantly, to take their business else where. These experiences are all a direct result of decisions made every day by manufacturers, distributors, retailers, service providers, and technology providers. Executives and middle management are constantly faced with determining policy, process, and technology around managing one or multiple channels.
orcing such decisions such as what or when to outsource in the channel, how many channels to have and what products to push through which channel, what skills and associated organizational models to put into place, what to spend on elaborate mailing and marketing campaigns, and what technologies to utilize to enable the plethora of channel management business processes—the channel management shuffle!! So, you may say "same old stories" regarding the ones mentioned above... but, you won't yawn and say "same old research" when you are finished reading the new report from Chainlink Research on channel management.
The report explores a number of areas that are critical to successful channel management:

1. "Dance with the one who brung ya'"... or channel conflict and multi-partner management—management of channels, minimization of conflict in and across channels, as well as management of multiple partners in and across channels. We will cover the strategies and decisions that a well known technology company is employing and facing moving from a totally direct channel to a mix of indirect and direct.

2. "Save the last carton for me"... or inventory management and returns management—the user experience, returns, distribution challenges, and inventory management areas such as locating, managing, and allocating.

3. "The Tennessee Waltz"... or channel management technologies—the underpinning solutions and technologies to support channel management business processes, as well as what is on the horizon of future plans and initiatives for these solutions. For these technologies and associated vendors, we will look at the delivery architecture options that are available, as well as key strategies that the vendors are employing to assure domain expertise throughout their technology or product lifecycle.

4. "Do the Hokey Pokey"... or emerging best practices—for skill development and organizational models to ensure success in channel management.

Tuesday, November 24, 2009

What is Saba University

0 comments 4:36 AM Posted by amma

If you Google Saba University, you will actually come across a website called Saba University School of Medicine in the Netherlands-Antilles region. The Saba University I’m referring to however, offers a rather different type of training.

When a Saba client purchases one of Saba’s products, they receive the regular end-user training offered by most software vendors. Saba, however, goes one step further by offering their clients the ability to enroll in Saba University’s learning programs.

When Kenyatta first mentioned Saba University, a few thoughts came to mind. Either this was a university that offers courses to anyone who wants to learn about software implementation and deployment readiness in general; or it was a place where Saba employees went to learn everything they need to know about Saba software before selling or deploying it. This, I found out, was not the case.

Saba’s training programs are geared towards:

* clients
* new users
* experienced users looking for additional training
* project managers
* business owners

Through their learning portal, Saba provides blended learning opportunities for users whenever and wherever they choose. Its learning programs are designed around the client and the specific job roles within their organization. So depending on the needs of your staff, your training program can be customized in such a way that it works for you or your team.

Saba University: What a Concept!

0 comments 4:35 AM Posted by amma

As a TEC research analyst, I get to see a lot of really interesting (and some not so interesting) stuff when it comes to enterprise software and the like. With technology changing at the speed of light, there’s always something new that I haven’t seen before, that grabs my attention and makes me say “Wow, that’s cool”!

Like this past week for instance. I had a product briefing with a company called Saba to get an overview of their learning management solution (LMS). I was fortunate enough to have Kenyatta Berry (Saba’s Director of Product Marketing) speak with my colleagues (TEC’s team of analysts) and I to show us Saba’s suite of enterprise software offerings. Along with that we received an overview of the company and its unique strategies for training its clients on how to use its software.

This leads me back to my opening remark about ”something I haven’t seen before”; that something is called Saba University.

What is Saba University?

If you Google Saba University, you will actually come across a website called Saba University School of Medicine in the Netherlands-Antilles region. The Saba University I’m referring to however, offers a rather different type of training.

When a Saba client purchases one of Saba’s products, they receive the regular end-user training offered by most software vendors. Saba, however, goes one step further by offering their clients the ability to enroll in Saba University’s learning programs.

When Kenyatta first mentioned Saba University, a few thoughts came to mind. Either this was a university that offers courses to anyone who wants to learn about software implementation and deployment readiness in general; or it was a place where Saba employees went to learn everything they need to know about Saba software before selling or deploying it. This, I found out, was not the case.

Saba’s training programs are geared towards:

* clients
* new users
* experienced users looking for additional training
* project managers
* business owners

Through their learning portal, Saba provides blended learning opportunities for users whenever and wherever they choose. Its learning programs are designed around the client and the specific job roles within their organization. So depending on the needs of your staff, your training program can be customized in such a way that it works for you or your team.

What to expect when switching to ERP

0 comments 4:34 AM Posted by amma

Today's leading ERP systems group all traditional company management functions (finance, sales, manufacturing, human resources) and include, with varying degrees of success, many solutions that were formerly considered bolt-ons (product data management (PDM), warehouse management systems (WMS), manufacturing execution system (MES), etc.). ERP functionality has increasingly been tailored to support the specific needs of vertical industries, e.g. healthcare or automotive.

Recently, the functional perimeter of ERP systems began an expansion into its adjacent markets, such as supply chain management (SCM), customer relationship management (CRM), decision support systems (DSS), and e-business, making systems less inward looking. Other value-added aspects of the newest systems include product configuration, field service modules, and Internet self-service capabilities that extend system access to more users and/or business partners. Finally, ERP can be the means for business-process reengineering (BPR), increasing flexibility and responsiveness by breaking down barriers between functional departments and reducing duplication of effort.

(For more detailed information, see Essential ERP - Its Functional Scope)

ERP has earned the general perception of being exorbitantly expensive to license and implement. Users typically pay an up-front per-user (either concurrent, named or casual) license fee and an annual maintenance charge to use ERP systems (typically 12%-20% of the license fee). The per-seat price for ERP varies greatly depending on the number of users, the number of modules to be deployed and what "bells and whistles" are added, and the company's size and revenue. The per-user price range has been from $1,000 to $8,000 (typically higher values for larger companies), with a continual price decline trend owing to fierce competition and the reduced demand for software. Many vendors offer per-month per-user rental or outsourcing deals as an alternative to traditional up-front licenses. Fixed price, preinstalled, pre-configured ERP is also available and is particularly attractive for the lower-end of the market.

Implementation cycles vary from a few months to years depending on company size, organizational structure (single or multi-site, international or not), and the functional scope of the project. Full-scale ERP implementations generally take between 6 - 12 months on average. As a rule, every $1 of ERP software sales drives on average another $3-$6 of additional hardware, third party integration and consulting, and resellers revenue, although in some cases additional costs can reach $10-15 for each dollar spent on software. The most commonly overlooked or underestimated costs of ERP implementations come from: training, integration & testing, data conversion & analysis, staff turnover, post-implementation turmoil, etc. Total cost of ownership (TCO) as a percentage of company revenue generally ranges from 1.5% to 6%, depending on the industry and the company size (typically higher for smaller companies).

Many customers begin with implementing accounting modules, although manufacturing and human resources are also popular for initial implementations. ERP benefits come mainly from reduced inventories and order lead-times, increased production capacity, lower distribution and procurement costs, etc. However, the first tangible returns on investment (ROI) come only several months after the implementation (eight in the best scenario).

ERP Beginner's Guide In So Many Words

0 comments 4:33 AM Posted by amma

Enterprise Resources Planning (ERP) is the latest phase in over 40 years of evolution of business management techniques and information technology. Up through the 1960's, business had to rely on traditional inventory management concepts, Reorder Point (ROP) and Economic Order Quantity (EOQ) being the most commonly known. The next evolutionary phase, Material Requirements Planning (MRP), developed in the 1970's. It uses bills of material, inventory data, and the master production scheduled (MPS) to proactively calculate time-phased materials requirements and make recommendations to release or reschedule replenishment orders for materials.

In the 1980s, the concept of Manufacturing Resources Planning (MRP-II) evolved as an enhancement to MRP by integrating other manufacturing company's resources, particularly shop floor, accounting and distribution management. In the early 1990s, MRP-II was further extended to cover areas like engineering, finance, human resources, project management, etc. namely, the comprehensive breadth of activities within any (not only manufacturing) business enterprise. Therefore, the new acronym ERP was coined to reflect the fact that these computerized systems had evolved well beyond their origins as inventory transaction and cost accounting systems.

ERP is the current generation of resource planning systems, which replaces "islands of information" (MRP-II being one) with a single, packaged software solution that integrates all traditional enterprise management functions. In simplest terms, ERP systems use database technology and a single interface to control the all-encompassing information related to a company's business. Along with functionality for enterprise and supply chain management, ERP is typically associated with the use of client/server (recently with Internet Computing Architecture (ICA) as well), relational database technology, and UNIX, Windows NT, AS/400 or mainframe operating systems.

Breakdown of business components.

0 comments 4:33 AM Posted by amma

As you can see in Chart 3 above, the functionality portion of the Showdown is broken down into four main areas: Supply Chain Management (SCM), Distribution Process Management (DPM), Retail & Commerce, and Back Office. Within each area are functional subareas, a total of 13 in all.

In SCM, the backbone of any ERP - distribution solution, Epicor Enterprise has the strongest showing across the board. JDA Supply Chain Planning & Optimization Suite is strong in Transportation Management, Trade Logistics, and Procurement, but gets only average scores in Warehouse and Supplier Management. Pronto Xi is also strong across the board in SCM, except in Transportation Management.

In Retail & Commerce, Pronto Xi scored best, with Epicor Enterprise and JDA Supply Chain Planning & Optimization Suite sharing the second spot.

In DPM, it’s basically dead even. All three vendor solutions score well across the board, although Epicor Enterprise slightly outperforms JDA in Process Management, and slightly outscores Pronto in Purchasing Management.

In Back Office, both Epicor Enterprise and Pronto Xi get top grades, with JDA Supply Chain Planning & Optimization Suite placing third. Again, this is no surprise, since this JDA solution is more of a supply chain optimization, best-of-breed solution.

Conclusion

Each of the vendor solutions we looked at in this Showdown offers a different combination of strengths and weaknesses.

For example, Pronto Xi scored well in every functional area except Transportation Management . If your business requires a strong transportation management module, JDA Supply Chain Planning & Optimization Suite may be the better choice, but that comes at a price: JDA Supply Chain Planning & Optimization Suite is weaker than Pronto Xi in Web Commerce and Financials . Epicor Enterprise also scored well across the board, but was weaker in Retail and POS . (It should be remembered that Epicor Enterprise offers other solutions that have strong retail and POS functionality). If your needs include a strong retail component, both JDA Supply Chain Planning & Optimization Suite and Pronto Xi may be better choices.

Also worth considering is which vendor is best positioned to understand and support your needs. With almost all its business in Asia-Pacific, Pronto has good knowledge and experience in that geographical market. On the other hand, if your company is in the upper part of the mid-market and North American–based, that much more closely fits with JDA’s corporate profile than either of the two other vendors. If your business is in the mid or lower end and North American–based, Epicor is the closest fit in terms of business size and geography. And, of course, functionality, as we’ve seen above, has to be factored in as well.

In Retail & Commerce, Pronto Xi scored best, with Epicor Enterprise and JDA Supply Chain Planning & Optimization Suite sharing the second spot.

Conclusion

Each of the vendor solutions we looked at in this Showdown offers a different combination of strengths and weaknesses.

Welcome to ERP - Distribution Showdown! Epicor Enterprise vs. JDA Supply Chain Planning & Optimization Suite vs. Pronto Xi

0 comments 4:27 AM Posted by amma

cc Chart 1 above indicates which industries these three ERP - distribution solutions support. What becomes readily apparent is that all three solutions are broadly based in terms of vertical markets. JDA Supply Chain Planning & Optimization Suite and Pronto Xi support all ten, with Epicor Enterprise supporting eight out of the ten, dropping off only in Food and beverage and Wholesale . However, this should not be taken to suggest that there aren't any important differences between these three vendor solutions.

Chart 2: Breakdown of market segments and geographical areas.

JDA Supply Chain Planning & Optimization Suite
JDA Supply Chain Planning & Optimization Suite is more of a best-of-breed solution, specializing in international trade and in logistics and transportation management, and is less of a full scale enterprise resource planning (ERP) system than the other two solutions. This is evidenced by its comparatively poor showing in back office functionality (a major part of what constitutes an ERP solution), and its relative strength in international logistics and transportation.

Also noteworthy is that JDA specializes in the high and middle end of the mid-market (as shown in Chart 2 above), deriving a full 50 percent of its revenues from companies in the $501 to $1 billion (USD) range, and a full 40 percent of its revenues from companies in the $101 to $500 million (USD) range. Only 10 percent of its revenues come from the low end of the mid-market segment ($51 to $100 million [USD]).

In terms of its customer base, JDA is very much North American–based, with almost 70 percent of its business coming from North American customers, with most of the balance in Europe, the Middle East and Africa, and very little in Asia.

Pronto Xi
Pronto is an Australian-based ERP vendor, so it’s no surprise that 70 percent of its business is in Australia, with most of the balance in the Asian market, and very little in North America. Unlike JDA, Pronto specializes in the mid and lower ends of the market, with 60 percent of its revenues coming from these two segments, and only 10 percent coming from the high end of the market. Pronto offers a full ERP solution with strong back end functionality.

Epicor Enterprise
Epicor Enterprise falls right down the middle in terms of the market segment it most supports, with 45 percent of its business coming from the mid-level companies. Its next strongest segment of the market is the lower end, with 20 percent of its revenues coming from companies in the $51 to $100 million (USD) range.

Sixty-three percent of Epicor’s business is in North America, with almost all the rest in Europe, the Middle East, and Africa.

We’ve included information on the vendors’ market segments and geographical markets because we believe these are important factors to consider when selecting a software solution. Any vendor doing a lot of business with companies of your size and in your geographical market is likely to have the kind of knowledge and expertise necessary to understand and support your company’s special needs and problems.

Chart 2: Breakdown of market segments and geographical areas.

Sixty-three percent of Epicor’s business is in North America, with almost all the rest in Europe, the Middle East, and Africa.

Saturday, November 7, 2009

Assign all of your product to bin locations

0 comments 6:38 AM Posted by amma

The average picker spends over one hour per day searching for product. If you have eight pickers that's equivalent to one person per day—and extra person that is probably not needed, or can be used doing something more productive. By assigning product to locations this will eliminate pickers searching for product throughout the warehouse.

Step 6: Allow only warehouse personnel to receive.

Receiving is the most important task your warehouse performs. If an item is received incorrectly, it will be putaway, picked, and shipped wrong. If the paperwork is not processed correctly, the wrong product will be received and given to the customer. When the order is generated, the picker looks for the product and can't find it, so the buyer then orders another while saying "Those warehouse guys are clueless. They just received this product this morning. Now they cannot find it." Eventually, shipping sends the order to the client, but meanwhile, the second order comes in , and the buyer decides to receive the product and personally ship it to the customer. If the product is returned because the customer doesn't need it, a sales person will likely say, "Don't send it back to the vendor. The customer will need another one for another job." The product then just sits on the shelf until it is lost or is counted at the next annual physical. Hopefully the first order was corrected because the customer was never billed for the second one, but for some reason you show two items in stock. Another vicious cycle of inaccurate inventory ensues.

Step 7: Address non-stock and dead inventory.

You have to address your non-stocks and your dead inventory. Non-stocks are a hassle and have to be dealt with. They should be counted regularly, clearly identified, and centrally located. Quite often, non-stocks and dead inventory are not addressed until the end of the year, and then management wonders why there are so many.

Dead inventory is usually DOA, "dead on arrival". New items are the major cause of dead inventory. Climbing up ladders to pick orders or relocating because of space issues does not make sense if you have dead inventory occupying floor space. It is a loss of productivity and should be addressed immediately. Simply put, "If it would stink I bet you would get rid of it." Treat DOA the same way. Get rid of it to streamline your warehouse processes

Also remember, a company has to pay cash for the materials and labor that make up inventory, and until the company gets paid, that outlay of money represents a financial burden to the organization. Your product is worth less each day you hold it in inventory—by the time it reaches the customer, you will have lost significant revenue..

Step 6: Allow only warehouse personnel to receive.

Step 7: Address non-stock and dead inventory.

Clean and organize the warehouse

0 comments 6:38 AM Posted by amma

James Q Wilson and George Keilling developed the "Broken Windows Theory" which states that "Crime is the result of disorder. If a window is broken and not repaired people will conclude that no one cares. Soon more windows will be broken and a sense of anarchy will move to the street upon which it faces." Replace "broken window" with "dirty shelves" and it becomes the very relevant "Dirty Shelves Theory".

An inaccurate inventory is the result of disorder. If an aisle is messy, a Coke can is left on a shelf, a box is not put away properly, or a light remains broken, people will conclude that no one cares. Soon more aisles will be messy, more cans will be left on shelves, and more product will not be put away. Pretty soon, an order will be picked incorrectly, and an item will be put in the wrong box at the packing station, and then we wonder why our inventory is so inaccurate.

Remember what I said earlier: "People do what you inspect and not what you expect." If your warehouse supervisor can't hold your people accountable for keeping the warehouse clean, it will not be realistic to expect an accurate inventory. Develop a simple aisle maintenance sheet that includes removing empty boxes, checking for broken lights, removing discarded shrink wrap, emptying the trash can etc. to prevent the warehouse from becoming a mess.

Develop and use stock check cards

0 comments 6:38 AM Posted by amma

Whether you have an automated or a manual system, your people need a vehicle to identify problems and notify the appropriate personnel. A stock check form (figure 2) does just that. It must have certain things on it, such as the order number, picker's name, date, product code, quantity, reason for completing the "stock check" form, etc.

If an item is backordered by a warehouse person, it should be accompanied with a stock check form, which will eliminate the vicious cycle of the backorder fillable report as well. That's when the picker backorders an item, then the purchasing department fills the backorder because the system says its in stock, and another picker backorders it again, causing the buyer not only to fill the order again, but to include a note asking the picker to find the product, all the while muttering obscenities about the warehouse. A new, untrained picker backorders the item again, because no one ever explained what those notes on the pick ticket meant. Now the buyer is livid so he or she goes to get the piece, which he or she can't find, and eventually has to order.

Document your processes.

0 comments 6:37 AM Posted by amma

Now even though this article is about your inventory, you have to document all of the processes that go on in your warehouse. How can you legitimately establish any type of inventory control program if your people are not sure about what they should be doing? The "follow Nancy around" approach to learn processes only works in the restaurant business. Your people need to know different picking (P) and receiving (R) functions: What to do when I go to pick an item and there is no product in the bin? (P) What do I do when the wrong product is in the bin? (P) What do I do when I am receiving and the vendor sends a replacement item? (R) What do I do if the item in the bin is damaged? and What do I do if the item is not in the bin, but I see the item in overstock? (inventory)

Even though some of the processes are picking and receiving-related, improper processes will cause inventory problems throughout the year and will lead to problems during the annual physical. Your people need to know what processes to follow; however, we know your people are not going to consult a training manual every time they encounter a problem so develop "Cheat Sheets" that are brief references showing how to troubleshoot problems. (See figure 1)

19 Steps to Maintain an Accurate Inventory What You Must Know About Your Inventory

0 comments 6:23 AM Posted by amma

Peter Drucker, the foremost author and expert on enterprise and self-management, and one whom I am sure everyone reading this has probably heard of, stated, "We know little more about distribution today than Napoleon's contemporaries knew about the interior of Africa." I found out just how true this was when I was gathering information for this article. I began by searching to see what other experts had to say about maintaining an accurate inventory. About one week after beginning my search, I was no closer than when I started, so I decided to talk to people in the industry and ask them three simple questions:

What are your currently doing to maintain the accuracy of your inventory?
Is what you are currently doing working?
If what you are currently doing is not working then why haven't you changed?

You know what the interesting thing was? Everyone answered number 1 and number 2, but when it came to number 3, I ended up right back where I started: scratching my head and saying, "I can't believe since inventory is one of an organization's greatest asset, why do most companies do so little to maintain it?"

There are some interesting things about inventory that I am sure everyone knows, but before I get to the nineteen steps I'm going to reiterate some key points about inventory.

Distribution inventory values range between 6 percent and 20 percent of the company's annual revenue.
An inaccurate inventory causes several problems: lost sales, decreases in profitability, and lost productivity from searching for products.
Companies use inventory as a security blanket to cover deficiencies in their warehouse.

Given all of this, the only thing you really need to know is that it takes $2,500 in new sales to make up $100 in lost inventory, assuming a 4 percent return. I don't think I am the only one in our industry who knows this, but if I am not, then why are so few people talking about how to control the accuracy of their inventory? Think about how much having an inaccurate inventory costing you and your organization.

Again, your inventory is one of the biggest, if not the largest investment you have in your company. The only thing that comes close to it is your people. But you know what I have learned over the years? People do what you inspect and not what you expect! Most leaders expect their people to know why inventory accuracy is important to the company, and it is with this assumption where the problems begin. It is also where I am going to begin the first step.

What are your currently doing to maintain the accuracy of your inventory?
Is what you are currently doing working?
If what you are currently doing is not working then why haven't you changed?

There are some interesting things about inventory that I am sure everyone knows, but before I get to the nineteen steps I'm going to reiterate some key points about inventory.

Distribution inventory values range between 6 percent and 20 percent of the company's annual revenue.
An inaccurate inventory causes several problems: lost sales, decreases in profitability, and lost productivity from searching for products.
Companies use inventory as a security blanket to cover deficiencies in their warehouse.

Monday, October 26, 2009

SAP Keeps Traction On Some Tires Of Its Omni-Wheel-Drive

0 comments 5:58 AM Posted by amma

SAP believes mySAP CRM offers chemical companies a strategic advantage since its operational, analytic, and collaborative features empower employees to respond more quickly because they have a consistent view of their customers. mySAP CRM enables collaboration by distributing relevant information to internal and external communities of interest, informing customers and partners about new products, special offers, updates on new site features, and upcoming events. This improves marketing efficiency and speeds communication. Additionally, mySAP CRM helps chemical companies to grow top-line revenues by enabling more effective up-selling, cross-selling, and identification of new sales and delivery channels. Capabilities such as predefined buyer profiles, commonly sold product terms, up-to-the-minute information about pricing and availability, customer-initiated tracking, and automatically updated financial and inventory data should reduce purchasing cycle time and, therefore, the cost of transactions.

Renewing its pledge to open its products, on April 18, SAP announced it would accelerate the delivery of open, collaborative application solutions, which use open integration technology and enable customers to maximize the return on their existing IT investments, even in heterogeneous environments. The company announced it has created a new business area to focus on the next generation of collaborative solutions and that Shai Agassi, in his new role as a member of the SAP Executive Board, will be responsible for this business area.

By extending the SAP Executive Board to focus on the next generation of collaborative solutions SAP intends to demonstrate their strategic significance to the company. The business area will include development, market strategy, professional services, and business development personnel of the formerly independent SAP subsidiaries, SAP Markets and SAP Portals, as well as strategically built field initiatives and solution centers. It will focus on providing an open integration platform that unifies people, information, and business processes. On top of this platform, which combines portal, business intelligence (BI), knowledge management (KM), and exchange technology, the new business area will supposedly deliver collaborative, analytical, and commerce solutions that should run within and across business boundaries.
On the same day, SAP also announced its preliminary results for the first quarter ended March 31, 2002. In Q1 2002, revenues increased 9% from EUR 1.52 billion in the same period last year to EUR 1.66 billion (See Figure 1). While product revenues in the quarter rose 6% to EUR 999 million from EUR 943 million in Q1 2001, license revenues notably dropped 12% to EUR 402 million from EUR 458 million a year ago. More notably, net income for Q1 2002, adjusted for the TopTier acquisition costs and the Commerce One impact, was EUR 65 million, a 40% drop compared to EUR 109 million in Q1 2001. In the quarter, revenues in the Europe, Middle East and Africa (EMEA) region increased 11% to EUR 886 million and in the Asia-Pacific region (APA) revenues were up 4% to EUR 185 million.

Figure 1.

Even revenues in the Americas region rose 7% to EUR 587 million, and, at constant currency rates, revenues in the Americas would have risen 5%. Still, the continued tightening of IT budgets, especially in the US and Japan, have given raise to disappointment, particularly as license revenue in the US was down 28% (down 30% in Americas) and in Japan was down 56% (down 32% in APA). Also interesting is the fact that while the license revenue in the EMEA market was up 1%, it dropped 4% in its domestic German market.

SAP continues to take market share in sales of specific software solutions, and it also increased its personnel 3% in the quarter, mostly in Europe. In Q1 2002, software revenues related to mySAP CRM reached approximately EUR 74 million, representing a 10% growth and accounting 18% of total software license sales. Even recently considered unexciting products, mySAP Financials and Human Resources, grew at a steady 6% rate to EUR 172 million, representing 35% of license sales.

On a less positive note, the steepest revenue declines come from other newer mySAP initiatives, including mySAP SCM (with a decline of 23% to EUR 79 million), mySAP PLM (with a decline of 28% to EUR 33 million), and mySAP Portals and Exchanges (with a decline of 45% to EUR 44 million). Although the conditions for software purchases are challenging, the company still expects a much stronger second half of the year, and still anticipates revenue for the full year to grow by around 15%. SAP anticipates that the improvement will become more evident in the second half of the year as software license performance improves and the company benefits from ongoing cost curtailment measures.
Finally, as to bolster its performance in North America and to get itself in a better shape for impending intensifying bloodbath in the CRM market, on May 23, on the eve of its forthcoming SAPPHIRE user conference at the beginning of June, SAP announced that it has appointed Lo Apotheker as president of Global Field Operations. In this newly created position, Apotheker and his management team will realign SAP's worldwide sales force around the needs of global customers for consistent processes and seamless operations across geographies. The realignment will also decouple some of SAP's regional organizations to create more homogenous market segments to enable the field organization to better meet customer needs regardless of the size of their businesses. Formerly president of Europe, the Middle East and Africa (EMEA), Apotheker will oversee all SAP field operations worldwide, reporting directly to SAP Co-chairman and CEO Henning Kagermann. Apotheker joined SAP 14 years ago and launched SAP France, serving first as managing director and eventually assuming responsibility for SAP's southwest Europe region. In 2000, he was appointed to SAP's Extended Board and named president of EMEA.

Apotheker will serve as acting head of the North American region of SAP, gaining hands-on experience in SAP's largest potential market, since Wolfgang Kemna, current president and CEO of SAP America, Inc. is assuming the role of executive vice president, Global Initiatives reporting directly to Henning Kagermann. Kemna will build on the success of SAP's global strategic initiatives in CRM and Supply Chain Management (SCM), leading a new organization dedicated to these and other future strategic initiatives.

SAP Announces Investment in Catalyst International

0 comments 5:57 AM Posted by amma

In return for an insignificant portion of its capital, SAP gains an experienced consulting partner. The alliance will help SAP expand its already huge market footprint into warehouse management execution, by leveraging certified interface partner Catalyst. Although the strengthened relationship stands to significantly accelerate Catalyst's business, having a big investor like SAP carries a price. It remains to be seen just how much longer Catalyst can continue to market its Catalyst WMS and CatPack products for use by other ERP systems, given the resource commitment the new alliance will demand. As part of their reorganization efforts, Catalyst will cease development on its NT version of Catalyst WMS. This allows Catalyst to focus entirely on UNIX. History indicates that their departure from NT may be a good move in the short term. Catalyst has tried repeatedly to deliver a Windows NT product without success, most recently through the acquisition of Kearney Systems Inc. (KSI). A previous attempt to deliver an NT-based WMS was abandoned when management scrapped development on a product acquired from Information Strategies Inc. (ISI) in early 1997.

SAP's move is another example of the rapid consolidation and partnering underway in the ERP and supply chain planning/execution markets. There are varying degrees of commitment in these relationships and the SAP-Catalyst deal is stronger than many. SCM powerhouse, i2 Technologies maintains alliances with Industri-Matematik International Corp., and EXE Technologies, Inc., that involve joint marketing and development aspects, but not an equity investment. Though strategies differ, these moves ultimately provide tighter integration of the packages, more comprehensive services and support, and lower installation costs for companies who seek to benefit from new technology.
Current SAP LES users should benefit short-term from the consulting and training services available through the SCE Competency Center. More advantages will come later as Catalyst leverages experience from its SAP integration projects to scale Catalyst WMS to larger and larger enterprises.

Drive down cost? What does that really mean in a supply chain world

0 comments 5:56 AM Posted by amma

Many organizations would like to lower their cost in the entire supply chain, but achieving this is not possible without suitable strategic plans in place. Usually, in cost cutting strategies, organizations don’t look at the entire value chain, but decide to cut for sake of saving some dollars. When you think about cost cutting, is it really a good, strategic plan for the organization in long run? Or should we be looking at reducing non-value added activities and processes from our value chain? In an economic downturn, the latter makes more sense—organization should be looking at the overall, long term objectives and ask what it wants to achieve while maintaining its profitability.

Now the question comes: should organizations be cutting or reducing cost? For some companies there is no difference between cost cutting and cost reducing—however, there is. Let me describe the fine difference between these two strategies. In cost cutting, each department or group within an organization has the mandate from upper management to bring costs down to a minimum. However, this mandate is not based on visibility throughout the entire organization. Cost reducing, on the other hand, cuts out only non-value added activities from their supply chain process.

In general, when a supply chain manager considers cost cutting, he or she is looking solely from the perspective of “where can dollars be saved”. And this is often done through quick fixes, without realizing that they are actually much more harmful. Below is a table of typical, cost cutting quick fixes and the potential risk they may have to the overall organization.

The above cutting tactics will lessen cost in the interim, but may also create major issues for the organization in the long run. That is the reason why many organizations won’t realize benefits from cost cutting.

Instead organizations need to adopt the strategy of cost reducing for their overall supply chain in their supply chain network. Cost reducing includes

Buying raw materials at the right price from the right strategic partner (supplier) and moving the material in the most effective and efficient manner (channels), while keeping in mind that the objective is to move as little as possible so the material price stays low.
Making product in a lean manufacturing facility will reduce waste and increase operation throughput. It will also reduce the overall lead-time to deliver. When doing this, organizations need to keep in mind that quality does not need to be jeopardized to implement this new process. It’s important to measure key cost reducing indicators to see if cost reduction has been achieved.
Transportation has a variable cost, depending on mode and location. The best ways to reduce cost is for organizations to establish relationships with its suppliers so they can plan their freight delivery in a manner which will benefit both parties. This also allows organizations to manage the freight delivery of finished goods to distribution centers and customers in the most cost effective and economical manner. Organizations should also use tools to analyze each transportation delivery to understand hidden cost and to build an improved transportation model.
Distribution centers need to have a best-in-class facility layout which can reduce the movement of material, as well as reduce the need to store inventory at other locations. Organization should apply the best practices of warehouse management to run the distribution center and remove inefficient labor cost. Organizations should also keep in mind the environmental impact of distribution centers, and strive to reduce the energy consumption and waste of packing material.
Inventory should be managed in-house, at stores, and in warehouses. The number of days supply is stored at a location needs to be evaluated on a daily basis so that organizations don’t get stuck with non-conforming inventories. The bottom line is to keep business profitable by having the right inventory, at the right location, at the right time to create satisfied customers.
Outsourcing should be evaluated through key indicator metrics, regardless of which activity is being outsourced. The organization should identify the benefits (profit) of outsourcing based on timelines and measure its return on investment.
IT systems are just one of the places where organizations need to re-evaluate their current providers. Some systems are out-of-date and need to be replaced or upgraded with new technologies or capabilities. These systems will identify the organization’s obstacles regarding data accuracy, completeness, and timeliness. All IT systems need to be able to integrate with each other, as well with other third party providers and partners.

These areas of supply chain need to be analyzed further for companies to implement a cost reducing strategy. Some, which are simpler and easier to achieve, have already been identified in this blog, but others are harder to achieve without further collaboration with other parties in the supply chain network.

Instead organizations need to adopt the strategy of cost reducing for their overall supply chain in their supply chain network. Cost reducing includes

Buying raw materials at the right price from the right strategic partner (supplier) and moving the material in the most effective and efficient manner (channels), while keeping in mind that the objective is to move as little as possible so the material price stays low.
Making product in a lean manufacturing facility will reduce waste and increase operation throughput. It will also reduce the overall lead-time to deliver. When doing this, organizations need to keep in mind that quality does not need to be jeopardized to implement this new process. It’s important to measure key cost reducing indicators to see if cost reduction has been achieved.
Transportation has a variable cost, depending on mode and location. The best ways to reduce cost is for organizations to establish relationships with its suppliers so they can plan their freight delivery in a manner which will benefit both parties. This also allows organizations to manage the freight delivery of finished goods to distribution centers and customers in the most cost effective and economical manner. Organizations should also use tools to analyze each transportation delivery to understand hidden cost and to build an improved transportation model.
Distribution centers need to have a best-in-class facility layout which can reduce the movement of material, as well as reduce the need to store inventory at other locations. Organization should apply the best practices of warehouse management to run the distribution center and remove inefficient labor cost. Organizations should also keep in mind the environmental impact of distribution centers, and strive to reduce the energy consumption and waste of packing material.
Inventory should be managed in-house, at stores, and in warehouses. The number of days supply is stored at a location needs to be evaluated on a daily basis so that organizations don’t get stuck with non-conforming inventories. The bottom line is to keep business profitable by having the right inventory, at the right location, at the right time to create satisfied customers.
Outsourcing should be evaluated through key indicator metrics, regardless of which activity is being outsourced. The organization should identify the benefits (profit) of outsourcing based on timelines and measure its return on investment.
IT systems are just one of the places where organizations need to re-evaluate their current providers. Some systems are out-of-date and need to be replaced or upgraded with new technologies or capabilities. These systems will identify the organization’s obstacles regarding data accuracy, completeness, and timeliness. All IT systems need to be able to integrate with each other, as well with other third party providers and partners.

Multi-enterprise Responsiveness—Can It Ever Be Achieved

0 comments 5:55 AM Posted by amma

Reassessing Existing Tools and Practices

Enterprises need to re-examine and redesign their supply chain processes and supporting IT tools to accommodate more responsive collaboration within a multi-enterprise, multi-echelon context. Most current enterprise resource planning (ERP) systems in use (as technical backbones) not only suffer from the vertical integration mind-set (i.e., they have a single-enterprise or manufacturing in-house orientation), they also suffer from being forecast-driven rather than demand-driven (see Demand-driven Versus Traditional Materials Requirement Planning) and from dealing with extended time brackets (i.e., weeks, months, or quarterly cycles). However, these systems merely record transactional history, and they require many complementary processes to address operations. In other words, ERP systems have to trigger too many additional external (often manual) transactions for more granular scheduling to occur.

To illustrate, sometimes users must perform manual steps on the ERP data to make it fit for use. Such steps may include creating production dispatches and schedules for production lines, which are often presented in a post-processed spreadsheet instead of coming directly from the ERP system in a useful format. Also, ERP systems typically cannot perform the following: map individual items to product lines; recognize the most appropriate order-scheduling rules; split days into shifts; and present input, such as adding finished goods replenishment needs to the production scheduler in an out-of-the-box manner.

As for the order-promising that is needed when moving toward a make-to-order (MTO) environment, ERP systems can typically show available inventory. But what MTO manufacturers need to know is the exact product line’s (work center) capacity for a particular routing operation by seeing the next open slot in real time from a single view. These companies also need to know raw material availability to ensure that the capacity can be used.

A manufacturing execution system (MES) can help to resolve these issues to a degree—see What Are Manufacturing Execution Systems? However, in addition to the well-known issues of integrating two systems that “live in different worlds and think in different terms” (see The Challenges of Integrating Enterprise Resource Planning and Manufacturing Execution Systems), the question remains of how large a step forward an MES is for responding to unplanned events versus doing more of the same (i.e., recording history, albeit in more granular, plant level).
Further, advanced planning and scheduling (APS)—see Remember APS?—and supply chain planning (SCP) systems came as improvements to ERP in the late 1990s, but only in terms of strategic- and tactical-level optimization (and again, mainly in the realm of long-to-mid-range planning), with hardly any help in terms of real-time operational advice to provide a solution or action in the nick of time.

APS uses linear programming, which imposes limitations on how it arrives at optimal solutions, since linear programming does not deal well with uncertainty. The APS system assumes that the input parameters are fixed and certain, that relationships are clear-cut, and that a single action results in a single result. However, in a sophisticated supply chain, actions may have nonlinear results that these systems cannot predict. In other words, planning-oriented applications do not allow for a fast enough response when changes in demand, inventory or supply, capacity, product mix, or orders occur. At best, these systems will offer another replanning exercise, and analysts then have to pore over mountains of irrelevant data to find the cause of a problem.

While this does not mean that APS calculations are useless and cannot be trusted, it does mean that the calculations should be compared to real results, and some processes may need to be modeled or simulated separately. One possible solution for managers suspecting that some of the APS’s inputs are highly variable would be to run a Monte Carlo simulation, which uses random variations to simulate chance. However, even if such commercially available solutions exist (similar to ERP and APS products), these too would typically be confined to a limited number of trained users and would not lend themselves well for the collaborative real-time environment.

Some organizations will then turn to business intelligence (BI) and analytical solutions, since if the ERP and APS systems have weak analytics, they will probably arrive at merely feasible rather than optimal solutions. However, while investing in management decision support systems (DSSs) should become a priority in terms of time and spending once transactional systems are complete, BI DSSs mainly score and magnify history. They are unable to provide a useful answer to the “now what?” situation of a customer canceling a major order (or increasing an order quantity) or an engineering department introducing a new product. Predictive analysis of demand and customer behavior can help in such situations (see Predictive Analytics—The Future of Business Intelligence), but to our knowledge, such commercially available solutions for manufacturing and distribution processes do not currently exist.

Sales and operations planning (S&OP) also comes to mind as a helping tool. APICS Dictionary defines S&OP as

a process to develop tactical plans that provide management the ability to strategically direct its businesses to achieve competitive advantage on a continuous basis by integrating customer-focused marketing plans for new and existing products with the management of the supply chain. The process brings together all the plans for the business (sales, marketing, development, manufacturing, sourcing, and financial) into one integrated set of plans.

Still, while S&OP is a huge step toward establishing and instilling effective and efficient collaboration—one by which all parties can explore options, wrestle with trade-offs, and develop a shared understanding and mutual commitment to a resolution—the problem is in S&OP’s focusing mainly within the single enterprise and on the level of tactical plans (versus operational ones).

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