Demand meets execution
Bob Trebilcock, Editor-at-Large -- Modern Materials Handling, 10/26/2004
Once, the lines between supply chain management applications were clear and distinct.
Up at the corporate level, planning systems marshaled together the resources and a schedule to manufacture, pick and ship orders over the next quarter, month, week or even days.
Down at the facilities, execution systems for warehouse and transportation management figured out the best way to turn those plans into reality.
Today, the lines between planning and execution are blurred.
“There’s no question that execution is moving closer to the planning space,” says Simon Bragg, European research for ARC Advisory (781-471-1000). “Right now, the leaders are the ERP (enterprise resource planning) vendors who are getting into supply chain execution because they already have one integrated database for all of their applications.”
But this trend isn’t limited just to ERP vendors. Traditional supply chain planning vendors like i2 (877-926-9286) and Manugistics (301-255-5000) have built execution functionality into their transportation planning and management solutions.
Meanwhile, traditional supply chain execution vendors like Manhattan Associates (770-955-7070), RedPrairie (877-733-7724), Provia (616-285-3311), Yantra (978-513-6000) and Logility (800-762-5207) are touting the benefits of optimizing warehouse and transportation fulfillment processes through better planning.
Changes in customer service requirements are the big drivers in this trend. “Over the last ten or fifteen years, a lot of companies have invested in demand-driven manufacturing to shorten their lead times,” says Karin Bursa, vice president of marketing for Logility. “But at the end of the day, we are still only as responsive as the warehouse’s ability to deliver.”
By integrating execution systems with planning systems, Bursa adds, a company can re-plan and react to changes in demand. “If I get a change in demand, I can look across my inventory and transportation systems to see if I can bring together the supply to fill an order in a shorter time frame,” Bursa says. “Or, I can determine the most beneficial way to allocate inventory in short supply based on business or customer rules.”
These systems can also look deeper into the supply chain to create more intelligent plans. “We now have the opportunity to synchronize actual demand with actual inventory and actual constraints,” explains Scott Pulsipher, Yantra’s vice president of product management.
He continues to say, “If I get an order for 100 widgets, I might have enough inventory in one location. But if the warehouse can only ship 80 widgets in a day, I’ll need to source the other 20 from somewhere else. Or, I might have only 20 widgets in a facility, but if I can look deeper into the supply chain, I might see that I have 150 coming in. I can then promise 70 of those to the customer, and automatically crossdock them when they arrive at the warehouse rather than go through the traditional receiving and putaway operations.”
In most scenarios, this new application sits between warehouse and transportation systems and an order management system. That way it can compare orders and desired delivery dates against the location and availability of inventory and transportation resources.
While more and more best-of-breed vendors are tying execution, demand, and planning together, Bragg cautions that these solutions are still new. “There should be cost savings,” says Bragg, “but I’m waiting for the evidence after some of these applications are deployed.”
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