Real time decisions, Instant response
That's what the new I-business paradigm delivers by using the Internet, information, and integration for intelligent decision making.
By Staff -- Modern Materials Handling, 2/1/2000
There's a new supply chain paradigm in town. And it's called I-business.With a name like that, the Internet is obviously one of the core elements. It's joined by three other I's-information, integration, and intelligent decision making. Together, they support "collaborative decision making among all partners in the supply chain in real time, enabling direct responsiveness to customer requirements," according to Benchmarking Partners (www.benchmarking.com ). The Cambridge, MA, industry analysis and consulting firm recently coined the new term in a recently released report, I-business and the Internet-enabled supply chain.
In I-business, the Internet acts as a bridge between trading partners. It facilitates the real-time exchange of information in a way that allows companies to move from the sequential, linear supply chain model into one where multiple activities occur concurrently. Such an integrated flow of information across enterprises allows intelligent decision making closer to the time that an order is actually placed without sacrificing turnaround time. As a result, the cost of delivered goods is lower while customer service levels rise. Bench-marking Partners see I-business as the best alternative to what they call today's "fairly dismal" state of the supply chain.
Such a world of real-time decisions and instant responses requires significant changes in business processes, says the report. Functional silos must disappear. Decisions must be made in real time and concurrently, not periodically and sequentially. Collaboration between trading partners must replace today's emphasis on simple communication. The chart on the next page compares these and other characteristics of I-business and the current supply chain paradigm.
In I-business, "information more than a few hours old is suspect, and business planning, once considered in terms of years, is done in weeks or months," say Benchmarking Partners. To ensure intelligent decision making, companies will have to integrate transactional software with rapidly evolving decision support systems (DSS). The later defines objectives, rules, and targets against which the transactional systems must make the business operate. And while transactional systems integrate functions within a single company, DSS makes plans across enterprises.
It is that link to information systems at other trading partners that make DSS so critical to the success of I-business. "I-business requires the integration of tightly coordinated communities of business partners and customers, all with shared business objectives, collaborating as a single well-run virtual enterprise. Organizational scope now extends to inter-enterprise relationships across the value network, enabling capabilities such as cross-enterprise demand planning and visibility into the unified supply chain infrastructure to track order status and availability," says the report.
At this point, three software suppliers-i2, Manugistics, and Baan-account for 75% of DSS sales, says the report. Suppliers dividing up the remainder of the market are: ILOG, SAP, Aspen, SynQuest, Logility, and J.D. Edwards.
The best of the software packages from these suppliers, says the report, are constraint-based solutions that are considerably more sophisticated than previous planning software. Those packages did not take constraints into account and only optimized planning within functional silos rather than across enterprises. Other new capabilities include capable-to-promise and due-date quoting order management functionality.
The software also helps companies to determine how they can service a customer and whether that customer's requirements should be serviced within the company's established business plan. Using information from transactional systems, DSS is capable of determining how long it really took to fill an order and how much it really cost.
One particular family of DSS software, collaborative planning, forecasting, and replenishment (CPFR), is at the crux of information exchange in the I-business paradigm. CPFR facilitates joint decision making by trading partners that allows them to align resources to fill customer requirements. As a result, the software fills the gap between resource alignment and inventory replenishment.
In the end, CPFR replaces communication between companies with true collaboration. The software goes beyond e-mail and electronic data interchange (EDI) and allows trading partners to share data that makes possible inter-enterprise process planning that improves order execution.
And improving order execution so that it is both more profitable to the supplier and provides more satisfaction to the customer is what I-business is all about, say Benchmarking Partners. Otherwise, the state of supply chain will remain in its fairly dismal state.
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