Supply chain software: NetSuite steps further into manufacturing

If you’re interested in what’s happening in the market for on-demand enterprise software, also known as cloud computing or Software as a Service, you have to watch NetSuite. As far as I know, they were the first full-blown ERP system designed to be deployed over the Web. What’s more, they have continually added to their functionality for the supply chain.

Most recently, they teamed up with RootStock Software, a provider of software for manufacturing systems, to develop a full-fledged MRP solution in an on-demand model, Rootstock MRP for NetSuite.

The new application was designed from the ground up as an on-demand solution, according to Patrick Garrehy, Rootstock’s founder and CEO. It also takes NetSuite one step further into manufacturing, not just back office stuff like financials. And while MRP is a supply chain management application, meaning it does not have to operate in “real” real-time, it strikes me that it moves the on-demand software market one step closer to that goal.

A little background. Two weeks ago, I moderated a Webcast with Jim Tompkins on the state of materials handling automation. One of the questions he was asked was whether he thought the on-demand, or Software as a Service, model would work for warehouse management systems.

Now, a Tier 1 WMS – the kind of system capable of running a sophisticated DC with some automation and complex order fulfillment requirements – has to execute in real time. That is especially true of distribution centers that include traditional processes, like manual order pickers, and automated processes, like a high-speed conveyor and sortation system at the shipping dock. When cartons are flying down a conveyor at 600 feet per minute, synchronization between the systems is critical. A split-second delay in the transmission of data could mean that a sorter doesn’t sort. 

As it’s been explained to me, the split-second delay in sending information back and forth over the Internet when you have an on-demand WMS is enough to gum up the works. That, in part, is why Jim’s opinion was that on-demand WMS’s work fine in traditional warehouses with fairly simple processes, like full pallet receiving, storage and delivery. They fall short, however, if you have more complex order fulfillment requirements. That is a sentiment I have heard echoed by other consultants and even some providers of on-demand WMS solutions.

Still, the on-demand model continues to make inroads in other areas of the supply chain. Last summer, NetSuite introduced an entry-level shop floor application for managing manufacturing operations. The MRP engine adds the ability to do material requirements planning for manufacturing, “typical of that which you would see in an SAP or Oracle,” Garrehy said. “It’s capable of handling the input and output processing associated with a heavier manufacturing environment.”

Who is the target manufacturer. According to Mini Peiris, NetSuite’s vice president of product marketing, it’s the mid-size discreet manufacturer, or the satellite plants of a larger manufacturer. “They can have SAP for their corporate financials,” says Peiris. “But they can have this at the plant and then roll the data up into SAP.”

Rootstock already has one customer using the solution, Xtellus, a manufacturer of optical networking technology that is headquartered in New Jersey with other facilities in Israel and South Korea. “They needed a single system that could handle multiple sites and get centralized visibility across their global operations,” says Garrehy.

This is a market I find fascinating. Let me know if your company is implementing any on-demand solutions in your warehousing, manufacturing or logistics operations at Robert.Trebilcock@myfairpoint.net.