2012 Logistics Management Technology Roundtable
May 01, 2012 - LM Editorial
As supply chain organizations evolve technologically and do a better job of collaborating with both their internal and external partners, the next challenge is integrating and interpreting the new waves of data that are now washing up on logistics and transportation managers’ computer screens as a result.
With this in mind, we’ve gathered four leading supply chain software and technology analysts to examine the latest trends, tools, strategies, and best practices available for better capturing and utilizing the new onslaught of data on the way to realizing an improved level of visibility across your logistics operations.
Ben Pivar, senior vice president and supply chain technologies lead for Capgemini Consulting, will bring us up to speed on the role enterprise resource planning (ERP) vendors are playing in integrating disparate processes; Jerry O’Dwyer, U.S. sourcing and procurement leader for Deloitte Consulting, will help shippers better understand the concept of business analytics (BI); Michael Liard, director of RFID
for VDC Research Group, brings us to speed on a new RFID-inspired wave of data; Steve Banker, director, supply chain management at ARC Advisory Group, gives us his take on transportation management systems (TMS) evolving position in visibility; and Adrian Gonzalez, director of Logistics Viewpoints, puts social media in a logistics management and career development context.
ERP: Integrating processes and systems
Logistics Management: How would YOU define the current state of the ERP market?
Ben Pivar: The strength of the ERP market depends on how you define ERP. Looking at core transaction components of ERP, we still see a steady amount of activity; however the nature of the work has changed. There’s still some greenfield implementation, but not as many as in years past. Much of the work is focused around upgrades, instance consolidation, or global expansion off an existing template. In addition to core transaction systems, we’re seeing very strong demand for optimization and business information management applications. Many of the supply chain related applications fall into this categorization, and customers are investing significantly due to the strong business benefits and short payback of these projects.
LM: What trends do you see pushing ERP’s growth in supply chain over the next two years?
Pivar: One of the big trends that we’re seeing in the market focuses on the idea of integrating business processes and systems that were previously operating in silos. As an example, we see strong demand for taking a time-phase consensus demand plan and doing a better job of sharing this information with upstream and downstream constituent groups like product development, logistics, and customers.
This plan better allows these groups to see trends in the marketplace and plan things like labor and other logistics activities more optimally. In addition, we believe that this integration will drive a new wave of collaboration between trading partners. We call this the “shelf connected supply chain,” and it allows consumer goods companies to better plan and share information with retailers.
LM: How far are we from cloud ERP? Are we there on some level at this point?
Pivar: We are seeing increasing demand for cloud-based services and managed services in general. Some of the applications that we work with are very batch process intensive, yet these batches may only run nightly or over a weekend. In supply chain, due to the data intensive nature of the problems we’re solving, these applications require significant hardware investment from our clients. Cloud can provide a strong and potentially lower cost option in these situations. But while we still hear client concerns about data security, we’re also seeing new private cloud options and enhanced cloud security that are making adoption more likely.
LM: What are the benefits to plugging in your ERP’s logistics and transportation offerings?
Pivar: There are strong benefits to using the ERP package from an integration perspective, but there may also be drawbacks in terms of rich functionality that currently exists with best of breed. We reommend a comprehensive review of the total cost of ownership of both options that considers the increased benefits of best of breed versus the potentially higher IT costs associated with the development and maintenance of interfaces to keep best of breed solutions running. The biggest benefit is reduced technical integration costs associated with the ERP solutions.
Business Analytics: Visibility enabler
Logistics Management: The concept of “business analytics” (BI) is certainly making its way around logistics management circles. For those new to the concept, how would you define BI as it pertains to logistics and transportation management?
Jerry O’Dwyer: We define “business analytics” as the practice of using data to drive business strategy and performance. This includes a range of capabilities—from looking backward to evaluate what happened in the past, to forward-looking approaches like scenario planning and predictive modeling.
Transportation and logistics management is one of the most data-driven components of the supply chain and is also one of the largest cost components of the supply chain for most companies. Transportation managers often lack critical visibility into today’s operations due to unreliable and inaccurate data, an inability to perform root cause analysis due to aggregated data, and too much time spent performing reactive, ad-hoc analyses. The right business analytics solution can help these organizations more proactively manage their business, make fact-based decisions, and successfully plan for the future.
LM: Can you give us a brief scenario of what a savvy logistics team might be able to do once they put analytics work?
O’Dwyer: We recently helped Welch’s consolidate transportation data from three different sources and achieve a return on their investment within 30 days. With operations in 35 countries, Welch’s processes approximately 50,000 customer orders each year and delivers 35,000 to 40,000 shipments annually to its customers with a transportation and distribution spend of more than $50 million per year.
We implemented a managed analytics solution that gave Welch’s a mini data warehouse to effectively report and produce key performance indicators within a dashboard. Welch’s can now view data from three disparate systems; and with easier access to business insights, the company achieved that return on their investment through higher utilization, more balanced shipments and network optimization.
LM: What are the tools/technologies that you need to harness data, put it into context, and put it to work to help you improve your logistics operations?
O’Dwyer: There are actually three foundational layers at play: First, data management and smart integration from TMS and WMS as well as freight audit and pay, industry benchmark data, or other external third sources; second, a data model that is designed for logistics users and is flexible enough to handle the complexity of the transportation network; but third, and most importantly, pre-configured analytics with metrics, KPI’s dashboards, and relevant dimensions that provide the deep insight and root cause analysis capability being demanded.