The synchronization and management of the Omni-channel customer fulfillment experience has fast become a complex problem for retail industry business management and supply chain teams. The added dimensions of taking orders online or from physical stores and fulfilling from multiple channels adds complexity and needs for smarter and more-informed decision-making. Cost to serve and determining impact to profitability become ever more a challenge.
Yesterday, in conjunction with the Focus Connect 2014 event being held in Barcelona, JDA Software and IBM made a joint announcement that Supply Chain Matters believes demonstrates the ongoing importance and continued evolution of Supply Chain Control Tower (SCCT) support capabilities in the supply chain technology market. This announcement could also portray a possible broader relationship among these two technology providers in the months to come.
The specific announcement involves a joint collaboration among JDA and IBM development teams to address the need to process and fulfill retail industry Omni-channel orders in a more efficient and more intelligent manner. The approach calls for combining the elements of JDA’s warehouse management, demand planning and workforce planning business support capabilities (JDA Intelligent Fulfillment and Labor Productivity) with IBM’s Sterling Distributed Order Management network platform capabilities. In essence, this approach marries elements of supply chain planning and execution with an end-to-end order management and fulfillment platform that connects all channel participants. The combined capability is expected to be offered in either an on premise or cloud deployment option, the latter being supported by IBM’s SoftLayer business arm. The joint development effort is currently underway and according to the announcement, is expected to be available in late spring of 2015.
This author had the opportunity to speak with IBM regarding the joint announcement. Discussions among these two technology providers began in January of this year at the National Retail Federation (NRF) conference. Both companies have a rather strong market presence among global retailers and each was hearing customers speak to the increasingly complex challenges currently manifested in Omni-channel customer fulfillment, including the dynamic aspects of having to manage the tradeoffs of inventory, appropriate fulfillment location, transportation and labor requirement needs. In May of this year, our Supply Chain Matters commentary associated with attendance at IBM’s Smarter Commerce Summit highlighted the evolving dimensions of Omni-channel and the needs to provide more predictive and prescriptive decision-making capabilities into the process.
The joint press release includes a quote from joint customer Lowe’s Home Improvement, and we were informed that both firms have identified interest from other unnamed retailers as well. Apparently, the original timetable called for announcement of joint product integrating JDA and IBM elements later in 2015, but it was obviously pushed-up to coincide with this week’s JDA customer event.
Our supply chain and B2B business community education series regarding SCCT has articulated that the concepts of control towers involve efforts to bring together supply chain planning and execution business process elements with enhanced intelligence and more predictive decision-making that can be provided in near real-time dimensions. There have been a number of strategic movements underway among multiple supply chain, enterprise and ERP technology vendors to build, broaden or position SCCT capabilities. We view this JDA-IBM joint announcement as yet another dimension of such efforts. JDA has the potential to leverage a broader more feature-rich distributed order network platform that supports more dynamic process parameters while IBM garners access to deeper retail-specific supply chain planning and execution support functionality. We have been informed that JDA is building and architectural framework that supports plug-in capabilities from other vendors, similar to what we have heard from supply chain planning providers such as Steelwedge and its connection to the Salesforce.com platform. Similarly, supply chain business network provider E2open augmented supply chain planning and product management support capabilities with the acquisition of Icon-SCM and Serus Corporation respectively.
As noted in our previous commentaries, IBM has been integrating elements of Sterling order management and B2B messaging capabilities with its IBM Emptoris sourcing and procurement business suite, and has communicated efforts to bring the predictive elements of Watson decision-making to online fulfillment and supply chain synchronization challenges. Thus, the SCCT business process support elements continue to broaden from many dimensions and are a sign of what will transpire from SCCT support technology down the road.
In the meantime, readers and joint JDA and IBM customers should watch the ongoing joint efforts among both providers for further signs of what is to come. Just like the prior announcement of the partnership among IBM and Apple, both parties provide the potential to remove the information integration burden for today’s highly complex supply chains.
Disclosure: IBM, E2open and Steelwedge have current or prior business relationships with the Ferrari Consulting and Research Group, parent of the Supply Chain Matters blog.
SAP conducted its annual Sapphire NOW users conference in the U.S. and utilized this customer forum to once again communicate significant changes and implications concerning future direction. The prime theme that SAP management delivered to customers was the SAP Run Simple message, which for many day-to-day users of SAP, is a message that is received with some cynicism. None the less, the implications are rather profound and real. Supply Chain Matters penned a prior commentary regarding the implications of SAP’s new strategies focused on integrated business planning that has since received significant reader and social media activity.
Among the keynotes delivered at Sapphire was the often anticipated talk by Hasso Plattner, one of the original founders of the company and existing Chairperson of the company’s Supervisory Board. While Hasso’s annual talks to SAP customers tend to sometimes be academic and lengthy, they often contain candor and important insights regarding SAP direction or missteps in the market. This year was no exception.
One of the most significant messages delivered by Hasso was that enterprise software running on-premise is going to the cloud, no matter what. That is why SAP’s new strategic emphasis is now all about reengineering for “the cloud.” The message from Hasso was that it is no longer a matter of if but rather a matter of time. That alone is a significant message coming from SAP’s founder and most influential investor. He further indicated that four years ago, SAP leadership was initially very apprehensive regarding the challenge to change 400 million lines of code within its ERP backbone system, but has now come to the conclusion that it would have no choice but to do so. Software that was designed many years ago under different assumptions related to business processes and existing technology at the time, now has to better match the realities of today’s new business and technology paradigms. Hasso’s drumbeat message remains: “simplicity beats complexity”.
A very significant implication of SAP’s ongoing re-engineering towards leveraging HANA and the cloud is the goal to eliminate “aggregates” within its internal system’s functions. Aggregates are when the system calculates for instance, gross margin, income statements or a supply chain planning optimization. Long-time SAP APO user teams can best relate to this concept by considering APO’s in-memory or former “live cache” design concept, where all planning related transactional and master data is drawn into the planning engine to formulate optimized supply chain plans.
Instead, the new HANA based cloud or on-premise technology will store all of SAP transactional data in memory (column-store) and will respond to information needs and reporting requirements by assembling models and algorithms on top of transactional data. The implication is a system with a far smaller footprint that users will eventually have the infinite freedom to re-arrange information hierarchy’s on-the-fly in a matter of a few seconds. By Hasso’s description, that opens opportunities for the system to perform all functions via models and algorithms and the ability to perform more predictive and simulation based analysis capabilities based on system-wide data.
Other significant implications will be the even more critical importance to accurate master data, internal skills in modeling and simulation of supply chain related data and the ability of supply chain planning and fulfillment teams to perform multitudes of what-if or target supply chain goal fulfillment analysis.
Of course, this broad and sweeping scope of SAP focused change is going to take additional time, perhaps years in scope. There will be critical decisions that customers will need to make over that time period. At Sapphire, SAP further communicated its increased dependence on select key partners to assist both SAP and its existing customers to more quickly and successfully navigate this ongoing and significant transition.
Existing SAP customers need to seriously think about the implications of this shift in technology direction, especially as it relates to supporting today’s and tomorrow’s broader and more complex supply chain management needs. While complexity and frustration may rule today’s mindsets, start seriously thinking about what these new changes imply for integrated supply chain and business planning support needs under the SAP HANA enabled banner. Such changes involve a changing mindset, new and different skill needs as well as a reliance on a trusted external consulting and support partner.
It is no secret that SAP APO, while designed as a bullet-proof supply chain planning system built around SAP master and transactional data, is somewhat difficult and inflexible in its ability to provide a means to support rapidly changing supply chain business processes or to support a new data paradigm where the majority of supply chain related data exists in an external demand or supply network. In a prior Supply Chain Matters posting, we noted that the structural design rigor and tight internal system linkages has led to many work arounds, including spreadsheets and supplemental systems. In many cases, the full potential of supply chain optimization, such as optimized supply planning is avoided because of the complexity and lack of understanding of innards of SAP APO. However, those teams that have taken the dedicated time and patience to learn and understand such innards with supplemental tools have managed to leverage APO functionality and subsequent benefits.
As noted in prior commentaries, as SAP continues to build out its described muscle platform, organizations need to focus efforts on the further mastering of broad-based supply chain planning and fulfillment process modeling, optimization, simulation and master data management capabilities. There are available tools and knowledgeable partners who can help you to re-focus your current efforts and direction and better respond to line of business needs, customer fulfillment or product management requirements, while helping to facilitate the skills and new capabilities roadmap that prepares for what will come in the new world of SAP.
Key SAP strategic partners such as Intrigo Systems, are not only focused on SAP APO, but the broader SAP Supply Chain Management, both today, and in the realities of the SAP HANA enabled environment. The Intrigo Systems Optek tool suite consists of modules that have been designed to place the planner more in control of the process while making SAP APO functionally more effective today, and in the future capabilities of SAP Supply Chain Management.
© 2014 The Ferrari Consulting and Research Group LLC and the Supply Chain Matters Blog. All rights reserved.
Disclosure; Intrigo Systems is a current client of the Ferrari Consulting and Research Group.
Cloud-based, end-to-end supply chain business network provider E2open has announced this evening the acquisition of cloud-based manufacturing and product management provider SERUS Corporation. According to the announcement, the transaction is valued at approximately $18.5 million at closing (comprised of approximately $14.5 million in cash and $4.0 million in E2open common stock), with up to an additional $7.5 million in cash contingent upon the achievement of certain revenue-related financial performance milestones.
SERUS’s capabilities as a one to many cloud-based network provider include the ability to integrate product management and new product introduction information management needs up and down a primarily outsourced supply chain. Supply Chain Matters featured our profile of SERUS in March of this year and we were impressed with the capabilities of their platform in supporting product management information integration up and down an outsourced supply network.
This announced acquisition is the second for E2open, after becoming a public company. The former was the stunning acquisition of supply chain collaborative and scenario planning technology provider of icon-scm for $34 million in total consideration in July 2013.
SERUS’s roots include initial adoption by a number of semiconductor focused manufacturers with complex supply chain business and information flows. This provider has of late expanded beyond semiconductor to high tech, consumer electronics and contract manufacturing supply network environments. Named lighthouse customers include AMD, Flextronics,Juniper, Micron, Nvidia, Sun Microsystems division of Oracle, Qualcomm/Atheros, among others. Industry supply chains such as aerospace, automotive, industrial equipment and telecommunications have further been targets for SERUS. Each deal with complex bill of material environments, have adopted more dependency on digital software and electronics content in respective products and have more dependency on outsourced suppliers and trading and design partners.
As noted in the press release announcement from E2open, from this author’s perspective, the combination of SERUS and E2open has the potential to provide the broadest set of capabilities for business networks in the market today. Ironically, this author delivered a SERUS sponsored webinar last week. During that webinar we conducted an interactive poll of participants that indicated that participants are predominately dealing with challenges in reducing NPI cycle time and improving supplier and product management collaboration. One of my key takeaways for our audience was that leveraging and end-to-end supply-demand network to address needs for bidirectional product management information and deeper collaboration with contract manufacturers, suppliers and design partners is the new opportunity for industry supply chains to effectively compete on responsiveness, quality, and speed to market.
With the combination of E2open and SERUS, the market will have the opportunity to evaluate a business network provider that incorporates a far broader collection of collaborative planning, scenario management synchronized execution, and now product design and management bidirectional integration capabilities.
Supply Chain Matters will provide a more in-depth commentary concerning what this acquisition will offer for industry supply chains at a later date, after the official closing. Suffice to note at this point that cloud-based end-to-end supply chain capabilities that combine planning and synchronized customer fulfillment, and now PLM and product management, have become very attractive for the market, and will continue to motivate these types of announcements.
Disclosure: E2open is a Sustaining Sponsor of the Supply Chain Matters blog.
SAP AG will kickoff its joint annual Sapphire-ASUG customer conference this week which will feature revised messaging and strategic direction for the SAP Supply Chain Management suite of applications. This strategy was initially shared at the SAP Insider Supply Chain Management conference in early April as a prelude to this week’s Sapphire event.
SAP will communicate the need for businesses to transform their supply chains to demand networks which implies deeper, more agile support capabilities for integrated business planning (IBP), specifically, the sales and operations planning (S&OP) process. SAP’s perspective in IBP capabilities is communicated as balancing product demand plans with supply network constraints for profitability, as well as the sensing and shaping of product demand to orchestrate customer fulfillment needs and requirements. In essence, SAP’s intent is to enhance and deploy a broader, next generation supply chain platform that is described as a broad, many to many supply chain control tower platform capability underpinned by IBP and response orchestration. The technology will be offered on either a cloud-based or on premise deployment leveraging the SAP HANA platform and more than likely tap the supply network capabilities of Ariba.
As our SAP installed base readers are well aware, the transformation of such a broad collection of SAP supply chain network and applications capabilities will take many subsequent years to accomplish and will require SAP focused supply chain business and IT teams to make difficult decisions over that same period. In the meantime, supply chain teams need to continue to manage today’s supply chain needs for agility , increased responsiveness as well as enhanced efficiencies.
It is important to consider that as SAP builds out its new muscle platform, organizations that are invested in SAP and want to continue to gain more productive benefits need to focus their efforts on further mastering broad-based supply chain planning process modeling, simulation and master data management integration capabilities. Another important consideration is that the SAP Sales and Operations Planning (S&OP), powered by HANA will become ever more strategic for enabling what SAP seeks to achieve.
Supply Chain Matters recently featured a commentary focused on this application. In our commentary we observed that getting up-to-speed and supporting a process that spans such a broad level of participation and influence with an application with this current level of sophistication, often requires the external assistance of an SAP implementation partner. In that commentary, we called reader attention to Intrigo Systems, a focused SAP implementation partner with a high level of honed experience, knowledge and fixed scope implementation methodologies related to SAP’s S&OP Powered by HANA application.
While SAP Sales and Operations Planning, Powered by SAP HANA is a cloud-based application, the needs for managed scope, proven phased implementation of data integration, coupled with considerations for change management and usability uptake remain critical. As this application further matures and becomes the linchpin for short-term, mid and long-term supply chain and IBP within a more product demand sensing SAP environment, process modeling, robust master data integration and cross-functional user adoption and productivity will be a must for core capabilities. Continuous engagement with business users on testing and maturing the IBP process, while understanding what capabilities would be most important in the strategic roadmap are equally crucial to long-term acceptance and adoption.
In its latest messaging, SAP has acknowledged the critical importance of its supply chain partner eco-system in helping users to gain more benefits and positive outcomes from use of SAP technology. That listing of partners includes Intrigo Systems which will be showcasing its capabilities at Sapphire this week.
Intrigo provides both the knowledge, proven experience and close alignment with SAP’s strategic direction concerning this application and should be on your short-list for adopting an implementation partner.
Disclosure: Intrigo Systems is a current client of the Ferrari Consulting and Research Group
Quantification of the Renewed Venture Capital Interest in Supply Chain Focused Technology and Services
In my years of observation and insights related to supply chain focused software and technology, I am often asked the question of how attractive certain supply chain and cloud-based B2B platform technology has become for venture funding. After all, venture-backed funding has a track record for spawning leading-edge supply chain focused technology.
If you have been keeping-up with Supply Chain Matters postings, you would have sensed that supply chain technology has again become attractive and has garnered a new wave of venture capital funding in new start-ups. The question was: how attractive?
The executive team of start-up cloud-based supply chain network provider Elementum provided this author a web link to a posting published on the CB Insights Blog, a site that quantifies and tracks venture capital investments. The posting titled: Software Eats the Supply Chain provides succinct quantification of the renewed venture capital interest in supply chain focused technology. The posting quantifies that over the last four quarters, investors poured $359M into 63 deals in the logistics & supply chain software industry segment. That is a considerable slug of money over a short period of time. On a year-over-year basis, deal activity has increased 50 percent in a displayed graph that extends back to Q1-2010.
Rather interesting is that the posting notes that the increasing complexity of global supply chains has peaked interest in primarily Stage One, early stage investments in mobility, same-day delivery and cloud based end-to-end platform investments. My interpretation is that investors are seeking the next “big wave” of technology focused customer solutions directed at overcoming supply chain complexity and time critical dimensions of customer fulfillment. More responsive supply chain logistics and supply chain control tower capabilities seem to be the new attraction.
Whatever the reasons, this new wave of private and public investments is good for supply chains and B2B focused networks since it assures that product innovation will continue to primarily stem from up and coming or best-of-breed market providers.
That is indeed the good news for industry supply chain teams as well as all technology and services oriented players.
In 2012, this author was quoted in an article published in a MS Dynamics World article on the subject of emerging multi-industry interest supply chain control towers. I was asked by the contributing writer to define this capability and describe the then current market interest. At the time, I was pleased to be able to contribute to the market education of this concept, and we continue to provide such education on this blog.
Full disclosure to readers: in 2012, two of the named sponsors of the Supply Chain Matters blog were supporting and delivering control tower capabilities to customers the names of which we could not disclose because of confidentiality and non-disclosure agreements.
I was recently contacted by the author of that same 2012 article to provide an update on the current market uptake in control tower capability. Unfortunately, because of other business commitments, I was not able to circle back with the reporter up to this point. Shame on me!
I state that because the reporter has reissued an updated article (no-cost sign-up login account required), feeling somewhat loose to quote my original statements but not indicating that I was unable to comment by press time.
If I had spoken to this reporter, I would have stated the following.
The interest level in supply chain controls does indeed remain high, but most of that interest is in educational and foundational initiatives at the organization level. The aspects involve understanding the current capabilities and how they relate to current and future supply chain competency objectives. When I speak to audiences about these capabilities, I often stress the wide change management aspects to consider in building a path towards a control tower. That path includes training or recruitment of teams with advanced analytical and program management skills as well as determine where in a firm’s organizational structures such capability can best be nurtured and sponsored. There may be some further interim competency and technology implementation steps required in that journey which relate to data management, visualization and supply chain business intelligence tools.
In short, supply chain control tower is a phased journey with different timetable requirements and needs.
While I tend to agree that control towers may have been overhyped by some specific technology vendors I do not necessarily agree that a single instance of an ERP system necessarily provides an advantage. Nor do I agree that starting on the execution vs. planning end is a more viable roadmap. It is more about having a strategy that relates to a set of desired business outcomes where a supply chain control tower provides a significant competitive advantage for a business or product focused supply chain.
Industry supply chain momentum in control towers will continue but do not necessarily look to the technology vendors for crisp definition. It will come from those knowledgeable resources in market, including the early adopters that understand and can articulate the various aspects of these capabilities as well as the benefits.
Now you have my updated perspective.
For our part, we will continue to utilize Supply Chain Matters as a medium to provide a forum for market education as well as an exchange of various viewpoints regarding supply chain control towers. If you have perspectives or viewpoints to share, please contact us.