Supply chain management software has become one of the most significant segments of the software market – AMR research estimates the market currently valued at $6Billion this is set to rise to $8Billion by 2010. It goes without saying that with this level of expenditure there is intense competition within the marketplace with many providers offering a variety of solutions and toolsets. It’s sometimes easy to forget in this cut throat world of supply chain management software, dominated by the likes of SAP, i2 and Oracle that the software itself has come an awful long way over the last 30 years.
Back in the 1970’s software systems were a new approach in particular to the planning and scheduling of material requirements. MRP evolved to MRPII and software companies (particularly the likes of IBM which bundled the software with it’s mainframe systems) sought to base it’s toolset around the concepts of inventory and supply chain. With this toolset linked to powerful databases, high volume transactions could be administered with greater efficiency and control. Business saw the potential and a software market was born.
The user environment in these early systems was very crude and transaction focused in comparison to the rich clients that systems utilize today – PC technology would go someway to improve this but it wasn’t until the client server technology took off that ERP’s as the systems had collectively been termed could be truly embraced by the user.
Functionality has improved exponentially since these early systems with greater emphasis being placed on empowering users through access to information. Functionality is also being driven by organizational needs. Business has changed over the last 30 years both culturally and geographically, companies have splintered across time zones and continents with multiple distribution channels now commonplace. Modern Supply chain executives face increasing pressures of globalization, obsolescence, pressing business strategy’s for collaboration and the old chestnut of cost control – coupled with common issues of reducing lead times and inventory while still conducting the day job of leveredging spend on suppliers. Supply chain management software is now the support unit that must bring all these issues together.
Connectivity has been a substantial driver in what can be achieved by supply chain management software. In today’s world of internet connectivity applications can be opened up to allow the whole supply chain to collaborate, radically changing the face of forecast and planning whilst providing “open book†insight into performance measures.
The effect of globalization has had various effects on the supply chain – not only has it spread the base of suppliers – but it has also spread requirement and inventory. Today’s supply chains commonly manage global commodities – with inventory spread across time zones, but with the need to manage stock information in real time with a seamless interface with the customer.
In support of this communication methods have developed at an alarming rate from the introduction of EDI standards in the 1970’s which resulted in the opportunity for large efficiency gains – to today’s internet and XML web-services and trading portals which can bring large numbers of suppliers together at the click of a mouse.
Perhaps the biggest significant difference between today’s supply chain management systems and their ancestors is that today’s software must do much more to aide knowledge workers and decision making – information is a key deliverable in today’s ERP. There has also been recent growth in supplier relationship management and risk tools – this is symptomatic for medium to large organizations which may have trouble controlling supplier activity across multiple buying domains.
Following dominance of largescale solution providers such as SAP, the marketplace is seeing some diversity with many niche software companies providing software targeted at specific tasks – for example the industry has seen significant growth in software that helps large organisations analyse spend and supplier relationships – supplier relationship management software doesnt process transactions (which differentiates itself from ERP solutions) but solves a specific problem for supplier chain executives – there are a variety of other individual toolsets from stock optimization tools, through life management solutions, integration applications, sourcing tools. These tools are available often at a fraction of the cost of ERP packages are often more tuned to the specific needs of executives and knowledge workers within the supply chain. While the large scale ERP solution remains popular – high costs and lenthy implementations have provided the niche tool provider an in-road into many organisations.
So, supply chain management software has come an awful long way from the worlds of purely transactional software. Tomorrow’s systems will aim to satisfy the needs of supply chain strategy looking for knowledge and control over increasingly diverse supplier relationships and inventory portfolios. One thing is for sure, software lifecycles have dropped considerably from their inception from decades to perhaps months – we can the systems of tomorrow to look different from today – with more tools and increasing levels of functionality – the supply chain market will remain cutthroat for a little longer!
Concerns with Delivery Schedule Adherence
Filed Under Blog
Delivery Schedule Adherence (DSA) is a commonly used KPI within Supply Chain organizations. DSA results can identify a variety of issues from poorly performing suppliers whilst alluding to other issues such as overstocking to mitigate supply delays. As such DSA is a common theme in supply chain improvement programs (as case studies provided by Industry Forum and Taylor.com show) and forms part of the QCD core KPI’s (Quality, Cost and Delivery.)
However, it’s not without its problems. DSA is typically produced by calculating the ratio of shipments delivered to the specified location on the day indicated at time of order against those delivered late and or early.
For many organizations one of the most significant issues in calculating DSA is obtaining accurate data. Computer systems may not contain the relevant fields to store data preventing the KPI from being calculated. Where the data can be stored, ensuring that all buyers use the data fields correctly (and don’t modify the original forecast delivery dates.) can be a challenge. It is not uncommon during performance reviews for suppliers to have completely different DSA results. Data recorded to calculate DSA should be accurate and transparent (without interpretation) – leaving no one in any doubt about the robustness of results.
A variety of home grown process related problems may also exist. Commonly delays in stores specifically at goods receipt may generate delays resulting in incorrect DSA scores – ensuring that items are promptly processed may compensate but many organizations chose to apply a “buffer” (for example one day either side of expected delivery dates) to compensate for internal processing time.
Another common issue arises due to inconsistencies between the expectation of delivery between the buyer and seller. Clear communication is key to capturing accurate delivery forecasts this can be supported by ensuring that orders are placed within the validity period of the supplier quotation (which should stipulate the expected lead time) – and that order acknowledgements are analyzed appropriately in order to record correct lead time.
Whilst the importance of DSA is unquestioned, businesses as with any analysis, where there are issues the results are skewed and cannot be entirely be error free. Using incorrect DSA results as part of any supplier engagement or performance review can be embarrassing to say the least whilst potentially souring relationships. It should be remembered that DSA is a relatively simple metric however, a simple metric doesn’t always reflect the complexities of a supply chain and calculating DSA should be treated with care in order to generate accurate and usable results.