On-demand SCM applications make a difference in company logistics operations

Jeff Berman, Senior Editor -- Logistics Management, 3/27/2006

BOSTON—The emergence of on-demand supply chain management (SCM) applications for things such as transportation management, supply chain visibility, collaborative forecasting, inventory optimization, and demand supply synchronization are being utilized and considered for implementation by more than half of 180 supply chain directors and executives surveyed in a report released today by the Aberdeen Group.

The report, entitled “The On-Demand Tipping Point in Supply Chain,” says that on-demand SCM applications can allow companies to improve externally-oriented processes that legacy SCM applications do not sufficiently support, among others.

On-demand SCM applications can be a boon for companies looking to better control their supplier base, according to Beth Enslow, Aberdeen vice president of enterprise research.

Enslow says that externally-facing processes (whether that is a customer-, supplier-, or transportation carrier-facing process) are the ones where many companies  are looking to on-demand models for to get more IT value or as an interim solution until they can free up enough bandwidth to do things internally, wait for an ERP system, or use it as a long-term solution.

She adds that companies can use on-demand SCM applications for multiple purposes and cites clothing manufacturer Liz Claiborne’s use of an on-demand supply chain visibility solution from TradeBeam as an example.

“They use it to monitor all shipment activities, delivery status, and customs status,” says Enslow. “We are finding that many companies are using these on-demand solutions not only to better understand inventory status, but also to start managing it more proactively. This way, they can quickly see where things are and know where a demand spike may be occurring in another part of the country so they can re-route items. Or if s shipment is running behind schedule, they can decide to put it on a truck rather than a rail.”

Along with providing companies more options for moving inventory, Enslow notes that one of the biggest differences on-demand models can make for a company is that many vendors already have pre-connected networks with either suppliers (in the case of E2open) or customers (in the case of GT Nexus). She says that because companies already have trading partners using systems, they can get up and running more quickly with on-demand models.

For companies considering using an on-demand SCM solution, Enslow believes anything having to do with transportation is ripe for consideration—whether it is transportation procurement, or functions related to domestic or international transportation processes.

According to Enslow, other areas in which on-demand SCM technologies can improve shipping processes are:

• order lead time and order fulfillment processes,
• electronic communications with transportation carriers and suppliers,
• and making adjustments to changing business models.

“A lot of the functions associated with traditional SCM applications are only built for the four walls of one enterprise, and on-demand SCM solutions are helping companies go outside of those walls,” says Enslow.

To read the “The On-Demand Tipping Point in Supply Chain” report from Aberdeen, click here.