Take the right path
Unilever and others turn events in their favor with new solutions from supply chain execution software vendors
By Joy LePree, Contributing Editor -- Manufacturing Business Technology, 1/1/2002 12:00:00 AM MST
Fred Berkheimer knows it takes a coordinated effort between partners, not just sound internal planning, to make a supply chain hum. This realization is why Berkheimer, vice president of logistics for Unilever Home & Personal Care, is among the growing number of supply chain practitioners who see event management software as a means of taking friction out of supply chains, and ultimately, pumping up customer satisfaction.
Clinton, Conn.-based Unilever Home & Personal Care, a group within consumer goods giant Unilever, stands to benefit from the improved communication and speed enabled by supply chain event management (SCEM) software. "SCEM functionality gives us simple Internet links to our third-party manufacturers, which allows us to include them in our processes," says Berkheimer. "This permits event communication about whether product is produced, on hold, released, or available for pickup. It also removes a few days in terms of cycle speed, due to improved information flow; and increases customer satisfaction."
Event management systems collect real-time data from multiple sources across a supply chain. The software converts the data into information that gives business managers a clear picture of how their supply chain is performing. If a problem requires immediate attention, the application can launch workflows and issue alerts to all relevant parties via e-mail, phone, fax, or other modality. The introduction of SCEM represents the coming-together of two kinds of functionality: analytics, formerly accomplished by data warehousing; and workflow, accomplished by means of integration tools.
A relatively new category of business management software, event management takes advantage of the fact that Internet technologies can be used to cost-effectively tap into disparate databases, aggregating a range of data and turning it into meaningful information. While eXtensible markup language is an ideal integration technology, more traditional means, such as ODBC, also often are used. In any case, integration remains the biggest hurdle in successfully implementing SCEM.
Understanding the event management space involves navigating a competitive, complex vendor landscape. There are software vendors that specialize in the solution, as well as supply chain planning vendors—like i2 Technologies and Manugistics—and warehouse management and order fulfillment software vendors that have added SCEM components to their solutions. These vendors see SCEM as a natural complement to their existing functionality.
In addition, SCEM can be looked upon as a set of technologies that can be used to tackle a specific set of business problems. Thus vendors put considerable "spin" on their positioning, to emphasize that particular area of supply chain management or the particular industry where they see the biggest opportunity.
Who needs it?
SCEM applications are intended to provide visibility and resolution capabilities for supply chain processes, says Kimberly Knickle, a research director with Boston-based information technology (IT) analyst firm AMR Research. "On the event side of SCEM, participants in the supply chain process need visibility into exactly what's going on," explains Knickle. "The information that enables visibility could be coming from within a company, or from outside that company. That information could be shared with internal employees, or with another company that is part of the supply chain.
"On the resolution side," Knickle continues, "the tools should alert the appropriate people if there's an unexpected event, and they may offer some resolution that tells them how to fix it."
Companies in need of event management include those that are extending their operations and integrating them with supply chain operations, or any company that stresses order fulfillment and execution at a networked value-chain level.
"The more interaction a company has to manage, the more value it is likely to get from an SCEM solution," says Scott Malcolm, a product strategy director with Oracle Corp., a Redwood Shores, Calif.-based database and business management applications vendor. "That's simply because the more customers and suppliers there are that a company deals with, the harder it is to keep track of everything going on in the supply chain."
For example, a consumer goods manufacturer with facilities overseas, as well as a long list of retail customers, is likely to need SCEM because that manufacturer has a lot of information to keep track of, says David Landau, director of product management with Atlanta-based warehouse management and order-fulfillment vendor Manhattan Associates. "Its offshore manufacturing partners don't always have a sophisticated warehouse management system, so the visibility they get from their suppliers tends to be limited. Having a system that can summarize what's going on and provide up-to-date information is important for many consumer goods manufacturers.
"This knowledge can then be used to improve customer satisfaction among retail customers because [manufacturers and suppliers] receive advanced notice about a problem and can fix it in time," Landau continues. "Also, SCEM can recognize cost-saving opportunities within their own enterprises."
The SCEM solution used by Unilever Home and Personal Care came from Waukesha, Wis.-based McHugh Software International, another vendor of warehouse management and order fulfillment solutions.
Unilever is ahead of the game in employing SCEM to tie into information from value-chain partners. Some say most SCEM solutions to date have been deployed for intra-enterprise—i.e., inside a given enterprise—management first. "This means they are focusing on their own operations—things that are directly within their control—to optimize what's going on inside the warehouse," says Landau.
Overstock.com, an Internet retailer that purchases production overruns from brand-name manufacturers and sells them at a discount, began using an SCEM module from HighJump Software, an Eden Prairie, Minn.-based warehouse management and order fulfillment software vendor, for intra-enterprise management. "If we are doing a cycle count and come up with a discrepancy, we use that to inform people in the warehouse with an alert," says Jim Hyde, vice president of operations. "We need a high degree of inventory accuracy or we will have a situation in which we sold something that can't be filled because we can't just order more due to the nature of our business."
Instead, Overstock.com uses SCEM to take a proactive approach to cycle-count discrepancies. "Someone is alerted and attends to these discrepancies immediately," says Hyde. "It could be a serious customer-satisfaction issue if they can't resolve a discrepancy."
Landau contends that once intra-enterprise management is mastered, companies will move toward using SCEM functionality for inter-enterprise purposes. "Inter-enterprise focuses on relationships with suppliers, and relationships with customers," says Landau. "It looks across the supply chain to recognize different events that may occur throughout the supply chain."
Visibility times three
There are three ways that SCEM functionality can be used to aid order fulfillment," says Dan Gilmore, a senior vice president with McHugh Software. "First, SCEM enables the necessary visibility to compare ordered quantities against both available quantities and expected quantities. This allows a user to see when they are likely to experience inventory problems that could impact customer orders, and alerts them early on so they can alter production or delivery schedules to rectify the shortage."
Second, SCEM provides multisite inventory information. "By making inventories visible, a distribution center manager can see if there's a shortage in the warehouse, look across the network, and find that inventory at another location and deploy it to fulfill a customer order," says Gilmore.
Third, SCEM assists with actual delivery. "Once a company has committed to fulfilling and delivering the order by a certain date, many events can occur that might impact meeting that date," says Gilmore. "If there's a problem with picking the order, shipping the order due to a backlog, or trouble with the carrier, event management allows visibility into those execution activities and alerts the appropriate people. And hopefully this will happen while there's still enough time to take action to rectify the problem."
SCEM best-of-breed vendors include Palo Alto, Calif.-based SeeCommerce, Atlanta-based Viewlocity, and Categoric, Sterling, Va. But even with best-of-breed solutions there is variation—e.g., with SeeCommerce stressing performance management while Categoric pursues alliances in which its software serves as the event management engine for SCEM offerings from order fulfillment software vendors.
"We've been able to layer SCEM applications on top of our execution engines to coordinate and synchronize events," says Scott Rischel, a vice president with Irista, a Milwaukee-based vendor of supply chain execution software. "The next layer of coordination is the notification system, which proactively alerts the appropriate business systems or personnel so that action can take place to correct the problems that the SCEM system has made visible."
Today, nearly all major vendors of warehouse management and order fulfillment software offer event management functionality in some form. Some provide alerts to personnel who can then go out and check on the problem, while others—like White Plains, N.Y.-based supply chain execution vendor Optum—provide machine-to-machine communication.
"If there's a problem in the supply chain, all the partners can be notified of the situation and take the appropriate action to correct it," says John Davies, an Optum vice president. "There are some traditional alerts, but we also provide machine-to-machine communication from our TradeStream product into various partners' business systems, which is much more efficient than the traditional fax method."
Most warehouse management vendors see SCEM functionality going beyond promoting visibility and delivering alerts to become a solution that triggers appropriate actions and resolutions. "We aren't at the point yet where we can offer a good resolution application," says Manhattan Associates' Landau. "However, we see that as the next step in the evolution of these products, and it should happen over the next eight to 12 months."
Other vendors are taking a different approach to general event management, and offer SCEM functionality that targets specific events. "We have studied the market and think that the concept of simple event management isn't going to be successful," says Chris Stephenson, a vice president for Dallas-based warehouse management and order fulfillment software vendor EXE Technologies. "Instead, what will be successful is when that technology is supplied to solve a particular business problem, and applications are developed from there."
Stephenson says EXE currently is working with two customers in this manner—one that will focus on the recall environment, and one that will use SCEM visibility for the replenishment of seasonal merchandise into retail stores.
Integration concerns
Despite the newness of the technology, application vendors agree there are some definite benefits to purchasing SCEM from a warehouse management vendor. Chief among these is the domain expertise these vendors bring to management of materials in outbound and inbound supply chains.
"The warehouse management vendor that is adding SCEM functionality will have the business logic and expertise already in place, and will know how to best use their application," says AMR's Knickle.
Manhattan Associates' Landau adds, "We already own the data—the receipts, transactions, and shipping information—because that's the nature of our systems, which means the domain expertise is in place."
Unilever's Berkheimer agrees. "Since we were already using McHugh's application, it just made sense for us to stick with a single system and application that all our people were familiar with," he says. "By using a single system, all the interfaces and interoperability became McHugh's responsibility—rather than sorting out who has to own what part."
But don't count out the benefits of best-of-breed. AMR Research's Knickle points out that enterprises that already have a primary warehouse management vendor should "definitely" look at SCEM modules that vendor offers, while also taking into account possible limitations to this approach.
"A WMS vendor will take applications primarily from its own system, or the type of application that it is used to," says Knickle. "A WMS vendor is going to be more conscious of a specific type of resolution, whereas a stand-alone system is potentially broad."
| FOR MORE INFO: | ||
| Categoric: www.categoric.com | EXE Technologies: www.exe.com | HighJump Software: www.highjumpsoftware.com |
| Irista: www.irista.com | Optum: www.optum.com | Oracle: www.oracle.com |
| Manhattan Associates: www.manh.com | McHugh Software: www.mchugh.com | SeeCommerce: www.seecommerce.com |
| Viewlocity: www.viewlocity.com | ||
