Choosing the right supply chain management software is the key to constructing a flexible supply web.
The supply chain has been evolving quickly over the last decade spurred by wider globalisation and fierce competition. However, high costs of transportation have been forcing many Australian businesses to pass these costs onto consumers, making it increasingly difficult for businesses to compete within the global market.
Many businesses across every conceivable market sector have been scrutinising the supply chain for ways of reducing costs through improved efficiency, while software vendors promise that their enterprise application will provide the desperately sought competitive edge.
In the 2012 Gartner Supply Chain Top 25 for Asia Pacific, the only Australian company which made the list, was retail giant Woolworths. According to Gartner research director Vikas Sarandghar "while demand in Asia Pacific is growing, inflation, rising costs and a tightening labour market pose challenges for companies in the region."
Today, the chain is more like a carefully constructed web with spokes and bars of suppliers, sub-contractor, customers, manufacturers and outsourcers in desperate need of cohesive processes and information to deliver profitability.
Although software can help, businesses need to align their strategic direction to a more service orientated architecture to match the way the industrial world has evolved. The days when one company sourced materials, built it and sold it all through direct control have long past. The supply chain, through its business processes and software architectures, must accept this economic reality to provide optimum fit.
Service-Oriented Architecture (SOA) is still seen by many as just a new form of Electronic Data Interchange (EDI), which for the last three decades has allowed disparate computer systems to exchange documents such as purchase orders, receipts and bills. Developed in an era of mainframes and bespoke systems, EDI is notoriously complex to implement and lacks the rigid standards that often limit customer and supplier interaction.
Where EDI simply allowed data exchange, SOA is instead a true collection of self-contained services that communicate with each other and do not depend on the context or state of the other service.
An example could be a manufacturer who uses a Web service to gather the stock levels of its independent sales agents or an accounting package using the Web service of a governmental revenue agency. The service can be a full blown application such as stock control or shipping system allowing a company to outsource the non-core parts of the business to a third party but still maintain control and visibility of the information systems that are essential for smooth operation of the business.
A SOA service can pass the relevant XML schema so that all systems are able to interact based on the access level that each organisation requires or is assigned by the service owner.
An organisation must choose the supply chain management software depending on whether or not is their business prepared to adopt business processes that meet the service-oriented market that the world is moving towards. Businesses that want to succeed need to evaluate whether they can break the rigid chain and instead construct a flexible supply web that the market is demanding.
Craig Charlton is the senior vice president and general manager for Epicor Software.