www.SDCExec.com Page 34 Automating Purchase- Automating Purchase- to-Pay at BAE Systems to-Pay at BAE Systems Page 18 Extending Quality Extending Quality into the Global into the Global Supply Chain Supply Chain Next-generation Supply Chain Training Page 16 Third-party Logistics - Survival of the Fittest Page 29 Is ERP Still a Four-letter Word? Page 31 INSIDE ALSO Issue 3e Volume 10 August 2009 Vested Outsourcing: Game-changing Rules for BPO 6 6 12 12 Inbound Shipment Management – The New Frontier Outsourcing Solutions-based Intelligence for Supply Chain ROI Business Process Business Process 21 21 Supply Chain Readiness for REACH and Global Material Regulations
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www.SDCExec.com
Page 34
Automating Purchase-Automating Purchase-to-Pay at BAE Systemsto-Pay at BAE Systems
Page 18
Extending QualityExtending Qualityinto the Globalinto the Global
Supply ChainSupply Chain
Next-generation Supply Chain Training
Page 16
Third-party Logistics - Survival of the Fittest
Page 29
Is ERP Still a Four-letter Word?
Page 31
INSIDE
ALSO
Issue 3e Volume 10August 2009
Vested Outsourcing: Game-changing Rules for BPO66 1212 Inbound Shipment
Management – The New Frontier
Outsourcing
S o l u t i o n s - b a s e d I n t e l l i g e n c e f o r S u p p l y C h a i n R O I
Business ProcessBusiness Process
2121 Supply Chain Readiness for REACH and Global Material Regulations
August 2009 | www.SDCExec.comwww.SDCExec.com 2
T he economic downturn has driven a great deal of
handwringing in the supply chain community about
risk management. Much of the debate has been around
whether supply chain executives should be spending more time
proactively scrutinizing their suppliers to identify “at risk” vendors,
or proactively putting in place back-up plans in the event of a
supplier failure. The consensus, of course, is that supply managers
ought to be spending ample time doing both.
One danger, however, in concentrating too much effort on the
“now” is that supply chain executives might not be prepared for
the “next.” “The current recession has seen many companies scal-
ing back on facilities and staffing for production or warehousing/
distribution to a point that it will be difficult for them to scale up
to meet demand when the economy rebounds – making this one
of the greatest risks facing the supply chain today,” notes Mark
Humphlett, director for supply chain solutions marketing with
Infor www.infor.com. Humphlett believes that companies need to
understand that risk management is pervasive and, just like quality
management, needs to be built into daily practices – examining how
fluctuations within the supply chain affect production, customer
service levels and, ultimately, the bottom line.
Another danger is that by focusing on the “known unknowns” in
front of them, supply chain executives might miss the “unknown
unknowns” coming at them from behind. Rory King, an executive
with IHS www.ihs.com, likens it to drivers who worry about the
highway patrol officer with a radar gun behind the billboard along
the side of the freeway. While a speeding ticket is no doubt an
inconvenience, the real threat to life and limb is the reckless driver
coming up from behind and swerving into your lane, says King,
who is my co-author on the report “Supply Chain Readiness for
EU REACH and Global Material Regulations” in this issue.
The looming danger, in this case, is the potential for supply disrup-
tions as the effects of environmental legislation begin to ripple through-
out the supply chain. Based on our research, many companies have yet
to recognize the significant impact that these regulations will have on
their continuity of supply. As a result, they are leaving themselves open
to being blindsided as engineers are forced to redesign old products to
incorporate new materials, as suppliers “end of life” components that
no longer have a large enough market, or as companies are compelled
to realign their entire supply networks around new carbon tax and
trade costs – to list just a few of the potential impacts.
Call to Action: We’ll be continuing our look at supply chain risk
in the August/September print issue of Supply & Demand Chain
Executive due out in mid-September. In the meantime, write me at
table of contents Issue 3e Volume 10 – August 2009
Executive MemoSupply Chain Risk ManagementBy Andrew Reese
Unknown Unknowns
Best PracticesThird-party Logistics By Mike Schoenfeld
Survival of the Fittest
Best PracticesEnterprise Resource Planning By Ned Lilly
Is ERP Still a Four-letter Word?
Best PracticesProcure-to-pay Automation By Editorial Staff
Automating the Purchase-to-pay Process at BAE Systems
2
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1212
31
66
Supply Chain Readiness for REACH and Global Material Regulations21 Special Research Report: Preparing for the impact of REACH is a supply chain imperative to
mitigate the impact of coming supply and demand discontinuities. Here’s your REACH Readiness Action Plan.
18
ff
he Purchase-to-pay E Systems
Meeting the numbersis easier for some companies.
Your data. Our insights. One month.
No brainer.
Looking for something other than short-sighted cost cuts or sporadic performance adjustments to meet your numbers? Maintenance, Repair, and Operations includes spare parts, materials, and chemicals that can tie up 15% of procurement spend and 75% of purchasing requisitions. This leaves signifi cant dollars - and opportunity - on the table. In a month’s time, IHS MRO Inventory Optimization can identify measurable opportunities to increase, maintain, or strategically
reduce production capacity while simultaneously decreasing inventory investment and operating costs. Tough decisions. No brainer. Contact IHS.
table of contents Issue 3e Volume 10 – August 2009
Vested Outsourcing: Game-changing Rules for OutsourcingBusiness Process Outsourcing By Kate Vitasek and Mike Ledyard
Building stronger relationships and greater value from your outsourcing relationships by moving from win-lose to win-win
Inbound Shipment Management – The New FrontierTransportation Management By Jay Friedman and Jerry Levy
Th e case for deploying a Web-based inbound transportation management system
Let the Sims Begin: Next-generation Supply Chain TrainingProcurement By Jim Wexler
Leveraging simulation training to keep key personnel on top of their game
Extending Quality into the Global Supply ChainGlobal Focus By Andrew K. Reese
Trek Bicycle Corporation uses a Web-based SPC solution to gain real-time visibility into quality on its suppliers’ plant fl oor
Streamlined Connectivity Makes for Good Chemistry between Trading PartnersIndustry Focus By Editorial Staff
WACKER uses a business process network to automate processes with global supply chain partners
6
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In Search of a Better Way to OutsourceFor the past two years, the authors have participated
in a University of Tennessee research program funded
by the Air Force to formally study companies that
were employing performance-based approaches for
outsourcing. This article is based on our research and
hands-on experience working with organizations that
have adopted symbiotic performance partnerships that
truly unlock win-win solutions.
While many believe win-win is a simple buzzword
that is theoretical in nature, our research has uncovered
there is indeed a set of unwritten rules that companies
can use to develop performance partnerships where
both parties in the outsourcing relationship go the
distance to achieve much higher levels of performance
and cost savings than previously thought possible.
We have distilled our lessens and approach into what
we call Vested Outsourcing – because it is typified by
an outsourcing relationship where both parties have
a stake in maintaining the arrangement and work
together to create a performance partnership that
takes both the company outsourcing and the service
provider to levels of cost, service and profitability levels
not realized previously.
A Better Approach: The Rise of Vested Outsourcing
After reading many articles that detail all the things
that go wrong in outsourcing relationships, you might be
asking yourself, “Is there a better way?” The good news is
that thought-leading companies have been challenging
conventional outsourcing models over the past 10 years.
The result has been an evolution to a “next-generation”
outsourcing model we call Vested Outsourcing.
In the familiar terms of strategic sourcing, there are basically three types of suppliers:
Transactional – the supplier is effectively kept at “arm’s
length,” and a purchase order is issued for every order.
cover story Business Process Outsourcing
Vested Outsourcing:Game-changing Rules for OutsourcingBuilding stronger relationships and gaining greater value from your outsourcing relationships by moving from win-lose to win-win
By Kate Vitasek and Mike Ledyard
August 2009 | www.SDCExec.comwww.SDCExec.com 7
cover story ??????????????????
OM Partners provides supply chain planning software to fit your needs
Industry fit
OM Partners has over 20 years of exper-tise in industries such as chemicals, phar-maceuticals, food & beverage, consumer goods, metals, plastics, flooring, glass, paper & packaging and others.
Functional fit
OMP Plus introduces in-memory integra-tion of our planning modules for Network Design, Forecasting, S&OP, Master Plan-ning, Transport Planning, DRP/VMI, Order Promising and Scheduling. For the first time, this innovative technology makes integrated demand planning, supply plan-ning and scheduling a reality.
Integration fit
With OMP Plus you can replace traditional, time consuming planning cycles by an in-tegrated, synchronized approach. More-over, OMP Plus can be integrated with SAP, Oracle or other legacy/ERP systems, while OMP Integrator is certified for SAP NetWeaver ®.
Our offices in the US and Europe, and our partners in Asia allow for global implementation and support.
results), they receive a bonus. It is important to
understand Vested Outsourcing is not gainsharing.
The manner in which Vested Outsourcing agree-
ments work is outlined in more detail later.
Under this dynamic, the outsource provider is
challenged to apply “brain power” and/or invest-
ments to solve the company’s problem. They also
take on risk to do it, in essence putting “skin in
the game.” The outsource provider looks at how
they can best apply world-class processes, technolo-
gies and capabilities that will drive value to the
company that is outsourcing. This commitment
to deliver against projected value for the company
outsourcing (such as a commitment to reduce
costs or improve service or both) shifts risk to the
outsource provider. In exchange, the company
outsourcing commits to allow the outsource pro-
vider to earn additional profit (above and beyond
industry average profits for their service area) for
achieving this incremental value. The result is a
win-win Vested Outsourcing partnership — a
paradigm shift we will explore next.
Changing the Game: Going the Whole Nine Yards with Your Outsource Relationship
It’s important to understand that Vested Out-
sourcing is much more than delivering a higher
level of service on a given activity. For example, it is:
• NOT about achieving 99 percent fill rate for
your warehouse provider versus 95 percent;
• NOT about answering 95 percent of all calls
in 20 seconds versus 30 seconds;
• NOT about going from 3,000 defective
parts per million (DPPM) to 3.4 (Six Sigma)
DPPMs from your contract manufacturer;
• NOT about ensuring that janitorial service
provider cleans the toilets every two hours;
• ... and the list can go on and on.
Unfortunately, many people on both sides of an
outsourcing relationship simply do not understand
the fundamental business model concepts behind
Vested Outsourcing. A common mistake occurs
when an organization thinks they have a Vested
Outsourcing agreement because they have taken
their existing contract and simply added a clause
This conference will provide you best practices and solutions from leading supply chain practitioners and thought leaders that your organization can use to drive improvements.
Choose from over 100 professional education sessions in 20 tracks including: transportation, warehousing, inventory management and demand planning, third party logistics, supply chain integration, and global infrastructure management. Representatives from over 40 countries and leading FORTUNE 500 companies will be attending.
Network with over 3,000 like profession-als. To register and see who is attending, go to cscmpconference.org.
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The World’s Leading Source for the Supply Chain Profession.™
KEYNOTE SPEAKER:Gary Maxwell, Senior Vice President of International
Supply Chain for Wal-Mart Stores, Inc.
Attend Supply Chain’s Premier Event™
September 20-23 in Chicago. Take HomeIdeas and Tools that will Help Drive
Improvements Within Your Organization. Illustration 3. Vested Outsourcing is based on a “What’s in it for We” philosophy.
Jerry Levy has over 20 years of sales and marketing experience
in the logistics and transportation industries.
He recently served as vice president for corporate
marketing for Agility, where he was responsible
for all the marketing and branding across the over $6 billion dollar network.
Levy joined the former PWC Logistics during their initial integration and was instrumental in launching Agility as a top ten global provider of supply chain
solutions.
About the Author:Jay Friedman
Jay Friedman is a senior account executive at
Gartner Group, the information technology research and advisory
company. He has almost 30 years of supply chain services and technology
experience. Friedman also is president of the Arizona Roundtable of the Council of Supply
real client situations and provide our reps with a
risk-free environment in which to learn.”
Programs like MAX! capitalize on the fact that
many sales reps and managers grew up playing
videogames. The old stereotype of traditional video
gamers is changing. According to the Electronic
Software Association, 60 percent of Americans
August 2009 | www.SDCExec.comwww.SDCExec.com 16
professional development Staff Development & Training
By Jim Wexler
More companies are leveraging simulation training to keep key personnel on top of their game
Let the Sims Begin: Next-generation Supply Chain Training
Transportation and logistics professionals need strategic, critical thinking skills to navigate multiple disciplines. APU has online undergraduate and graduate degree programs in:
APU. Affordable education for a complex world.
APU is a member of the regionally accredited American Public University System
professional development Staff Development & Training
play video games; the average age of
game players is 28; and 43 percent of
game players are female. Americans now
spend more money on videogames each
year than they do going to the movies,
and more time at home playing video-
games than watching DVDs at home.
“Games and simulations are a key
part of our culture and have always
been part of the learning process,” says
Scott Randall, president of Brand-
Games, the New York-based agency
that developed MAX! for Arrow. “Air-
line pilots can’t fly multimillion dollar
planes until they do hundreds of hours
of flight simulation. The military, CIA
and other organizations have all used
simulations to teach hard skills, combat
skills and basic leadership for years.
Games have proven to be a winning
platform. Now, these tools are avail-
able for the more practical, but equally
important, job of training executives,
sales teams and others.”
The simulation approach is gaining
popularity in the current economy, with
the mandate to reduce travel, class-
room and executive expenses. “One of
the biggest benefits is controlling the
message and delivering best practices,”
says Martin. “We extend our hard-won
business practices across the enterprise
through a shared experience of carefully
designed scenarios that put everyone on
the same page.”
Farmers Insurance is testing simu-
lation as a learning tool with Farm-
ers HelpPoint call center employees.
“We see ‘serious gaming’ as an ideal
delivery system for a number of learn-
ing opportunities,” said Mike Cuffe,
vice president of learning at Farmers.
The company is piloting IBM’s In-
nov8 2.0, a 3D simulation game based
on real-world business scenarios that
challenges players to drive results for
both the company and the customers
they serve. The challenges include call
center management and optimizing a
company’s supply chain.
As the nation’s third largest personal
insurer, Farmers receives more than
3.75 million claims per year – which
equates to 10,274 claims a day, 428 an
hour, or seven per minute. Its claims
employees log more than 95 million
miles in some 6,000 company vehicles,
and its 3,000 Farmers HelpPoint call
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global focus Global Supplier Performance Management
in part because they were more proactive in seek-
ing new ways to work with the bike manufacturer.
“There are other companies that would have been
tougher to work with because they are very much
inspection-based and they didn’t see the value
in investing money upfront to prevent defects,”
she says. “We purposely picked companies that
were more willing to work with us and do what
we need. So knowing the culture of the company
you’re dealing with is very beneficial.”
Deploying the software and having it pull data
directly from the suppliers’ production line did
present some minor difficulties specific to the
locale. For example, the relevant gauges were
manufactured in Asia, and the manuals were
in Chinese, so it took some time to understand
how to connect the equipment into the soft-
ware. More significantly, progress in getting the
deployment fully rolled out was affected by the
amount of time that Wilhelm was able to spend
on the ground at the suppliers’ facilities making
adjustments or improvements.
Wilhelm, who travels to Asia to visit the suppli-
ers at least five times a year, says that, in retrospect,
she would have recommended training Trek’s staff
in Asia to provide more of the front-end support
for the deployment of the software. “We relied too
much on me being there to fix small issues that
came up, or to make improvements,” she says.
“Our people could have handled that if we had
given them the training upfront, although we’re
working on that now.”
Protecting the BrandTrek started the project by collecting data on
product weight from the suppliers’ assembly lines,
but the company has since expanded the data
they are managing through eSPC. For example,
the quality team developed a test to proof load
all the forks – the part of the bicycle that holds
the front wheel and permits steering – to ensure
zero construction defects before this critical com-
ponent leaves a supplier factory. Data from these
tests are fed into eSPC, alerting Trek’s quality and
engineering staff to issues with a given part, but
also allowing them to access data on every single
fork at any time. “It helps us sleep better know-
ing that our bikes are undergoing these tests, that
we’re tracking them and that we know exactly what
happened to each one,” Wilhelm says.
The company’s plans call for further using eSPC
to manage the key dimensions on components and
bikes coming in from suppliers, as well as data
from additional tests that will be put in place to
ensure compliance with applicable consumer safety
requirements. Trek also is looking to extend use
of the solution to additional high-end vendors
with more critical products, such as the carbon
components, and eventually to any key supplier
for OEMed or aftermarket products.
For companies looking to extend their quality
management programs out onto their Asian sup-
pliers’ plant floor, Wilhelm recommends carefully
considering the infrastructure within the vendors’
facilities. “Their Internet connections are generally
a lot slower than ours, they don’t always have their
buildings wired like we do, and obviously access
to the Internet is key with eSPC,” she notes. And
she repeats her suggestion to ensure that local team
members are trained up on the solution prior to
the deployment. “Getting the support staff trained
on the ground before you implement would help
move the project a lot faster, changes could be
made faster and you could expand its use a lot
faster,” she advises.
The benefits from the project for Trek have been
two-fold. First, it has prevented defective product
from leaving the suppliers’ facilities – many of
those products would have been uncovered during
a check when it reached Trek in Wisconsin, but
two months would have been lost while the goods
were in transit across the Pacific. The system also is
preventing products intended for the aftermarket
– products that go directly into a warehouse and
then onto the dealer’s floor – from reaching the
market, which helps protect the Trek brand name.
Wilhelm further believes that using the eSPC
solution will have additional cost benefits down
the road. “If the vendors buy into it and start us-
ing it even further upstream in their processes,
they’ll end up saving money and hopefully pass
that along to us, and then we can pass that on to
our customers as well.” ■
“It helps us sleep better knowing that our bikes are undergoing these tests, that we’re tracking
them and that we know exactly what happened to each one.”
— Julie WilhelmManager of Asian Quality and Compliance
Trek Bicycle Corporation
Failing the Grade?Supply chains are at risk today from significant dis-
ruptions stemming from many known sources. But the
European Union’s REACH regulation (Registration,
Evaluation, Authorization and restriction of Chemical
substances) represents a “hidden risk” that many corpo-
rate executives appear to underestimate. This “Report
Card” highlights the extent to which industry currently
is ready for REACH and provides a benchmark against
which companies can rate their own level of prepared-
ness for the regulation.
The REACH legislation took effect on June 1, 2007.
The regulation provides for phased requirements over
an 11-year period, including obligations to register, with
the European Chemicals Agency (ECHA) in Helsinki,
substances imported into, or used within, the European
Union. Nearly 150,000 substances were pre-registered
with ECHA by 65,000 companies by a December 1,
2008, deadline. In addition, an expanding list of “Sub-
stances of Very High Concern” (SVHCs) will be subject
to potential substitution in products. Companies also
must be prepared to proactively notify downstream us-
ers regarding the presence of SVHCs in their product
and respond to consumer requests for information on
SVHC presence within 45 days.
The impact of REACH will extend beyond companies
engaged directly in business within the EU. It will apply
to companies with relatively low levels of EU revenue
– and even companies that do no business in the EU
but that engage with suppliers or customers that are
involved in the European market. A customer that sells
into the EU may require information on SVHC content
to satisfy its own regulatory obligations, while suppliers
that service customers in the EU may opt to discontinue
production of parts or component that include SVHCs
rather than continuing to provide both “compliant” and
“non-compliant” product lines.
The recent executive briefing, “Report Card: Failing
the Grade on Risk in the Supply Chain,” prepared by
Supply & Demand Chain Executive, in conjunction
with IHS, suggests that many organizations are behind
in their preparations for REACH. The briefing presents
an overview of the results of a research study conducted
in 2009 by Supply & Demand Chain Executive to quan-
tify the risk of supply chain disruptions associated with
REACH and understand current levels of preparation
among the 200-plus global organizations that partici-
pated in the study.
The Report Card at right represents the high-level
conclusions of the study. The remainder of this report
provides greater detail on the Supply Chain Readiness
Areas highlighted in the Report Card, breaking each
RESEARCH REPORT:Supply Chain Readiness for REACH and Global Material Regulations
WHITEPAPER
S o l u t i o n s - b a s e d I n t e l l i g e n c e f o r S u p p l y C h a i n R O I
is an indication of the current readiness of people, process, and technology.
A—Very High Level B—High Level C—Sound Level D—Limited F—Very Limited
Supply Chain Readiness Area Overall Heath Effort & Action
EXPLANATION OF MARKING SYSTEM
OVERALL HEALTH
Organizational ReadinessLevel of Visibility, Stakeholder Engagement, Executive Engagement, Executive Sponsorship, Reach Program Formalization
Supply Chain ReadinessSupply Chain Awareness, Level of Concern, Acknowledgement as Supply Chain Issue, Priority Level, Preparation & Control
is a measure of the steps being taken to close gaps and enable an appropriate strategy.
A—Excellent B—Very good C—Satisfactory D—Needs attention F—Unacceptable
EFFORT & ACTION
REPORT CARDC-B-
C+C
Information & SystemsReadiness to Notify, Confi dence in Ability to Respond to SVHCs, Methods of Gathering SVHC Information & Outsourcing, Data Management
D C-Execution ReadinessProgram Establishment, Activity Prioritization, Budget Allocation C- C-
billion, also has developed a reputation as a forward-
thinking organization focused on efficiency and
lowering its costs of doing business while providing
a superior customer experience.
Technology is playing a key role in WACKER’s
drive to maintain its leadership in the industry. As
part of its efforts in this regard, the company has
been leveraging a business process network operated
by Elemica as its platform for supply chain process
integration and collaboration.
Complex Supply ChainWACKER operates in five divisions that manu-
facture products ranging from hyperpure silicon
wafers for the semiconductor industry to surface
coating resins, industrial salt, acetyls and insulation
materials. Each business unit within WACKER
has a supply chain director who is responsible for
the “plan-source-make-deliver” process within that
unit. It is notable that the supply chain is not a
logistics function – logistics and procurement are
centralized, whereas supply chain resides within
the customer-facing business units.
With production locations and warehouses spread
around the globe, the synchronization and coordina-
tion of the different units are critical to maintaining
efficient operations and high customer service levels,
according to Joern Mierke, director of supply chain
management for performance materials at WACKER.
“We have to distribute customer orders across
our production facilities in a way that maximizes
capacity while avoiding logistics costs by sending
the right production step to the right location,
with consideration of the import duty implica-
tions,” Mierke says. The company also must ensure
that it stocks its warehouses around the world
to meet demand on short notice while avoiding
overstocking and material out of shelf life.
WACKER operates an SAP backend system to
help automate and coordinate its own processes.
Since 2001, the company also has been leveraging
a business process network operated by Elemica to
automate processes with its top customers and to
facilitate mutual collaboration and increase cus-
tomer satisfaction. Founded in 1999 by 22 lead-
ing companies in the chemical and oil industries,
Elemica today offers a global, neutral information
and transaction network that facilitates the order
processing and supply chain management of con-
tract and repeat chemical purchases.
Simplifying ConnectivityThe chemical industry continues to be plagued
with various message languages, formats and dispa-
rate systems, and order processing between trading
partners remains challenging. For WACKER, Elemica
provides a single channel for system-to-system con-
industry focus B2B Connectivity
By Editorial Staff
WACKER uses a business process network to automate processes with global supply chain partners
Streamlined Connectivity Makes for Good Chemistry between Trading Partners
August 2009 | www.SDCExec.comwww.SDCExec.com 28
nectivity with its trading partners. By maintaining
one connection to Elemica rather than multiple
point-to-point links with each of its partners, WACK-
ER simplifies B2B connectivity for both itself and its
customers, reducing complexity and cost.
Partners can connect to WACKER via Elemica
regardless of which “flavor” of EDI or XML they
use for their communications, since the Elemica
network translates the messages into the ChemX-
ML format before forwarding them directly into
WACKER’s SAP system. Similarly, the network
enables WACKER product data, such as material
and order numbers, to be directly translated into
partners’ systems so that they can be processed
without encountering disruptions and without
the need for rekeying data, saving both time and
money for both parties to the transaction.
Regardless of whether WACKER acts as a cus-
tomer or supplier to other Elemica-connected
companies, all purchase orders, confirmations,
order changes, delivery notes and invoices are
integrated directly into the partner’s ERP system.
Processing steps are fully automated, from order
placement to product packaging instructions.
An additional advantage that WACKER has found
in using Elemica is that the network allows for connec-
tivity with partners regardless of their level of technical
sophistication. Moreover, Elemica acts as more than
just a value-added network (VAN) or EDI provider;
it ensures that data moving through the network
conforms to a business process by enforcing “business
rules” specifying the logical content of documents.
“Each member accepts Elemica’s business rules, which
apply to everyone,” Mierke says. “This enables us to
meet high standards with reduced complexity.”
Mierke notes that one key to success in auto-
mating B2B processes between companies is to
collaborate closely with customers to find a con-
nectivity solution that works best for them. “We
work hand-in-hand with customer to pinpoint the
best way to optimize business processes in terms
of efficiency, quality and speed,” he concludes. ■
industry focus Your supply chain is changing.
Get the experts on your side.Whether you realize it or not, your supply chain is changing. EU REACH regulation concerns the Registration, Evaluation, Authorisation and restriction of Chemicals. It’s not just a compliance issue. REACH poses serious potential threat to the unprepared when chemical transitions ripple throughout industries. “No data. No market.” is the industry mantra, yet adequate data is not available as the supply chain prepares itself and requirements are designed to evolve.
IHS is a leading provider of critical information and insights. We offer a unique approach to enable compliance, mitigate supply chain disruption, and address the fundamental reality that your partner relationships and their capabilities are vastly different. Our proven ability to enable green performance in areas such as RoHS, REACH, Climate Change, and Total Chemical Management helped us earn the SDCE 2008 Green Supply Chain Award.
No data. No market. Our insights. Seamless transition.
Related LinksElemicawww.elemica.com
WACKER www.wacker.com
Electronic Data Interchange (EDI) is an electronic process for transmitting structured messages automatically between various systems. EDI enables direct communication between different systems, saving both time and money because transactions take place much faster and more ef-fi ciently. It was a medium that proved monumental to the growth of global electronic commerce.
Community-driven Development Trumping Proprietary Product Roadmaps
A primary reason that open source is succeeding
even in products as complex as ERP is the power
of real community-driven product development.
Before open source, large software makers, with
quarterly timelines and shareholder pressures top of
mind, followed the model of infrequent, large-scale
updates to already hulking platforms. (Of course,
software maintenance costs would reliably rise
every year, regardless of the frequency or quality of
product updates.) The changes that did come were
as likely to be influenced by the software company’s
commercial objectives as by actual customer requests
for product enhancement. By contrast, today’s
open source ERP products are driven wholly by
real-world challenges and actual user requirements.
This is, to a great degree, attributable to the mar-
ket power gathered by a large community
of highly skilled and experienced users
– many of whom may have little to no
commercial relationship with the vendor. Initial
claims by proprietary vendors that open source solu-
tions lacked support or documentation have been
blown away by the sheer depth of the communities
that surround many open source products. This
depth sets a high bar for commercial product devel-
opers – to create additional value over what’s freely
available. The good ones do. But the benefits go
beyond support into development and extend into
the way that software is created and maintained.
Today’s open source community members not
only can request enhancements but can also enact
meaningful changes to the product themselves
independently. This can be as simple as fixing a
bug that a larger vendor might not ever bother
to address, or as involved as creating wholly new
functionality. Open source “best practices” call
for a robust, public discussion of any proposed
enhancements, and shared learning from the
successes and failures of other products in the
past. Once the change is written, this real-world
innovation is shared across the community of
users, quickly making available even the smallest
enhancement for the entire user group.
This is a fundamental business process im-
provement – arguably akin to the supply chain
improvements of the Japanese automakers – and
it is having profound long-term effects on the
companies that are exposed to it.
This community approach to collaboration is
even moving beyond software to be applied within
corporate cultures. The same Forrester study found
that 42 percent of respondents said they are work-
ing to better collaborate and share intelligence
within their businesses, creating a “corporate open
source community” of sorts.
Traditional Solutions Hedging Bets, Playing Catch-up
In the face of this game-changing competition,
and with IT decision makers and financial man-
agers alike looking for more bang for their buck,
some proprietary ERP vendors have raced to make
changes in order to try to stay competitive with
lower-cost options.
Proprietary vendors looking to stem customer
defections have put forward various approaches to
ERP that provide greater flexibility and relinquish
more control over the product to the users. One
notable company in the space has acquired and
integrated dozens of legacy products in ERP, cus-
tomer relationship management (CRM), enterprise
asset management (EAM), and other related fields.
The company recently launched a program aimed
at giving customers lower-risk options to upgrade
to one of the company’s more current products.
It’s largely a banking program akin to GMAC
(uncomplicated by any hard assets), but give them
credit for trying.
Other vendors are experimenting with various
implementations of software-as–a-service (SaaS),
hosted/managed services or cloud computing – which
certainly reduce the upfront cost investment of tra-
ditional perpetual licenses. But it’s still too early to
draw definitive conclusions about whether SaaS really
gives users more control, or whether it just changes
the nature of their dependency on the vendor.
CDC Supply Chain, a heritage that includes over 70 years of collective experience solving supply chain challenges with world class solutions.
CDC Supply Chain - formerly Catalyst International and Industri-Matematik International Corp. (IMI)For more information, please visit www.cdcsupplychain.com
Editorial Advisory BoardR. Jerry Baker, C.P.M, Executive Vice President, MyGroupBuy, Inc.
Carla Lallatin, President, Lallatin and AssociatesDick Locke, President, Global Procurement Group
Julie Murphree, Founding Editor, Supply & Demand Chain Executive R. David Nelson, C.P.M, Chief Supply Chain/Strategy Offi cer, HTC Global Services, Inc.
Jay U. Sterling, Ph.D., CPA, Sr. Research Scholar, Center for Business & Economic Research (CBER); Associate Director, University Transportation Center for AL (UTCA), University of Alabama
Joseph Yacura, Co–Founder and Chief Strategist, Supply Chain Management, LLC
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16 American Public University www.studyatapu.com
14 Blinco Systemswww.blinco.com
32 CDC Software www.cdcsoftware.com
8 CSCMP (Council of Supply Chain Management Professionalswww.cscmp.org
17 Darden School of Businesswww.darden.virginia.edu/exed