Globalization is having a bigger impact on companies' supply chain management systems, requiring greater scalability of applications and better integration with far-flung partners.
That was a key theme repeated by customers here at i2 Technologies Inc.'s Planet 2005 customer event this week.
With the lure of cheap manufacturing, distribution and supplier resources overseas -- particularly in the Far East -- even companies with long-established supply chain management (SCM) backbones find they need to adapt to survive, users said. As a result, global companies facing ever thinner profit margins see an increasing need for centralized accurate data, greater integration and the ability to respond nimbly to changes in demand.
SCM software maker i2 is looking to address a number of those issues, offering more extensive training services and, from a technological perspective, what it calls the agile business platform. According to i2 CEO Mike McGrath, that platform can help companies get SCM installations up and running in as little as four months by allowing them to snap in applications on a Microsoft .Net- or IBM WebSphere-based middleware platform that lets them go live gradually with i2 workflows.
As part of its initiative, i2 this week announced a deal to standardize its suite around the Microsoft technology platform -- enabling end users to access their SCM applications via Windows-based desktop products, such as Excel.
Users talked of the greater complexity required in managing their supply chains, and the need for more process re-engineering. For instance, at shoe retailer Payless ShoeSource Worldwide Inc., planners must factor some 22 billion variables a year when crunching supply and demand numbers, said Darrel Pavelka, senior vice president for the company's merchandise distribution, planning and supply chain unit. Pavelka was a keynote speaker at this week's event.
The Topeka, Kan.-based company runs i2's Merchandise Planner software, and when making supply chain decisions, it must take account for 4,600-plus stores, 2,000 unique brands of footwear, 13 sizes, as well as 200 factories in seven countries.
Handling the complex issues around stores, styles and prices is impossible without automated systems, said co-speaker Chuck Kramer, vice president of information systems development at Payless.
Among the problems SCM customers face is infrastructure, said Kevin Bott, vice president for product and technology management at Miami-based third-party logistics provider Ryder Systems Inc. Bott, who was not present at the Planet show, said his company uses i2 Transportation Manager Version 6.5.1. While North America and Europe have a sophisticated telecommunications system to support enterprise tools, Southeast Asia is "an entirely different ball game," he said. "The infrastructure is not as good there. In China, some stuff is being horse drawn and there is no technology [to support SCM processes] at all.
"You have to use a phone-based system -- and hopefully you can find a phone," Bott said.
Places where contract suppliers or manufacturers are technologically behind are much like North America was 40 years ago, when SCM systems began to be automated, said Ellen Martin, vice president of supply systems at apparel maker VF Corp. and a panelist at the Planet 2005 show. The Greensboro, N.C.-based company runs i2's Demand Fulfillment and Supply Chain Planner products.
She noted that because companies have already implemented SCM -- and are, thus, savvier now than when they first installed SCM systems -- it won't take 40 years to get operations overseas up to speed. But "it will take a lot more creativity," Martin said.
VF is now contracting with suppliers and manufacturers in the Far East, and that requires a high level of trust, said Martin. She said she'd like to see vendors like i2 and SAP AG -- which provides VF with its ERP backbone -- be more willing to collaborate so data can be easily integrated between their systems and to better enable SCM processes.
"I'm taking risks, and I don't see them taking risks [to collaborate]," she said.
Companies are beginning to realize that even if their supply chains are global, they have not been centralized, said Gartner Inc. analyst Dwight Klappich. These companies may run multiple SCM applications in different regions, and they may not have consolidated the data in one place.
Creating such an automated supply chain is difficult, he said, adding that i2 might be able to help companies do so as it becomes more of a services-oriented vendor.
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