February 1999 | Commentary | Supply Chain Technology

JD Edwards: The Fourth Wave of Supply Chain Management

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The dynamics of the supply chain as a strategy, as a market, and as a set of technologies are creating a tidal wave of change. One company riding the crest of the wave is J.D. Edwards, Denver, Colo. Best known for its very strong position in the ERP market and recent phenomenal growth surge, J.D. Edwards has now staked out a large claim in the supply chain market with its SCOREx (Supply Chain Optimiza-tion and Real-time Extended Execu-tion) software solution.

"With SCOREx, we are trying to position the supply chain as something not unique or unusual," says Ray Rebello, vice president of product marketing, service industries for J.D. Edwards. "Supply chain management is a natural evolution. Years ago there were completely non-integrated systems within an enterprise. Then these systems became integrated, and MRP and MRP II applications came along. Financial applications were added, followed by ERP.

"MRP integrated a couple of departments within the enterprise, MRP II integrated more departments, and ERP many more departments," says Rebello. "The supply chain is not new. It is a natural evolution of business. By managing the supply chain, we are not only adding more departments within an organization, but external departments outside an organization as well.

"Supply chain management is really MRP IV," he notes. "The manufacturing, products planning, and distribution functions should encompass the whole organization, within and without. They are the same functions. You are going to receive an order, ship an order, bill a customer, provide Web access, and offer optimization of manufacturing and distribution capabilities."

"Supply chain management is made up of two parts—planning and execution," Rebello continues. Supply chain planning optimizes what you have. It has three distinct areas: distribution, manufacturing capacity or shipping capacity, and materials planning. Depending on the user, one of those fits but not all of them.

"When a company says it is a supply chain planning vendor, you have to ask where you fit," he advises. "It is possible to buy the wrong tool because these software products work differently for different functions. You can buy a metric wrench for an English problem.

"After customers determine what they want to optimize, J.D. Edwards offers several alternatives," Rebello says. "We have formal partnerships with Manugistics, i2 and Synquest. We also have a license for optimization components from Ilog, which provides components to SAP.

"We have the same components as these companies, although how we use them may be different. Our components and our solution will not address the total range of planning. It is important to know your supply chain challenges to help determine the tool you should use. That is the first part of SCOREx, and can be described as supply chain optimization," he says.

"The second part of supply chain management is execution. Execution is important because it lets you grow your business," Rebello says. "With planning alone, you can't add new customers or ship your orders. There are two types of execution: extended execution and real-time execution.

"Extended execution means going beyond simple order processing. When taking an order, we must be able to have visibility of the order in the warehouse and all the way through the supply chain. The same is true of product changes. SCOREx offers the extended capabilities of execution; not just one small aspect of it. Only a few ERP products do this," he says.

"In terms of real-time execution, we have found that customers are not buying whole new software systems today," Rebello says. "They are not green-fielding. They are replacing current systems. When we ask why they are buying another system, they tell us that their current system is not meeting their needs.

"We see in the process of the sales cycle that people believe an ERP system will solve their problems," he says. "The day they go live, the system becomes the problem. Most systems are inflexible and they cannot make changes in real time. What we are saying with SCOREx is that the system can continue to be the solution by giving companies the capability to put their ideas into action.

"Suppose you have a supply chain that requires you to sell products through distributors," says Rebello. "Your boss wakes up one morning and decides he wants to now sell direct. Or suppose you run a plant and decide you want a new distribution warehouse in China. Can your software handle this? How long does it take? For SCOREx, it is not a matter of whether the software can do it, but how fast," he says.

For more information on J.D. Edwards and the SCOREx product, visit the company's web site at www.jdedwards.com.

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