October 2004 | Commentary | Supply Chain Technology

Oracle Divines the Future of SCM

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Supply chain management continues to post good growth numbers. AMR Research predicts SCM will grow by five percent in 2004, and to a total business of approximately $5.5 billion.

Those supply chain management service providers who are secure in the business will make aggressive moves to stay ahead. Oracle is surely one of these key players.

Oracle, whose U.S. headquarters are in Redwood Shores, Calif., identifies several important factors in supply chain management and its implementation: the need for inter-enterprise applications, the need to integrate with business partners, and the need to reach and work with the supplier's supplier.

Oracle 11i.10 solution is due out later this year, and focuses on three core areas that will improve collaboration around and within the enterprise:

  1. The complexities of managing growth globally.
  2. Managing risk and compliance in the supply chain. That includes complying with government regulations such as the all-too-well-known Sarbanes-Oxley Act and 21 CFR Part 11—the Food and Drug Administration's set of rules and regulations on electronic records and signatures.
  3. Enabling the lean enterprise by extending the concept of lean beyond the shop floor.

Meeting Global Challenges

The greatest challenge for companies trying to operate in the global marketplace is dealing with difficult cost pressures and shrinking margins in an era of global outsourcing, according to Oracle.

To meet these challenges, a company's manufacturing and fulfillment processes need increased coordination. Companies also need increased visibility into key data such as inventory levels, resource use, and customer demand forecasts.

If a company fails to take these factors into account, it is in danger of holding too much or too little inventory, missing shipments, improperly using resources, and eventually missing sales. Oracle's solution stresses enhanced global forecasting, mobile supply chain functionality, and international drop shipments.

Oracle is also moving into the wireless world, with the launch of its mobile supply chain applications.

"Oracle's mobile supply chain applications enable users to perform many common warehouse and shop-floor transactions through handheld devices, PDAs, and truck-mounted radio frequency scanners," says Jonathan Colehower, Oracle's vice president of supply chain management.

"Transactions can be carried out at the point of use, offering real-time transaction processing, improved data accuracy, and increased mobility and convenience," he notes.

Oracle is also addressing RFID demands with its sensor-based services. "Oracle's sensor-based services capture, manage, analyze, access, and respond to data from sensors such as RFID, location, and temperature," Colehower explains. "Oracle sensor-based services enable companies to quickly and easily integrate sensor- based information into their enterprise systems. The Oracle solution includes a compliance package, an RFID pilot kit, and integrated support in Oracle's E-Business Suite and Application Server."

Managing Risks, Regulations

Companies need a new level of monitoring and control in order to manage supply chain risk and comply with new, ever-expanding government regulations.

To meet that need, Oracle offers an internal controls solution for monitoring and managing transactions. The solution gives users flexibility in meeting customer demand and simultaneously delivering compliance for corporate business practices.

In addition, the Oracle solution generates liability analysis in regard to inventory and work-in-process risk; payment and auditing of freight to account for third-party services in transportation; and RFID transactions.

Oracle's SCM offering also supports lean enterprises with the following capabilities:

  1. Scarce inventory allocation for the purpose of fulfilling orders that maximize corporate profits.
  2. Lot serial receiving that helps cut labor costs by improving the warehouse's labor resource utilization.
  3. Catch weight support that helps an enterprise accurately measure and price variable order sizes and their amounts.
  4. Costing of lot specifics that enables the enterprise to accurately account and measure cost variability and production output.

It's clear that Oracle is taking supply chain management, the challenges of compliance, and the need for greater visibility most seriously. The company has a lot on its plate and we'll wait to see how customers respond.

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