April 2003 | Commentary | Supply Chain Technology

SupplyWorks: Making the SRM Connection

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It is always a pleasure to see connections being made between both legacy applications and their updates and the newly defined needs of a user community. Supplier Relationship Management (SRM) is exactly this kind of connection.

One company that offers a solution in this area is SupplyWorks, headquartered in Bedford, Mass. The company's mission is to offer solutions that optimize the flow of production materials and parts for discrete manufacturers. SupplyWorks' web-based solution gives companies the potential to increase their competitive advantage while improving their timing in reacting to the market. This can lead to a stronger financial position.

SupplyWorks stresses several procurement processes that are crucial for every company:

  • Understand what you purchase (spend analysis)
  • Evaluate supplier capabilities (RFQ analysis)
  • Streamline commerce transactions
  • Improve supplier agreements
  • Optimize both inventory and material flows
  • Eliminate low-value-added procurement steps

SupplyWorks defines Supplier Relationship Management as "filling in the gap between traditional manufacturing planning applications that define materials requirements—MRP for example—and the suppliers who need to fulfill those requirements," says Jeff Herrmann, CEO of SupplyWorks.

Three Levels of SRM

According to Herrmann, SRM processes occur at three levels:

  1. Execution— purchasing transaction management between buyer and supplier.
  2. Collaborative planning— the buyer and supplier share demand information and interact to schedule shipments and manage optimized fulfillment strategies in relation to demand.
  3. Strategic sourcing— the buyer manages supplier relationships over a longer period of time.

The company's solutions, SupplyWorks MAX and SupplyWorks SOURCE, provide value in each of the three areas individually, but also create additional value by leveraging the synergy among the three levels of functionality.

In general, the benefits of SRM solutions such as the one SupplyWorks offers, include:

  • Enhanced synchronization of procurement activities between the enterprise and its suppliers, as well as within the enterprise itself.
  • Lower inventory levels are needed to achieve comparable levels of service.
  • Greater supplier visibility of manufacturing requirements.
  • Less procurement time spent on routine or clerical tasks, enabling more time to be spent on high value-added activities such as strategic sourcing.
  • Lower direct material costs.

"The ROI from installing a SRM solution is typically several times the initial investment, in the first year," Herrmann notes.

Technology Behind the Application

SupplyWorks MAX and SupplyWorks SOURCE are web-based hosted applications based on universal industry standards. They can be accessed from any PC with Internet access and a web browser.

"The SupplyWorks applications run on a highly redundant multi-server architecture to facilitate reliability and scalability," says Herrmann. "The applications were designed for high configuration flexibility in meeting customer needs, including configurable data fields, multiple user roles, and versatile data import/export capabilities."

For flexible data integration with customer systems, SupplyWorks leverages EAI solutions from webMethods, an integration software provider with corporate headquarters in Fairfax, Va.

"webMethods provides a versatile, industry-proven set of capabilities for robust data transfer into and out of customer ERP and legacy systems," notes Herrmann.

"SupplyWorks has built an extensive integration layer that provides connectivity with customers' ERP and SCM systems, as well as to suppliers," he adds. "The integration layer supports multiple data formats including flat file, EDI, and XML.

"Additionally, the timing and frequency of the integration touchpoints are configurable and driven by the business process," Herrmann says. "For example, we have customers who feed SupplyWorks with weekly MRP output, but real-time receipts data.

"Finally, the integration layer provides tremendous flexibility for supplier enablement and connectivity. Suppliers access their data and transactions via fax, browser, e-mail, EDI, or XML," he says.

Spend Analysis

SupplyWorks also offers a spend analysis function that provides manufacturers with a corporate-wide view of direct material spend.

"Most manufacturers do not have uniform ERP infrastructures, so they can't easily roll up procurement data from multiple plants," Herrmann notes. "SupplyWorks enables manufacturers not only to review spend data across plants—such as aggregating the data for a given part or a specific supplier—but to create and compare various sourcing scenarios and perform what-if analysis."

In addition, spend analysis enables sourcing managers to instantly review their spend by supplier, region, business unit, geography, and manufacturer. They can ask questions such as: What percentage of this category is on contract? Which locations are leveraging the existing contracts and which ones are buying off contract? What is the last price that any of our plants bought this part for, and when?

"Scenario analysis enables comparisons of sourcing strategies to create actionable cost savings plans by commodity or category," Herrmann says. "Finally, the ability to establish a baseline spend and compare various sourcing scenarios provides a powerful tool for cost reduction."

SupplyWorks is marketing its solutions to discrete manufacturing—companies that make or assemble their products from multiple parts and materials. Specific verticals within this area include automotive and other transportation, high-tech/electronic assembly, and industrial equipment and machinery.

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