November 2006 | Commentary | Supply Chain Technology

Talking Tech at CSCMP

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The annual Council of Supply Chain Management Professionals (CSCMP) conference in San Antonio last month provided a great opportunity to catch up on the latest innovations in logistics technology.

The Supply Chain Technology Solutions educational track, and the many sessions that dealt with logistics technology, expertly dissected top tech capabilities in everything from global trade management to inventory optimization, wireless initiatives, supply chain security, and procurement.

Forward-thinking shippers such as ON Semiconductor, Intel, Whirlpool, and Chevron were on hand to share their technology success stories, and the CSCMP Learning Exchange featured supply chain software vendors including Management Dynamics, JDA Software, CTSI, and RedPrairie, among others, offering hands-on demos and information.

As if that wasn't enough, I crammed in many one-on-one meetings to grill technology executives on their latest offerings.

Here is a brief roundup of some CSCMP technology highlights:

Vendors Embrace SOA

Services Oriented Architecture (SOA) has been the subject of much buzz in the supply chain lately, and it was no different at the conference. SOA is fundamentally changing the IT delivery model for software implementation, according to one presentation, "Simplify IT Infrastructure with SOA to Reduce Costs and Increase Flexibility and Scalability."

I met with Dallas-based supply chain software provider i2, one of a number of logistics technology players that have jumped into the SOA pool. SOA applications are modular, reusable, and easily integrated, and they help companies reduce resource requirements, improve technology integration, and cut the number of software licenses required.

"SOA is the next fundamental evolution for logistics technology," said Hal Feuchtwanger, i2's director, industry solutions. i2's "new generation transportation" solution is the second offering the company has enabled in an SOA environment—it is part of what i2 is branding as its agile business process platform (ABBP).

"ABBP allows users to do three things. First, it customizes the user interface at the desktop level, so individual users can pick and choose the fundamentals they need," Feuchtwanger explained.

Second, it creates configurable workflows that integrate easily into other solutions. "Within our Transportation Manager program, for example, users can now adopt data or elements of other i2 solutions, or solutions from other vendors," Feuchtwanger added.

"Last, ABBP helps improve technology integration and implementation time."

In addition to embracing SOA, Feuchtwanger reported two other big changes i2 is making to its core TMS technology: focusing its transportation solutions on global transactions, including ocean shipping, and introducing demand planning and supply chain planning applications.

Spotlight on Inventory Optimization

Haven't heard of multi-echelon inventory optimization yet? You will soon, predicts Jonathan Colehower, president and CEO of Optiant.

Burlington, Mass.-based Optiant is one of several interesting companies—along with SmartOps, Logic Tools, and Tools Group—to grow out of academic supply chain research on inventory optimization. The idea behind inventory optimization technology is to help companies simultaneously reduce inventory and improve service, while also helping to mitigate risk.

Optiant provides supply chain design and policy development for enterprise-wide application providers such as SAP, Oracle, and i2. In essence, they fill a niche ERP providers don't offer.

"Shippers implementing SAP, for example, get three-quarters of the way through the blueprint phase, and realize SAP doesn't offer inventory policy and target setting. This is where Optiant comes in," Colehower explained.

The need to go beyond merely examining inventory on a "how much should I keep on hand?" level is driving interest in this type of technology.

"Shippers need to ask, Where should I manufacture? Can I postpone final manufacturing to a later stage in the supply chain?" said Colehower. "It doesn't make sense to make finished goods in Singapore only to transport them to the United States and Europe, when you can manufacture one base product in Singapore; ship it to the destination countries, and make localized products there."

Examining these inventory specifics helps companies develop robust plans for managing and synchronizing inventory, and technologies such as Optiant's make it possible to easily integrate this information with an ERP or other system.

Because of the specific nature of, and the complex scientific technology behind multi-echelon inventory optimization, market adoption is slow. In 2005, 50 deals were transacted; Colehower expects that number to double in 2006, and rise dramatically in the next few years.

So far, mainly major high-tech and consumer goods companies such as P&G, HP, Intel, and Microsoft are biting.

"Over the next two years, the market followers will all be looking at these solutions," he predicted. "Think about how long it's taking companies to become comfortable with RFID. A natural learning curve exists with this technology also."

Trade Management Technology Gets Air

Because the volume of international shipments is increasing in tandem with cargo security screenings, shippers are placing greater emphasis on complying with government shipping regulations. This puts global trade management technologies in the sweet spot.

"Customs is raising fines for not complying with regulations, so shippers have become more aware of this area of the supply chain," said Al Cooke, vice president of sales, Management Dynamics, a global trade management software provider in East Rutherford, N.J. "It is all about risk avoidance. When risk goes higher, people are less willing to take a chance."

Contract management is another aspect of global trade management that is getting more play, moving beyond just ocean transportation. Management Dynamics has added an air contract module to Rate Explorer, its tariff and contract management solution, "which provides a value-add for shippers already using the ocean module," said Cooke.

"When shippers are in the trade planning phase, they look at the cost for executing a move from Point A to Point B. What if they want to send that shipment via air expedited? They can now plan for that in our system and develop a per-item or per-unit cost," he added.

This is good news for shippers who are aiming to find true landed costs—item by item—in order to conduct price optimization scenarios and make better sourcing decisions.

RFID Has Left the Building

Is the hype surrounding RFID beginning to die down? Judging from the limited number of educational seminars addressing RFID, and the small group of RFID vendors at the Learning Exchange, the answer might be yes.

Perhaps the early adopters have made their peace with RFID for the sake of lucrative Wal-Mart mandates, and the rest of the pack is waiting on the sidelines to see if these implementations pay off. The overwhelming number of articles written about RFID in trade journals and business magazines may have satisfied potential user interests for now.

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