The following Supply Chain Matters guest commentary is contributed by Prashant Mendki. Prashant is a 15 year experienced industry principal, blogger and social media enthusiast.
In a conventional supply chain process, the focus was always around 5 aspects – Plan, Develop, Make, Deliver and Return. All the applications developed and solutions designed to optimize supply chain processes were expected to run on top of the core ERP systems. You develop a strong demand & supply planning strategy (Plan), Identify the right set of suppliers and source (Develop), Manufacture goods (Make), Transport & store finished goods (Deliver) and accept any returns from customers.
Functional units in an organization such as finance, procurement, HR, customers & infrastructure management operated as independent business units, and processes and data flow was integrated between different applications as needed. This meant applications for Procurement, Travel & Expenditure, CRM, HCM, BI, SCM, Planning, and Execution ran on top of the core ERP system to manage the business.
What has changed in last few years is the way these functions are delivered & consumed. The manner in which they integrate with each other, generate large volumes of data and enable predictive analysis, all provide important pointers to measure the impact on business. Factors such as global business expansion, the way materials get sourced, and the risk that geography & global economy face, have direct impact on business operations. Compliance and monitoring have increasingly become a key priority for organizations. On the other hand factors like social media and its impact on consumer behavior, consumer expectation management, the buying pattern coupled with consumption, and change in power center due to global economy expansion – all have made the ’supply chain‘ more significant strategically and complex at the same time.
All these scenarios are directly impacting the way supply chain processes and applications have been thought through, designed and defined. This calls for a holistic “integrated extended supply chain” rather than independent business processes.
Here is how an ‘integrated extended supply chain’ would look like:
The entire ecosystem would be treated as part of the supply chain, where suppliers will have complete visibility into key customer demand and have their response plan ready. This will give them a clarity on how inventory is working and how scheduling needs to happen on its part. Such a system can have tremendous business benefits, for e.g., in the case of a transportation agency that delivers perishable food, a sensor can be installed to submit a report on the food quality to the monitoring system.
As the opportunities & market size are increasing, the challenge to respond to it is getting tougher. Few factors are still in its midst of change. Technology delivery models such as cloud and mobility, new ways of payments such as Apple Pay and Ariba Pay, high end processing systems such as HANA, Big Data and predictive Analytics; all of these are still evolving and will make a large impact on businesses in the coming years. The IoT wave will get devices to communicate with each other and localized cloud computing (Fog ) will reshape the way data is being created and consumed for localized business purposes.
What this means for most the businesses is –
- New order will remove complexity that core ERP brings with it.
- Customers will have best of the breed solution catered towards enhancing productivity of the specific business process – not necessarily dependent on Core ERP, which may still be there as a transactional system.
- The “extended supply chain” will provide extension for business process innovation as its focused towards outcome
- Extended solution landscape involving HCM, CRM, Procurement, Executives and different delivery mechanisms – beyond conventional supply chain definitions
Specialized systems integration partners– with niche experience in business process and technology can help customers to keep the holistic view of Extended Supply Chain areas – productive towards business outcomes, independent of their Core ERP applications or just extension to ERP.
Exciting times ahead for sure.