Another buzzword, another hyped up same ol’ thing or something new, looking at an age old problem with new glasses – what is PLM exactly all about? I came across Arena solutions which is in the business of selling PLM tools and went through their demos to ascertain what they’re upto. In a nutshell, PLM software:Products as ERP:Finance and CRM:Customers. Attendant to the described associations is an underlying definition that no vendor of the latter products might sign up to because they’re in the business of extending their solutions/services into the PLM space or any other space that one can think up.
Mark Holman of Arena solutions in his demo seeks to explain how PLM can:
1. Accelerate time to market
2. Streamline collaboration in the supply chain
3. Ship profitable products
Mark also compares the current state of PLM software with traditional PLM software based on the Client-Server model as opposed to the PLM as a service (SOA approach?) model – meaning that all you need is a internet connection and a web browser (Web 2.0?), that they follow.
A first cut review of the demo leads me to think of PLM as a information exchange and, product related control routing and processing tool that uses SOA to deliver its content. I’m sure that ERP vendors are hot on their heels adopting the same technology wholesale into their myriad functionalities or extending their current capabilities in that direction. Gleaning information from the demo, I’d classify PLM as an analytic tool that brings into a firm adopting it a host of its own preferred method of structuring product management, cost reductions, collaboration etc.
However, something that struck me that if ERP seeks to subsume PLM, might PLM instead replace ERP itself simply because of the ease of adoption, focus on product management rather than financial mumbo jumbo and accounting? Could PLM and CRM taken together as an integrated SOA render ERP irrelevant?
Tags: PLM, Product Lifecycle Management, Product Management, Lifecycle
Paul Strassman has a relatively older article that has a rather frank discussion on finding value in IT projects. Given my interest in the enterprise application software, which could be classified as one gigantic IT project which has nothing much to do with IT, this article certainly had my antennae up.
Paul begins:
So far – to my best knowledge – nobody has been able to demonstrate that there is a positive correlation between money spent on IT and sustainable profits.
Alright, that’s one swing from the bat but let’s see if it is on target…
Sure there are articles about the positive contributions of IT. But the proof could be applied to justify greater IT spending as a sure cure for poor for poor financial numbers is still missing. The quest for demonstrating the directly measurable value of IT can be added to the list of fascinating but hitherto unfulfilled ambitions to attract academic fame or consulting contracts.
And quite importantly…
What is always missing is a repeatable technique for performing the calculations that would satisfy a firm’s methods for making investment decisions
Alright, Paul is not denying that IT investments contribute/create value for the firm but that a direct measurement of that value created/contributed is so far lacking and when provided is not repeatable in other contexts. I would hazard a guess that demanding controlled repeatability in the real world is an idealistic requirement which is more to be found in the scientific world than the business world.
He continues:
Nevertheless, there are ways of finding IT value – it’s just that they are all indirect.
He has outlined 6 key rules that might direct an investigator as to where to look for IT value:
Rule #1: Follow the money – The decisive contribution to an enterprise’s profitability is its capacity to manage purchases. Ergo, that is where the contribution of IT should be maximized as that is where the greatest opportunities are – primarily in improving the management of the firm’s purchases and in simplifying transaction costs. The relationship between purchasing, transaction costs and profits has not been adequately exploited.
This post is a continued peek into the capabilities of mySAP’s solution space. Transportation is one of the specialty areas of the firm that I work for (GENCO) and so I am more than familiar with all aspects of the transportation area and it should be a whole lot of fun exploring the capabilities of mySAP in this area. So let’s dive right in. There are three main areas in the Transportation solution space namely:
1. Transportation Planning
2. Transportation Execution
3. Freight Costing
Under Transportation Planning, there are five areas:
1. Collaborative Shipment Forecasting – Allows the firm to exchange/adjust forecast infomration between customers and carriers. Since forecasting really is the forward loop of the system, we should be observe a feedback loop (implicity or explicit) that should give back information to the firm and the other stakeholders about reality.
2. Load Consolidation – Any good TMS should have this feature because it is absolutely essential to realizing cost savings from transportation operations. mySAP comes with two options – one option is to carry out the consolidation yourself and the other is to allow the carriers to carry out the consolidation for which presumably you’d have to part with a portion of the savings so realized.
3. Mode and Route Optimization – Any good TMS should have this feature as well. What I would like to know is the internal workings of the Mode and route optimization algorithms, whether it relies on true optimization or some heuristic to achieve the mode and route optimized results. The other obvious question, given the high fuel prices and lack of carrier capacity, is whether this feature extends to the intermodal space or not.
4. Carrier Selection – Another important aspect of any TMS tool is to be able to assign and (and with the following feature of tendering) tender loads to carriers based on some business rules.
5. Collaborative Shipment Tendering – Most TMS come with this feature built in simply because it makes sense to do it. Either that or you’d have to be on the phone getting spot rates for lanes which is the least efficient way to tender large volumes of loads.
Under Transportation Execution, there are five areas:
1. Shipping – This option seems to be a souped up version of the Load Consolidation feature in order to move it from the Transportation planning to Transportation execution.
2. Collaborative Shipment Tendering – Repeated from Transportation planning area. I’m kinda getting ticked off with the repetition thing (not only because I might repeat myself needlessly but also because it inflates the number of features that a product advertises). Sure, it might not be possible to neatly categorize such a subject but that is a flaw in the presentation of the capabilities in neat little silos when such silo based differentiation is not the solution. C’mon SAP, you can do better…
3. Express Ship Interface – Deals with those orders that needs to be shipped out using the Parcel mode. However, I wonder what’s driving the logic of whether to send a particular shipment by parcel or not – whether the different modes of Ground, Next Day, Second day etc can be selected/optimized based on delivery dates or priority etc.
4. Distance Determination Service – There are only two service providers for distances – PC Miler or Rand McNally, that are used in the industry and most firms that I have dealt with use PC Miler of some version or the other.
5. Transportation Visibility – Since visibility is a key desire for many firms especially given outsourcing and longer lead times for the products produced in cheap manufacturing locations, this is a feature provided for tracking the movement of an order either by road or by sea.
Under Freight Costing, there are 4 areas:
1. Freight Cost Calculation – An entire industry of freight pay and audit works around this particular topic and this functionality is going to make inroads into their revenue pie.
2. Freight Conditions – A database of freight rates and accessorials that are applied to orders to evaluate the freight costs
3. Freight Cost Settlement – Classic execution of freight pay conducted from within an ERP system so that there is end to end supply chain management.
4. Freight Costing Extensions – Adjustment of freight paid with customers or carriers based on some outlined business rules.
So is anything amiss? Not really. mySAP’s transportation piece seems to have everything that I’d expect from a good TMS solution. The natural extensions that might be thought off from the current state are probably contract management with the transportation providers, integration of 3PLs as 3PLs and not as some virtual carrier to whom the loads are tendered, performance of the carriers as well as 3PLs, BI (Business Intelligence) from carrier performance that enables the identification of routes, modes and networks that could be leveraged for better carrier contracts. There is one component that will be of great value to an ERP provider such as mySAP that can leverage existing users through the internet and that is peer collaboration of transportation networks. And that can be entered into using an interface that mySAP could provide albeit for a small fee.
Randy Littleson of Response Management had a few comments regarding my initial post on Response Management. As I learn more about Response Managment, I offered this comment at his site regarding Response Management and Quick Response Methodology (QRM):
In your comments, you have referred to “breakthrough” in responsiveness that can be achieved by empowering the many stakeholders involved in making course corrections due to unexpected events in the day. From my reading of Response Management (albeit a cursory one at this time), it seems to be a software backed tactical level planning, weigh the options and impacts, decision making (and probably prioritizing) system i.e. consisting of a DSS (Decision Support System) side as well as certain processes that use this DSS. This probably fills a gap that has existed with Supply Chain Planning tools (that remain at a more strategic and long term horizon level) in that they cannot really get down to the nitty gritty of operations. ERP tools have recorded information at all levels of the firm but they do little more than that. I hope that I have captured the gist of the Response Management approach.
Of course, any tool that does some if not all of the above piques my interest greatly.
What QRM does is something quite similar in that it also gets down into the nitty gritty of operations – however it is very much from the planning point of view. With its attendant DSS, QRM plans the structure of the manufacturing system for those very situations wherein Response Management has been highlighted above.
So in a sense, they’re competing ways to solve the tactical issues of daily operations at a level not addressed effectively by SCM/Simulation/ERP systems.
An archived version of the recent webinar on Dynamic Inventory Optimization presented by the Electronics Supply Chain Association (ESCA) is available here. Registration is requied and free. The webinar will be available for a year from now. I found some of the items in the presentation especially from the Aberdeen Group as well as IBM’s DIOS group quite interesting and that makes watching the webinar well worth your while.
Some of the other documentation relating to the webinar is also available here:
1. IBM’s DIOS brochure
2. Case study of application of DIOS at a company
Randy Littleson of Kinaxis on Response Management blog has a post about how firms are often kicked into “response mode” where in they’re trying to respond to the latest fire that is about to kill their customer service ratings. Isn’t it always like that or doesn’t it always feel like that? He is of the opinion, no doubt earned by consulting practice that it is virtually impossible to plan out the activities of the firm such that you can avoid/significantly mitigate the “response mode” state of affairs.
These deviations from plan are happening literally hundreds of times throughout the day in most organizations. It may be a key customer calling, a field failure that needs to be dealt with, an unexpected delay in receipt of a critical part of any number of things that “just come up.”
At the core to solving these problems is compromosing. Teams need to get together and figure out what tradeoffs and compromises need to be made on the spot to solve these types of problems….and they need to do so while weighing the impact on the rest of the business.
Well, you could if you wanted to.
Quite simply, you either have to have excess capacity built into you system (not so good idea) or have a system that operates at or near the lowest total lead time (better idea). I’m not saying that you’d be able to handle every “response mode” crisis hands down this way but a significant portion of the response mode crises ought to be mitigated by advanced planning. But that requires a different way of thinking and applying i.e. bringing in the fruits of applied queuing theory into the firm’s activities. One of the highpoints of my graduate education was putting this into practice – through Quick Response Methodology (QRM). QRM is the brainchild of Dr. Rajan Suri at the University of Wisconsin-Madison and I was part of a team that consulted with a manufacturing firm with the specific objective of reducing their lead times for spare parts.
If you’re facing any of the below:
- Our biggest customer is demanding faster response time …
- We provide a high degree of customization, and JIT is no longer helpful in our low-volume, high-mix environment …
- Our shop floor has become very efficient, but it takes too long to get out a quote or process an order …
- Our own response time is fine, but our supplier is another story …
Logistics Management has an article on their website (Free registration required to view the article) which summarizes a survey of current trens with respect to SCM technology – likes, dislikes, loves and gripes. The respondents were surveyed about the type of SCM or related software that they intended to purchase/upgrade/deploy in the near future, important factors w.r.t SCM software and who in the firms made the decision to acquire SCM software. This is the kind of response that any SCM consultant or SCM software maker has to be keenly watching – hopefully not as a first source of industry trends but as a sort of secondary confirmation.
The article gives an idea about the content of their survey sample:
The final survey sample included logistics and supply chain managers from both large and small companies, with annual sales ranging from less than $49 million to $1 billion or more.
Some important takeaways (which are succintly graphed in the article as well):
1. Six types of software are most commonly used in logistics today. The most popular are warehouse management systems (WMS), used by 61 percent of respondents, followed by enterprise resource planning (ERP) at 55 percent and transportation management systems (TMS) with 34 percent. Rounding out the list are supply chain planning (32 percent), import/export management (15 percent), and yard management systems (YMS) with 10 percent.
When it comes to upgrading or purchasing software, WMS and TMS are at the top of readers’ shopping lists. Supply chain planning and ERP applications are close behind.
This year’s survey also highlighted an important trend in on-demand (“pay-as-you-go”) solutions. Some 28 percent of readers already use such systems, and 34 percent expect to purchase them within the next 12 months.
2. Ultimately, readers said, the most important reasons for purchasing supply chain software include the right features for their operations, quality of service and support, compatibility with existing solutions, and configurability. All of that is aimed at achieving one overarching objective. “The number one attribute that companies tell us they’re looking for is integration of their internal supply chain,” says John Fontanella, senior vice president and research director, supply chain services, at Aberdeen Group. “That is head and shoulders above everything else.”
3. Eighty percent of the respondents who plan to buy supply chain solutions expect to spend less than $1 million on software, training, and integration. Most are currently evaluating vendors, and a smaller percentage have already decided which vendor they’ll buy from. Respondents typically rely on a team that includes corporate management, information technology, and warehousing/distribution/logistics, among others, to make those decisions.
In exchange for their investments in supply chain software, one-third of the respondents expect a payback within 12 to 18 months.
4. Fontanella adds that a 12- to 18-month ROI is not only within reason, it has become a necessity. “It’s not an unreasonable expectation at all,” he says. “A technology vendor that can’t deliver that will be out of business.”
All of the above seems just about right except the last point. T’is all well and good to expect an ROI within a 12-18 month timeframe but to place that squarely on the shoulders of a technology vendor smacks of the COTS (Commercial Off The Shelf) problem and how firms tend to view software solutions – as a magic wand. And that is singularily unhelpful.
