Manufacturers of all sizes are looking into hosted software for core supply-chain functions, such as demand planning and factory scheduling.
In a recent supply-chain spending survey, AMR Research found that 26% of US companies are considering on-demand service offerings. The interest is being driven by the need among manufacturers for tools to streamline business-to-business processes across increasingly distributed supply-chain networks. Going the software-as-a-service route lets companies avoid the capital investment and complex deployment associated with conventional licensed applications.
It’s a model that has done well in the CRM world. The success of NetSuite, Salesforce.com and Salesnet has influenced traditional software makers to tweak their line-ups. A prime example is SAP, which unveiled an on-demand version of its CRM software earlier this year.
Web-centric environments are not new to manufacturers. Online business-to-business trading hubs peaked in the 1990s and some, such as E2open, thrive today as community marketplaces and hubs for trading partner collaboration. But the hosted, multi-tenant software model is relatively new to the supply-chain world.
“The reason software-as-a-service has taken off in CRM, but not in [the] core supply chain, is that a lot of supply-chain applications are computationally intensive,” says Mark Hillman, a senior analyst at AMR Research. Users have traditionally needed the speed and power of a client-server application, he says.
In response, vendors have built hosted applications that offer core supply-chain features, such as distribution planning, contract management and factory scheduling — delivered over the web.
JRG Software, which CDC Software acquired in February, is tackling one of the more computationally intense elements of SCM. It offers web-based factory planning and scheduling applications, aimed at helping companies improve retail premises fulfilment rates, trim order-to-production times and respond more quickly to demand fluctuations.
Other vendors with hosted supply-chain software are emphasising collaborative sourcing and procurement functions. Procuri, for example, offers on-demand software for spending analysis, supplier management, sourcing and contract management. Emptoris, which merged this month with contract-management vendor diCarta, offers a similar line-up of supply management software that users can opt to deploy on premises or via a software-as-a-service model.
Newcomer Mitrix is something of a hybrid. Its on-demand suite includes collaborative features such as private trading communities, as well as more traditional supply-chain management functions, such as forecasting, inventory management, fulfilment and logistics.
For Mitrix customer Hampton Products International, the combination will enable better communication with its suppliers.
“If our suppliers have access to what’s moving, and what our customers are doing, this is to their advantage. They can anticipate demand a lot better,” says Charles Anderson, vice president of global supply-chain management at the company, which makes security products and accessories.
One result the manufacturer hopes to achieve with Mitrix’s SCM Live software is faster turnarounds. “We would like to begin to whittle away at lead-time,” Anderson says. “Long lead-times just add cost to the entire supply chain. Short lead times reduce cost. It’s real simple.”
Part of the appeal of Mitrix is its roots — the startup software maker is a subsidiary of Japanese conglomerate Mitsui, which built the Mitrix system to handle supply-chain activities for its business units.
“They’re dealing with some of the same countries that we’re dealing with. They’re dealing in manufacturing environments, as well as distributor environments. They’re dealing with import and export issues, which is a big part of our business,” Anderson says. “They understand the fundamentals and have hands-on experience with all supply-chain activity.”