What the analysts say

Gartner says a fully integrated SCM suite is not available from a single source, "despite vendors' marketing messages and long lists of partnerships".

Gartner says a fully integrated SCM suite is not available from a single source, “despite vendors’ marketing messages and long lists of partnerships”.

In a short report in May, Gartner noted that ERP and supply chain planning packages make up only part of total SCM functionality, and that ERP vendors’ installed base are often confused and disappointed once implementations start because the vendors have claimed to be “integrated SCM” providers when they only provide some planning and execution functionality. One or two standalone products will be needed to be added to the ERP system to “complete the project spectrum”, and there are bound to be “unplanned integration and execution issues”. Gartner says enterprises “must construct a digital nervous system for their supply chains that includes real-time, event-based communication; shared planning and analytical processes; monitoring and alerting systems; and intelligent supply chain execution”.

Collaborative commerce will look different from industry to industry and from one IT architecture to another, so enterprises can’t just follow a single recipe, says Gartner. They need to:

  • tie performance measure to business agreements
  • Manage their own performance
  • Define key performance indicators, such as supplier and delivery performance and forecast accuracy
  • Plan for complexity
  • Use activity-based costing analyses
Gartner says measuring the performance of you supply chain management is a key component to collaborative commerce. Through collaborative internet-enabled technologies and performance management, enterprises can improve agility, monitor effectiveness and drive competitiveness within the extended supply chain.

But Gartner says packaged application vendors such as ERP companies and supply chain software firms are still scrambling to build solutions, and metrics are still emerging. It says firms should look at understanding and measuring their own internal performance before trying to measuring supply chain performance involving trading partners.

Because data to measure supply chain performance is not readily available, the process may take 12 to 18 months.

Forrester Research interviewed 40 supply chain executives at $US1 billion-plus firms for a recent report, When To Share Supply Chain Secrets.

It found that 57% of firms are just getting started with online collaboration and 18% of firms lack corporate sharing policies, and that:

  • Unsecured partners expose entire supply chains to new risks.
  • The cost of information leaks changes over a product ’s life cycle.
  • Basic security measures will often suffice.
Forrester examined four prototypical supply chain collaboration scenarios. It says depending on the extent to which secrecy matters, firms should:
  1. Focus on operations. When exposure to an information snafu is low, firms should implement basic security rules to maintain data integrity.
  2. Charge ahead -- off the shelf. When the stakes are high but industry best practices exist, firms should use them rather than customised rules.
  3. Build a private hub. Firms can mitigate online risks when venturing into new collaborative activities by setting up and controlling their own private hub.
  4. Stay off the net. If mishandled information can wreck the business and the flow is too tough to control, firms should not use the net as a collaboration tool.
Nevertheless, Forrester says supply chain execs recognise the risks of leaking proprietary information to competitors -- but they are most concerned that suppliers won’t be ready to handle the data appropriately because of the large volumes and lack of integration standards. While these buyers are just getting started with online collaboration activities, 40% plan to have their strategy fully deployed by 2003. By using the net to share data like production forecasts, CAD drawings and terms and conditions with suppliers, companies expect operating efficiencies and faster cycle times.

Some 45% of supply chain execs raised fears about their pricing and terms falling into the wrong hands though only 7% of companies reported a net-based confidentiality breach.

Most of companies interviewed were confident in their ability to implement information-sharing business rules. But a significant minority said that they face challenges or don ’t have any policies at all. Execs pointed to IT difficulties and corporate culture as impediments to getting their collaboration efforts up and running.

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