For most of us, we’re experiencing unprecedented economic challenges. The implications to the supply chain management profession are profound. We’ve gathered some of the industry’s brightest minds to discuss these challenges and seek innovative solutions. We hope you enjoy the Kinaxis Supply Chain Expert Series as we challenge these experts on these issues.

Bruce Richardson
Chief Research Officer
AMR Research

Bruce Richardson brings more than 27 years of experience to his current role as chief research officer at AMR Research. Bruce has spent most of his career analyzing the software industry with a distinct emphasis on ERP and supply chain. Since joining AMR Research in 1988, he has been responsible for spearheading new market coverage and contributing to the company’s analysis of leading market trends in areas such as ERP, supply chain management, service-oriented architectures, software-as-a-service, software appliances, and virtualization and visualization.

You can follow Bruce’s blog at The Future of Enterprisese Software.

Kinaxis: We are experiencing a rapid and perhaps long-lasting downturn in the economy.  What specific supply chain initiatives can be applied in the short term that will have greatest effect on a company’s financial performance and sustainability?

Bruce:  Given the sorry state of the economy one of the top priorities is to get a 360 degree view of demand.  If you sell your products through channels, the data that you get on consumption may be 6 to 13 weeks old.  That’s unacceptable.  You need to move closer to real-time.

Smart companies are also building pipeline management dashboards to manage changes to forecast.  They are a looking at the data across multiple dimensions – products, geographies, customers and reps to sense any changes that may require immediate intervention.

Kinaxis:  We have seen the globalization of demand, especially in the BRIC  (Brazil, Russia, India, China) countries.  Notwithstanding the current economic downturn, will this trend continue?

Bruce:  I wish I could be more optimistic about manufacturing jobs returning back to North America.  The only case would be for products where the cost of logistics exceeds the cost of manufacturing.  In those cases, though, the primary benefactor in North America might be Mexico.

What’s more likely is that every few years we will evaluate our manufacturing partners on the basis of costs and risks against new opportunities (i.e., shifting from China to India or Vietnam.

Kinaxis: How will this impact product development, and by extension the products available in the developed countries?

Bruce:  Follow-the-sun product and software development will continue to be the norm.  The one question is whether any country can challenge Taiwan for product design/manufacturing leadership, especially in consumer electronics.  Indian companies have been threatening to do so.  There are new schools starting up, but we have yet to see a shift to India.

Kinaxis: As companies have outsourced, much to their consternation, their direct control of the supply chain has decreased.  They now need to participate in multi-enterprise supply networks.

Bruce:  We have seen an uptick in interest in multi-enterprise supply networks.  Manufacturers would love to have one low cost,  industry “standard” for dealing with suppliers – and customers, too.  Ironically, despite all the promise of XML, it’s still an EDI world.

Kinaxis: The adoption of on-demand or software as a service (SaaS) increased dramatically in 2008 for non-core processes, and even for some core processes such as CRM and, to a lesser extent, Procurement.  What are the drivers for this adoption?

Bruce:  While my peers at other research firms may dispute the cost advantage that SaaS has over on-premise, I think they are crazy.  SaaS deployments have no servers or data centers, require minimal IT attention, foster continuous innovation (through quarterly or semi-annual upgrades), and use less energy.  Compared to most ERP applications, SaaS looks more like a consumer application.  They are much easier to use.

Kinaxis: What are the barriers to wider adoption of on-demand services for core supply chain processes?

Bruce:  The barrier is often the CIO, aided and abetted by the large ERP vendors.  The primary concerns are Sarbox compliance (i.e., concerns over “where’s my data?”) security, governance, data management, and integration.  So far, security has not been an issue.

Kinaxis: Will this trend also lead to the outsourcing of the process itself?  In other words, will we see the emergence of companies that specialize in procurement for, say, pharmaceutical manufacturers?

Bruce:  Pharma is pretty conservative.  I could take you to a large semiconductor company who’s using a combination of open source, SaaS, business process outsourcing, and cloud applications (e.g., he replaced Microsoft Office with Google apps) to drive down the cost of non-core processes.  Ironically, the CIO there argues that IT fits into the non-core side of the equation.

Kinaxis:  “Cloud” computing is the hot topic in the IT world, and is a superset of SaaS.  Will there be a wide adoption of “cloud” computing in the supply chain management (SCM) world?

Bruce:  Today, the only people talking about cloud computing are analysts, journalists, and vendors operating in the 650, 415, and 408 area codes.  That’s changing quickly.  I think in the not-too-distant future we will have all of our supply chain data available in the cloud.  It will be real-time and available in 3D.  For example, I recently visited Zappos, the $1B online shoe retailer based outside of Las Vegas.  As we walked through the hallways, I saw a flat panel display showing web visitors mapped against the map of the U.S.  Every new visit resulted in a new “footprint.”   In the future, we’ll turn to the cloud to look at real-time data for all facets of our supply chain.  Wouldn’t it be nice to not have to lug your laptop when you travel?  Wouldn’t it be great to use that 42-inch television in your hotel room as your laptop screen?  Imagine having email and your individual dashboards on display on one side and the Red Sox game on the other!

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Tags: On-demand (SaaS), Supply chain, Supply chain management
Posted in On-demand (SaaS), Supply chain expert series, Supply chain management
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