Journey to Achieving the Supply Chain Vision: Introduction
Supply Chain Platform Series: Part 1
By Ann Grackin
on Oct 18, 2011
The web has become the dominant force in supply chain operation and technology. In this series we will discuss how it's evolving.
Full Article Below -
Introduction—Supply Chains at Last
Since Michael Porter took us from our stovepipe view of work (make, store, and move, circa 1980s) to a value chain/supply chain view, a vision of an integrated and visible supply chain became our goal. But we had a lot of obstacles in our way.
The first was in creating that vision—moving professionals ‘upscale’ from a logistics or materials-centric view to one that was multi-functional and then becoming trans-enterprise.1 By the late 1990s the goal of thought leaders of the day was a world of Supply Chain Orchestration and Collaboration.
A second, equally important obstacle to achieving the vision was technology that was woefully inadequate. Module-based technology was all we had, so fax, phone calls, and mail were often the most expeditious forms of communications. Then we gained some automation with EDIFACT or EDI. Dial-up was the big innovation in its time! (We are back for a moment in the 1970s). The advent of good standards—EDI and bar-coding—reduced the burden of translation. But be we still have lack of true integration and visibility.
Enter the internet. It’s 1999. Web V1.0 bought us reduced friction in commerce—integration—but supply-chain-wide visibility remained out of reach. Now it’s the 21st Century and with new web techniques we have moved from portals and exchanges to event-driven platforms.2 Platforms where trading partners can co-exist and manage much of their supply chain activities. Maybe the vision is within reach?
This new decade has seen an explosion in the sale of cloud solutions. Whether collaboration, procurement, transportation and logistics, or global trade management, supply chain operations are clearly showing their preference for a web-based approach for these inter-enterprise processes.
As firms become more global and outsourced, and technology availability is anytime/anywhere, dependable, scalable, and cheap to operate, firms are beginning to trust the web for operations. And the need to share data and workflow in a real-time manner, beyond the firewalls of their own enterprise, also drives them there. They can’t do that with their enterprise software.
This is not a new technology option in the market—but things are changing. Since the introduction of the ecommerce solutions in the late 90s and early 2000s, supply chain networks have grown and thrived on the web. And now the movement in the platform world is to extend the focus and applications in these networks to cover a fuller business lifecycle: breaking down functional barriers, extending trading-partner networks, and generally making the web a thriving place in which to achieve trading-partner-enabled visibility.
In this series we will discuss both the foundation and the transformation of platforms.
Nothing is neat and clean in the rock and roll of the business world. But we can draw some important conclusions about the way enterprises vs. supply chains operate and, therefore, the kind of system architecture that might work best for each.
Fundamentally, the enterprise world is full of proprietary processes and information. Though we do have standards for ‘how to run finance,’ the actual discussions about budgets, expenses and reporting are private conversations within the enterprise. So, too, are human resource management, corporate goal-setting and the achievement of those goals. We might seek help to execute these functions from the outside, but that help needs to adhere to our process and privacy policies. The enterprise system, therefore, needs structure to give cohesion—from within—to the enterprise and the information that supports it.
“ We are finally achieving our Supply Chain vision with our web platform . . .”
The supply chain, on the other hand, is a world of partners in which we have multi-enterprise process requirements. As well, there are vendors or service providers with whom we transact business, but might not need to hold too close otherwise.
In essence, if we want to play ball, we all have to play by the common rules. All organizations have the same challenges—to create responsive ecosystems. The common standards that allow us to communicate and exchange information are the by-word here. Rather than a million point-to-point connections, a 3rd party manager—the network manager—becomes a valuable service. Not just an umpire, but the switching station to manage the transactions. And not just a switching station, but a place to reside to operate the processes.
Whereas the enterprise needs a moat, the supply chain thrives on openness, synchronizing the work of multiple enterprise and processes. Yet unique processes, views and transactions must maintain integrity—supply chain cohesiveness.
Figure 1—Enterprise vs. Supply Chain Cohesion
So two views need to coexist in today’s world—supply chain cohesion and enterprise cohesion. And the solutions they use should reflect these distinct needs.
For many, the platform or web world is something they use, but may not know too much about.
Most end users, thankfully, don’t have to know too much once they connect. But there are huge differences between platform providers. If true trading-partner-enabled collaboration is to take place in the supply chain, understanding the networks and platforms is essential.
So, let’s get some basic understanding, in English. (We will try to explain the tech jargon as much as possible.)
A Platform on the Web
Since there is so much to talk about, and the terms have gotten hot (which means poorly used and overused), let’s get back to some basics—some starting definitions. We have written a lot about the cloud, networks, and collaboration, so we will discuss only what is essential to this conversation.3 We suggest that you read some foundational material on cloud computing if you need the background. You can read that at cloud-as-a-service-framework.4
Platform5—a stage for performers (stage: that definition has some promise); policy of a party seeking elections (not so promising); standard operating system—a specific configuration of hardware, specific operating system, or other software that is a standard for the development and operation of computers and of computerized devices . . . (that definition might work).
Platform—We use this term to apply to so many environments today—both on and off the web. An additional reality is that each technology firm develops their own standards. So although there might be ‘a standard’ for XYZ Company, we hope that they also comply with public and open development standards so that they can integrate with the many components that operate in the web world today.
Hence, our Platform definition has to adhere to public industry standards, designed to interoperate across our eco-system of partners and customers. So, what else do we need to understand about the Platform? What’s in it?
Today, whether we call it On-Demand, SaaS, Cloud, multi-tenant or single-tenant architectures, (defined below) these are different modes of delivering services on the web. End users no longer have to grapple with the challenges of selecting operating systems, a development language, databases, and data center infrastructure to operate their business environments.
There are a few critical elements that make a platform a supply chain solution:
A network—the encoded relationship between entities. The more established the connections and the more supported the standards for my trading network, the easier the flow of information between my firm and all my trade partners. In other words, a network requires a lot of pre-built connections. And the more pre-built connections it has, the more valuable it is to the many companies that use it. These connections should reflect the exact compliance preference for trading partner connectivity.
Trading Partner Enablement—includes EDI, document and data sharing through Managed File Transfer (MFT)—standard messaging protocols—both batch and real time; and industry standard data (GS1 for bar-coding and auto-ID), ISO, RosettaNet, etc.). EDI (Electronic Data Interchange) is a more general term these days which, in essence, is an agreement about how to automate and structure data and messaging—application-to-application. It includes a variety of standard structures that can emulate documents, file expressions, etc.6 Due to the variety of methods and preferences used by trading partners, the translation between trading partners would take place on the platform.
Performance attributes—today’s platforms should be real-time event driven. As one company told us, “Your supply chain should be operating based on real-time events that are happening with customers, suppliers etc. now. Not by reports of past actions or stale data.”7 Today we often use the term ‘sense and response’ as a way to describe this performance attribute.
In addition, platform technology should support the network’s performance. This performance can be categorized in a few ways:
Monitoring—tracking, monitoring and auditing all trading-partner transactions and data changes. This is an underlying service that monitors the status of all transactions: Is the transaction in process, successful, or failed? EDI users are used to this type of monitoring.
Scalability—Computer resources need to keep pace with business growth. There should be dynamic scaling for increases in numbers of users, storage space and applications usage. Sometimes a compute exercise can gobble up a lot of resources. They need to be available, dynamically and over time, as your business grows.
Client integration and experience—software and web tools used for the client’s window or desktop. Do web pages build quickly? There are tools and techniques to create a real time, immediate experience.
Applications—business apps such as Transportation, Global Trade Management, Sourcing and Procurement, Collaborative Forecasting and Replenishment, Trade Promotion Management, Assortment Planning, Trade Financing and other supply chain applications.
Today we have single-instance or multi-instance apps. That is—individual code and or data per enterprise or share code.8
Single-instance can apply to code (one code base) and data. Would use the same data.
Multi-instance code can be the replication of the same code on different hardware, or variants of that code (revs) per user.
Most platform users have a combination of those two types.
Many platforms are industry-specific, have a rich network for their industry (Aerospace and Defense, Food/Produce, Healthcare, and High-Tech part sourcing for example) and, therefore, can share some data—reference, rates, and the like.
Security—Supplier/Trading-partner registration and authentication are accomplished through Public Key Infrastructure (PKI) and digital certificates. (Financial services platforms need much more security.) Platforms should also address the authentication of those personnel admitted to the network.9 There are many other aspects to creating and managing secure networks and supply chain security. We will talk about some novel and secure ways to manage the community of trading entities later in this series.
Auto-ID—to complement the security and transaction services mentioned above. The secure identity of the physical container or goods should be included. Multi-level security of goods, electronic transactions, and end user/personnel initiating any transactions, will allow enterprises to utilize these platforms with a fairly high degree of security. As well, they will allow for the authentication of end product through the supply chain.
Wireless/Mobile—ability to integrate to and manage mobile devices, device security and provisioning from the network, both across internal wireless networks and cellular networks.10
Content and Data Management—documents relevant to the application. For example, Global Trade Networks should have all import and export forms; eProcurement would have a template for RFIs, RFPs, POs.
Role-based or customized Portals—Many platforms provide their customers a branded portal so that the enterprise can provide a ‘window to their customers’ for transacting business.
Subscriber services—Need help? Many providers wrap a lot of services and consulting around the platform. Though the goal is self-service, the business processes of supply chain can be quite complex.
Other areas of capability are:
And more . . .
These capabilities have been built over a decade or more of web experiences by platform providers, and yet there is so much more to build and provide. Some providers do not yet have all of the above-mentioned services. But that is not to say that those providers may not be a good option for your business needs.
In future articles we will dive deeper into many of these services as well as give specific examples of trading-partner-platform players and how they provide these services.
1Trans-enterprise is one of shared processes across multiple enterprises; whereas multi-enterprise is a commerce-centric view of multiple enterprises buying and selling from one another—a buyer supplier relationship. Trans-enterprise looks at total supply chain performance—not just cost reductive schemes foisted on suppliers. (Read the Network Business Case and Cloud Economics.) 2 And the so-called Web 3.0 helps support this. 3 For discussion on cloud computing you can go here: http://www.chainlinkresearch.com/cloud.cfm 4 Other reading indicated in the References section at the end of this article. 5 Source: Encarta 6 Today it represents many methodologies including (asynchronous and bisynchronous), HTTP, AS1, AS2 (preferred by Walmart, Amazon and other channel partners with huge trading networks). 7 Raj Saksena, CEO and President of Omnitrol Networks 8 An example of shared code is a standard app, such as one provided by mobile carriers, vs. unique software routines that only your firm uses. 9 Financial services and government platforms require ‘in person’ authentication and background checks by the companies. Other apps may be less stringent. 10 Device security and provisioning will also be discussed further in these series.
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