No one knows more about the changing face of supply chain management and the move away from purely internal ERP (enterprise resource planning) systems than the sector’s number one vendor.
“ERP was very much in your plant,” says Frances Meade (pictured), head of supply chain management, SAP Ireland. “You didn’t concentrate on what your suppliers did; you didn’t care who the end customer was. Someone placed an order with you and you placed an order with your supplier. But the supply chain stretches from the end-user to the guy who grows the crop.”
This realisation that it’s the whole chain that counts is starting to hit home on an enterprise level in a big way. “People aren’t just looking at their own company any more. They need visibility of the entire chain and this is being driven by the consumer,” she says.
“As consumers we are not happy to take what the shop has. We demand better prices and better options. The market is changing because of the internet and the fussiness of consumers with the result that the whole supply chain is becoming important rather than just your own entity. This is the main shift we would see in the whole ERP sector,” Meade adds.
She defines the evolution in three stages. The first was when it was concerned with a single business. The second has occurred over the last three or so years as companies have become more collaborative. “They share information with customers and their suppliers,” explains Meade. “It’s hard to quantify but we feel that about 47pc of companies are involved in collaboration. That sounds high but it’s in a selective mode. In Ireland it would still be in pilot mode.”
“The third stage, and this is where I would like to think that SAP will differentiate itself, is in the adaptive supply chain, where the chain automatically changes in response to conditions. For instance, if I place an order via a website for a PC with a 17-inch monitor it will show up along the supply chain. But if I go back and change the order to a 21-inch monitor, the change should be seen by everyone along the supply chain in real-time. We know the technology to do this is available but we reckon that only 3pc of companies worldwide are dabbling in this. It’s responsive, it’s flexible and we feel we are leading the industry,” she believes.
SAP’s other big differentiator is that it offers a complete suite of products. “And it’s all our software,” Meade says. “It’s our CRM, it’s our product life cycle management package. We believe that other companies tend more towards partnerships. We never have any concern about interfacing products. The other main thing is our R&D spend. We spend about Û4m per day on R&D.”
In the specific area of warehousing, Meade emphasises the fact that SAP provides a complete solution. “In the past, in a warehouse environment one company would provide the barcode, we would provide the software and you would need middleware to get the two talking to one another,” she explains.
That, she says, has now changed. The hardware can talk directly to the SAP system. There is also a shift towards wireless technology, whether it is wireless barcode readers or radio frequency tags that are detected and scanned when they pass a certain point.
The SAP system can also interface directly with other equipment. For instance, forklift trucks – manned or unmanned – can be equipped with standard interfaces. The SAP software can talk directly to the equipment. In the case of unmanned vehicles they can be directed to select a given product. In the case of manned vehicles, the driver can be updated about his route in real-time and alerts will tell him if he is in the wrong place. “There’s no middleware required,” emphasises Meade. “If companies already have fairly recent hardware they shouldn’t need to reinvest.”
By David Stewart
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