RFI Analysis: Supply Chain Management Vendors

Enter Supply Chain Management

SCM is, essentially, a huge integration problem. Manufacturers must purchase components from suppliers to make finished products. Distributors must know where to send which products, when to send them and how many to send. And someone must keep track of it all, balancing the number of items manufactured with the number sold, while keeping an eye on its bottom line. As NWC Inc.'s IT staff, we decided to build out our systems to gain visability into the company's supply chain. After all, we have inventory management and business integration in place (our Cognos Series 7 implementation) to analyze sales patterns. How hard could hooking up NWC Inc. to its component suppliers and distributors be?

Very difficult, actually. Although EDI, XML and VPNs have lessened the prohibitive expense of dedicated lines among suppliers and distributors, systems still must speak EDI to communicate effectively with partners' systems. And though our analysts can review the reports and data presented by Cognos to determine which and how many widgets to ship to distributors at what time, there's still the little problem of getting that data from the head of the analyst to whatever system the IT staff is cooking up to organize widget distribution. Note to selves: Custom RFID (radio frequency identification) implants aren't a solution, no matter how good they sound over drinks at 2 a.m.

So we did what most small and midsize businesses would do when faced with such a daunting task. We sent out RFIs to vendors whose products offer links in the supply chain to find out just how much our venture would cost. We asked Xenos to spec out an integration hub and Fidelitone to give us a quote on virtual distribution services. We asked Ariba, Epicor Software, Infor Global Solutions, i2 Technologies, Manugistics, Oracle and SAP to give us their best complete SCM systems. We sent requests to IBM, Tibco Software and webMethods for answers and products that would at least jump-start the project and save our IT staff from a task estimated to take at least five years to complete.

Fidelitone, Oracle, webMethods and Xenos stepped up to help NWC Inc. Epicor and Manugistics gave it the old college try, but both bowed out before the end. The others, well, we hope they aren't using their own SCM applications to manage their RFI processes.

You've probably figured out this isn't a conventional comparative review. Instead, we've scoped out what's available to NWC Inc. and businesses like it. By evaluating each component in light of its place in the supply chain, the challenges our respondents address and the business drivers forcing us to seek outside help, we aim to give you the topographical information you need to build an SCM road map.

You might be surprised to see we're not mentioning price. That's because vendors weren't any more forthcoming about pricing with us than they are with you. Normally, this would be a deal breaker for a review, but the number of variables involved means your pricing would vary wildly from ours. Still, we're not pleased that vendors won't even float an idea of what it's going to cost us. We've heard horror stories about the millions spent on implementing similar enterprise-class systems, like ERP (enterprise resource planning) and CRM (customer relationship management). In fact, we covered such a story in our Children's Hospital On Location case study (see "Child Support"). We're sure our pockets would be emptied. Whether the ROI would make it worthwhile is still unknown.

Examining the technology offerings and the business needs addressed by each vendor was easier. We broke down our needs into the four key links in our chain: supply side, manufacturing, distribution and sell side, and integration. Then we examined each RFI response to determine whether the offerings met our business drivers--including our strategic plans for NWC Inc.--and IT challenges. In some cases, more than one product filled the bill, as was the case with Oracle's and webMethods' offerings to solve our supply-side issues, and we were forced to choose--just as you would. We've included excerpts from each vendor's proposal in our analysis.» Business Drivers:
• Reduction in component acquisition costs

• Alignment of component purchasing with demand for finished product (widgets)
• Business-process optimization

» IT Challenges:
• Multiprotocol, multistandard environment
• Supply- and sell-side processes are not complementary, nor do the processes communicate effectively
• Not all business processes are automated

Potential Solution: webMethods Fabric 6.5. The fact that webMethods Fabric is an SOA (service-oriented architecture)-based suite appealed to NWC Inc. because one of our long-term goals is to harness the flexibility of SOA to improve our application infrastructure. WebMethods' Fabric supports a variety of industry standards, including EDI, ebXML, RosettaNET and generalized XML.

WebMethods' proposed solution to our supply-chain problems, including its ability to address our challenges without an ERP implementation, was interesting. Fabric can store transactions in a database, which can later be accessed through other applications, such as a business intelligence tool, to perform data analysis. Although an ERP-less implementation might be desirable in another situation, our needs for control and optimization of our manufacturing process leave us with little choice but to implement ERP or develop custom software to manage the manufacturing processes.

Even if we did implement an ERP system, webMethods still provides an interesting communication story with its Trading Networks, which the company says enables rapid partner integration and a portal through which relationships can be managed."Trading Networks would be used to define the trading partners, their location, document types to be sent and received, and the service that should be executed to process the documents. Trading Networks provides HTML pages for the trading partners to verify if documents were received and if there are errors with those documents. The webMethods Fabric platform would be used to integrate these business documents into existing systems. Responses to the orders will then be sent back to the trading partners via Trading Networks."

After evaluating webMethods' proposal, we foresaw a lot of work involved in implementation. Although we could model processes and define document types to achieve the results provided by Oracle's JD Edwards EnterpriseOne, webMethods is more focused on integration and transaction transformation than it is on supply-chain-specific functionality, such as planning and forecasting. WebMethods didn't address these SCM aspects.

Fabric would serve more than adequately as a communication mechanism among our manufacturing facilities and component suppliers, perhaps offering more flexibility than Oracle's JD Edwards EnterpriseOne supply planning module in its ability to codify the business rules that determine which supplier to purchase components from, and when, given the business-rule-like capabilities offered by Fabric.

webMethods Fabric 6.5. webMethods, (703) 460-2500. www.webMethods.com Read webMethods' full RFI response here.

» Business Drivers

• Manufacturing-schedule optimization
• Reduction in cost to manufacture finished product

» IT Challenges
• ERP system not tied into the rest of the supply chain
• ERP system doesn't support functionality required
Potential Solution: Oracle JD Edwards EnterpriseOne 8.11 EnterpriseOne is a midtier ERP suite that promises to streamline NWC Inc.'s supply chain and lower the costs associated with manufacturing our widgets by providing near-real-time, on-demand manufacturing data.

EnterpriseOne could reduce our total investment across the supply chain by enabling on-demand manufacturing, from order receipt to component purchase on the supply side. Being able to lower our inventory levels while servicing consumers and retailers in an on-demand scenario is the ticket to reducing the overall costs associated with NWC Inc.'s business model. EnterpriseOne is modular and includes a module for managing manufacturing schedules. By optimizing those schedules, EnterpriseOne can help lower our overall widget-production costs.

"In a demand-driven market, EnterpriseOne paves the way for more efficient 'pull' and make-to-order methods--where customer demand instantly resonates throughout the supply network and triggers coordinated action between the company, its customer and suppliers."

EnterpriseOne also includes a partner portal, which can be extended to support EDI, XML and other industry standards for communicating with suppliers. Although Xenos' TerminalOne also provides this functionality, we would prefer to use Xenos' capabilities for sell-side optimization and use the EnterpriseOne modules for supply-side enhancements because the latter is more closely tied to our demand for components. For example, EnterpriseOne's Supply Chain Planning modules support optimized procurement by planning scenarios based on price, lead time, quantities and other criteria. This is necessary for reducing the cost of components required to manufacture our widgets while letting our facilities produce products in a timely manner.

EnterpriseOne's portal facilities also are attractive because they assist in managing our supplier relationships. This intimate familiarity with our suppliers also makes EnterpriseOne a better choice than Xenos' TerminalOne for supplier integration.JD Edwards EnterpriseOne 8.11. Oracle, (800) ORACLE1, (650) 506-7000. www.oracle.com Read Oracle's full RFI response here.

» Business Drivers

• Optimize stock on hand to reduce storage and shipping costs

• Maximize profits by reducing costs to distribute and deliver goods
• Ensure ability to respond to sudden surges in demand
• Provide partners and distributors with visibility into the supply chain

» IT Challenges
• Limited visibility into distribution channel
• Multiprotocol, multistandard environment

• EDI, the industry standard for communication between partners, requires a 1:1 data connection

Potential Solution: Fidelitone Technology-Based Supply Chain Outsourcing Service Fidelitone replied to our RFI regarding its capabilities in the distribution and sell-side link of our supply-chain. Fidelitone can best be classified as a virtual distribution provider, and its services meet all our needs with a fraction of the IT resources that would be necessary if we were to implement a similar system ourselves.

Fidelitone owns warehouse space in the Midwest and has access to warehouses across the country. That saves us the time of locating and negotiating for the warehouse space necessary to distribute our widgets to retailers and consumers. Using a customized inventory-management app, Fidelitone claims it can do for NWC Inc. what it does for Best Buy and Sears: provide pick, pack and ship services for customers and retailers on demand. Besides distributing our widgets from the nearest warehouse, it can analyze sell-side patterns to determine how best to distribute our stock across its network."Fidelitone will serve as the warehouse facility for NWC's finished product. Distributors will place orders through a corporate EDI environment that is transmitted to Fidelitone. Fidelitone will then pick, pack and ship that product to the distributors, or even direct to consumers, as needed."

Fidelitone uses EDI to communicate with its customers, using an IPsec VPN. That means NWC Inc. must deploy, configure and monitor a VPN to communicate with Fidelitone regarding sales and its requests for more inventory. Choosing Fidelitone also means that our IT staff must code a custom application to speak EDI with Fidelitone, or implement integration software that can convert EDI to something our back-office apps understand.

The cost savings in choosing Fidelitone would be achieved mainly through the reduction in time spent by NWC Inc. locating and finding warehouses to store widgets until they are distributed. We also would see improved inventory management without a huge investment in an in-house application, which also reduces maintenance costs for hardware and software.

Fidelitone Technology-Based Supply Chain Outsourcing Service. Fidelitone, (847) 487-3327. www.fidelitone.com Read Fidelitone's full RFI response here. » Business Drivers
• Reduce time and costs associated with adding suppliers and distributors
• Provide a single point of entry through which all transactions are received to simplify logging and audit trails

» IT Challenges
• Multiprotocol, multistandard environment hampers the ability to add partners quickly
• Transaction logging and auditing required for regulatory compliance
Potential Solution: Xenos TerminalOne Although we liked Fidelitone's RFI response, we were concerned about NWC Inc.'s ability to communicate using EDI. None of our staff is EDI-fluent, so we'd be battling both the implementation challenges of communicating with Fidelitone as well as learning EDI in our spare time. Also problematic is EDI's requirement for a 1:1 data connection between partners. TerminalOne doesn't use EDI.

Xenos' TerminalOne alleviates both of these problems with a supply-chain integration hub capable of speaking multiple languages and performing bidirectional transformations on messages to ensure accurate communication between NWC Inc. and its partners. It also offers a secure messaging server that would solve our problem of implementing a 1:1 data connection with Fidelitone. Xenos' TerminalOne not only assists on the sell side, it could alleviate problems on the supply side as a transformation hub that can reduce the on-boarding time for new suppliers. After carefully reviewing our options, however, NWC Inc. prefers to implement TerminalOne on the sell side only because of the advantages offered by Oracle's JD Edwards EnterpriseOne to manage manufacturing and supply-side processes.TerminalOne comprises three core components: TerminalOne Transport, Transform and Traffic. Transport guarantees delivery of messages, while Transform speaks a variety of languages, including EDI, XML and CSV, and offers transformation capabilities. This aspect would eliminate the need for NWC Inc. IT staff to learn EDI, leaving them to concentrate on implementing TerminalOne. TerminalOne Transport solved our 1:1 data connection requirement as well as providing validation services on incoming EDI messages, another nitpicky requirement when dealing with EDI transactions.

terminalOne. Xenos, (905) 709-1020. www.xenos.com Read Xenos' full RFI response online here.

Lori MacVittie is a Network Computing senior technology editor working in our Green Bay, Wis., labs. She has been a software developer, a network administrator, and a member of the technical architecture team for a global transportation and logistics organization. Write to her at [email protected].