Attaining superior efficiency, high visibility and customer satisfaction across the entire supply/demand chain is essential for all organizations in today’s competitive markets. Supply chain efficiency has profound implications on an enterprise’s ability to meet its customer’s demands, the enterprise’s reputation, and the overall financial success of the enterprise. However, an enterprise’s supply chain also presents the single biggest opportunity for operational inefficiencies in any enterprise. This potentially affects an enterprise through:
- Dissatisfied customers who are looking for the right product, in the right place, at the right time.
- Disappointed suppliers, making their best efforts to satisfy their enterprise customers, but are unable to attain visibility into demand.
- Increased cost by potentially forcing multiple interactions with different touch-points throughout the enterprise. Without supply chain visibility too many employees – both at an enterprise and its suppliers – must get involved to fulfill an order.
The concept of agility has become part and parcel of enterprise business and IT today. An enterprise’s supply chain is the primary test-bed for this, with agile and adaptive supply chains becoming more than a competitive advantage but a requirement to survive. In the past enterprises would tolerate excess inventory, delayed shipments, and stock outages but in today’s economic climate this is no longer acceptable. The benefits of supply chain agility are many:
- An adaptive enterprise that can respond to customer demand changes
- More efficient planning horizons
- The elimination of stock-outs
- Optimization of spare-parts inventory
- Improved relationships with suppliers
- Efficient logistics and improved relationships with transportation providers
Enterprises leverage new technologies that enhance their productivity, such as a demand forecasting, distribution and logistics, and procurement to optimize supply chain effectiveness. With increasingly complex business processes, spending on supply chain technology can escalate dramatically. While enterprise management embraces the fact that a supply chain is one of its most valuable intangible assets, this does not mitigate the budgetary pressure associated with such expenditures. Furthermore, the commonly used ROI measurements do not adequately take into account the customer satisfactions issues associated with failing to meet customer needs for timely and quality delivery of products and services.
Supply chain managers and their IT support organizations have a multitude of areas for improvement to balance against their budgetary constraints. Overall, the pressure to make the supply chain more efficient, reduce cost, and prevent stock-related customer service issues is paramount. Many enterprises have SOA projects underway to assist in upgrading and integrating disparate systems and manual, disconnected business processes that diminish supply chain agility and effectiveness.
Although enterprise supply chains already represent a heavy investment in technology, current investments still don’t satisfy management’s ongoing desire for decreased costs and increased agility. Agility is decreased when supply chain managers need multiple sources of data and transactions in order to manage inventory, place orders, receive orders, and get parts or finished goods to their location. This arduous process adds cost to the equation, and reduces customer satisfaction.
The most visible manifestation of the problem caused by the above scenario, is when an order is missing or late. A supply chain manager, attempting to track the order back to a supplier, in many cases will have to access a variety of procurement, fulfillment, logistics and inventory applications in order to find the status of an order. These applications may reside on any number of systems, ranging from a shipper’s PC to the corporate mainframe, and may include a variety of packaged, custom and legacy applications. The strategic promise of SOA and BPM is to replace this current software foundation with a networked collection of SOA-style supply chain services orchestrated by a customizable process manager.
Some of the primary reasons why supply chains have struggled to be truly efficient and agile are the lack of quality information, as well as the lack of actionable insight. Supply chains will not fulfill their potential of maximizing efficiency, profit and value until the foundational components of technology, data and process are fully integrated and leveraged. An organization needs intuitive supply chain applications built on a service-oriented architecture that provides an integrated enterprise view. It needs value-added information that is consistent and current across the entire supply chain. It needs supply chain processes that are optimized and tuned – using key performance indicators derived from corporate performance objectives – for supplier and customer interactions.
SOA will not only assist in service enabling all existing IT investments, but also unify the underlying data silos and business processes across multiple applications with a combination of application middleware and portal technologies that call on web services to dramatically improve operations and create streamlined interactions.
SOA provides additional benefits to supplier networks that cross enterprises and small and medium businesses. By service enabling the legacy applications and creating a thin-client unified agent interface, all outsourced agents can act as efficiently as in-sourced agents without affecting performance. Through the power of SOA-based approaches, contact centers have been able to empower supply chain managers and suppliers through in-context applications that increase the profitability of each step in the supply chain while lowering costs. Suppliers will also have the benefits of a truly integrated experience, ensuring customer expectations are being consistently met.
Companies can take an incremental SOA approach to continually realize business and IT benefits, while leveraging their existing IT investments. Companies can start at Stage 1 by creating a supply chain foundation and enhancing the user experience through specific channels or applications using web services and portals. Stage 2 optimizes enterprise and supply chain effectiveness by eliminating data silos and creating shared business services across applications. Stage 3 maximizes cost savings and revenue opportunities through new role-based composite applications and contextually-driven experiences.
When implemented strategically, a service-oriented architecture enables the evolution of a well connected “service-driven enterprise” where information and application silos can be bridged to deliver better visibility of fast-changing business events and critical information. A service-driven enterprise embraces the concept of increasing business velocity and achieves the following strategic goals:
- A more succinct expression of purpose and strategic direction
- A shared understanding at the top team level of what needs to be improved by how much and by when
- An integrated view of cross-group linkages and interdependencies
- A greater focus on the timeliness and quality of key customer-touching business process outputs to balance the traditional financial metrics
- Tighter alignment of strategy, structure, business process and technology
Service-Oriented Architecture (SOA) is an approach to distributed computing that considers software functionality as services on a network. These business services can be independently developed and combined into higher value business processes. This service orientation provides business users with understandable services that they can compose into business processes as needed. A main goal of SOA is the support of business agility – keeping pace with the velocity of change and uncertainty in the business climate facing an organization. Businesses can look to SOA as the best way to leverage information technology assets and to provide the business the agility required to compete in today’s economy.
