Enterprises May Be Overlooking Profits from After-sales Service

Traditional sources of profit margins for manufacturers from product sales are diminishing as more and more products are commoditized, and margins are thus further and further reduced. On the other hand, profit margins from after-sales service are good (if managed well), and hold the promise of sustained (if not increased) revenue in the future. In industries like aircraft, automobile, computers, mobile phones, electronics, and so on, a major portion of revenue comes from after-sales service. Also, from the point of view of retaining customers, efficient and reliable after-sales service is important.

These facts warrant investment in good systems—popularly known as enterprise service management systems—to better manage after-sales service. Unfortunately, AMR Research points out that manufacturers invest four times as much in IT solutions for their product businesses as they do for their service businesses, but one quarter of their revenues—and half of their profits—come from service.

The Rising Importance of After-sales Service

After-sales service is no longer an afterthought for manufacturers. It is now firmly on the strategy agenda for most manufacturers with significant after-sales service operations.

Across all industry segments, an Aberdeen-Industry Week study found that profit margins for after-sales service and parts ranged from 25 percent to 1000 percent higher than margins for initial product sales. The study further revealed that after-sales service accounted for 20 to 30 percent of revenues, and about 50 percent of profits for most companies.

In the automotive industry, parts and services constitute nearly half of revenues, and 45 percent of profits, for both automotive original equipment manufacturers (OEMs) and dealers. Much of the remaining profit in the automotive industry come from financing and other value-added service (rather than sales of new cars).

A few quotes from research agencies indicate how important after-sales service has become for manufacturers:

* "Service also allows organizations to compete for and retain customers based on values other than price. In markets in which the product offering is viewed as a commodity, high-caliber service can serve as a rationale for higher prices."
— Aberdeen Group
* "A massive revenue opportunity follows each product sale."
— AMR Research
* "While original manufacturers spend billions to develop, produce, and market their durable goods, they don't pay equal attention to servicing these products once they're sold. As a result, OEMs' after-sale activities are held together with strings and baling wire."
— Forrester Research

Cost Economics:Major input costs in after-sales service are labor charges and service part costs. Service parts costs consist of inventory, transportation, purchase order, item, and administrative costs. This is why service parts costs can be as high as 70 percent of after-sales service. There is definitely scope to reduce this cost by as much as 50 percent, by reducing inventory and other costs. Service levels for service parts in many cases can be as low as 60 percent. This can be increased to over 95 percent, without increasing inventory costs. This can be achieved by better managing the whole process of procurement, transportation, and inventory management at all stocking points. This will result in reduced lead times, better predictability of demand, better visibility of supply, and more inventory turns. This helps to reduce safety stocks at all stocking points, and due to fewer chances of stockouts, helps in increasing service levels. Thanks to better visibility inside your safety stocks, you can also eliminate or reduce obsolescence of parts.

Currently, the service parts pricing model used by manufacturers is "cost-plus," where the sales price of a part is calculated by adding a certain percentage of the manufacturing or purchase price. This ignores the impact of competitive and comparable price points, and sacrifices opportunities to increase revenues and profits. By adopting optimal pricing strategies, manufacturers can increase revenues and profits.

One last consideration is the cost economics effect of having service part networks on a global scale. Having global suppliers, regional hubs, and service stations located in different parts of the world (and in mobile units) makes for a huge network. If this network can be managed efficiently, to minimize localized excess inventory, transportation costs, lead times, and delays in providing service, then huge savings can be realized by the manufacturer. There are some best-of-breed software vendors whose software can be used to achieve these cost savings, including Servigistics (www.servigistics.com), Xelus (now Click Commerce [www.clickcommerce.com]), and so forth.

Service Parts Supply Chain The service parts supply chain network basically consists of a chain which extends from service parts suppliers (after-market manufacturers and service part dealers) to central warehouses of manufacturers, to repair sites, field locations, mobile units, and so on.

The service part supply chain is very different from production parts or products. First of all, demand for service parts is not predictable, and is wholly dependent on predictive and preventive maintenance (and thus on calculations of mean time to failure). The sparse nature of usage or consumption data makes it difficult to generate valid forecasts for service parts. These parts are costly, and so excess inventory at any inventory location is always a costly affair. These factors means that effective supply chain management for service parts is very difficult.

Based on historical data, customer service departments make a projection for need of service parts for any future time period. Based on this forecast (coupled with lead times, order costs, inventory costs, and other cost factors), service departments decide how much inventory they should be keeping with respect to different service parts. Since there is no firm demand as such, and since supply is totally dependent on this forecast, exact matches of supply with demand is very elusive.

Potential for Savings

There is huge potential for saving costs in service parts management, as well as for improving service. Among the major potential areas for improvement, there are five which merit close study:

* Reduction of inventory costs and parts optimization: By reducing inventory throughout the supply network, inventory costs can be substantially lowered. Parts optimization can be achieved through supplying the right parts, to the right places, at the right time.

* Service improvement: Through accurate forecasting and supply planning, service levels can be significantly improved.

* Revenue enhancement: With optimal pricing and better service levels, revenues can be increased.

* Bottom-line and top-line improvement: Increasing revenues will improve the top line, while reducing costs will improve the bottom line.

* Efficient management of global supply chain network: The efficient and effective management of the global service network delivers significant value in the form of dramatic cost reduction, revenue gain, increased profitability, and higher levels of customer loyalty.

All of these potentials for savings can be achieved if supply and demand information can be integrated in real time for all points in the supply chain, right from suppliers to service centers, production units, mobile service stations, and so on. This will ensure that live information is available to make the right decisions. With a planning and forecasting system, things can be improved further, as demand and supply can be matched in the most optimal manner.
Scenario in Developing Countries:In developed countries, service parts management is well-organized. In developing countries like India and other Asian countries, however, service parts management is still nascent. Manufacturers and service centers in these regions may thus not be able to obtain benefits from the business opportunities which are increasing due to high market growth and favorable government policies. For instance, the Indian government recently announced policies to enhance India's status as a major hub for small car manufacturing. Demand for small cars in India is already reaching double-digit growth annually, and after this governmental policy is instituted, growth is going to explode. All this will lead to high growth for service parts management. Similarly, the use of computers, mobiles, and many hand-held devices has been growing, and the need for efficient service parts management in these sectors has become critical.

One estimate is that in India, revenues from after-sales service in the automobile industry does not contribute more than 10 percent of the total revenues for the manufacturer. Contrast this with figures of more than 50 percent in countries like the US. These facts indicate that there is huge potential for manufacturers.

A Brief Case Study from India

A tractor and farming equipment manufacturer had been struggling with service management of its products. This manufacturer had an ERP system installed but was not using any service management application.

A study was conducted with help of a management consulting agency. This agency evaluated the manufacturer's situation and compared its existing performance against the benchmark standard for similar businesses operating in the US who were using service management applications. There were seventeen major areas included in the study. In areas such as "improving fill rates for spare parts" and "reducing customer response times," there was room for as much as 40 percent improvement. In eight areas, as much as a 25 percent improvement was possible. In three areas, 20 percent improvement was possible. All of these gaps were attributable to the fact that business processes, although similar to the US counterparts, did not have any service management application at the enterprise level. Such applications can integrate all business processes within the enterprise, and with suppliers, customers, and partners. This manufacturer would definitely benefit from investing in any good service management application.

User Recommendations

As the market is becomes more and more commoditized, margins are shrinking from product sales. Most manufacturers are trying to find new avenues for obtaining more revenues, and trying to find new business lines from which they can get better margins. In this scenario, after-sales service looks very promising, and is becoming a savior for the manufacturers. But efficient and reliable after-sales service needs a good enterprise service management system to manage it. And there lies the rub. Manufacturers are still slow to invest in buying and implementing a good enterprise service management system.

Undoubtedly there is a big potential in after-sales service for saving costs by streamlining service parts procurement, improved service, and inventory management. Revenue can be increased by service parts price optimization and improved service. To tap this potential, manufacturers should look into making investments in enterprise service management systems.

PeopleSoft Revamps World for Its Mid-Market "Express" Conquest Part One: Recent Annoucements

Having all but prevailed in the still ongoing tug-of-war hostile acquisition attempt by Oracle (see Frantic Merger-Mania Spiced Up With Vendettas Leaves Customers Anxious), PeopleSoft, Inc. (NASDAQ: PSFT), recently "inaugurated" as the No. 2 leading business applications provider after digesting former J.D. Edwards & Company, has been making decisive moves to deliver a number of new or refurbished solutions, in a great part by leveraging the recently acquired product portfolio. Although the vendor has acted swiftly on assimilating the former competitor (see PeopleSoft Gathers Manufacturing and SCM Wherewithal), these recent initiatives might show us that the vendor has moved even farther from the digestion stage into a full-blown execution and productivity phase.

One of the moves took place on May 3, at COMMON 2004, the IBM iSeries user conference, when PeopleSoft announced PeopleSoft World Express, one of the industry's most comprehensive solutions for smaller businesses with annual revenues between $20 million and $100 million (USD). The solution also exhibits vertical focus and is thus available for industrial manufacturers, wholesale distributors, homebuilders, and construction companies. Developed exclusively on the IBM iSeries platform, PeopleSoft World Express builds on twenty years of enterprise applications innovation, strong customer satisfaction, and the reliability of its progenitor—the former J.D. Edwards WorldSoftware (now PeopleSoft World) suite. With this rejuvenated offering, PeopleSoft hopes to be able to deliver a comprehensive solution to an entirely new market segment—one that demands low maintenance solutions and a rapid return on investment (ROI), without sacrificing their need for rich functionality.

To that end, PeopleSoft World Express includes

* The ample suite of PeopleSoft World applications that provides the foundation for somewhat "lighter" PeopleSoft World Express with PeopleSoft World Financials, PeopleSoft World Distribution, PeopleSoft World Manufacturing, PeopleSoft World Human Resources, and PeopleSoft World Project Management.

* The new solution is configured with fifty-one industry-specific business processes, including returning an item to a supplier; performing product costing and item introduction; purchasing an inventory item; managing accounts receivable balances; and so on. These embedded business processes should enable small businesses to implement the solution relatively quickly with a reasonably rapid ROI. As mentioned earlier, the templates are currently tailored for customers in the industrial manufacturing, wholesale distribution, homebuilding, and construction industries. For example, the suite for construction companies includes a job costing process that lets companies define the complex project job, such as the building of a bridge, and then define and track all the costs associated with that job.

* PeopleSoft distributors will provide user training and implementation services for the PeopleSoft World Express solution. The distributors are certified by PeopleSoft and have comprehensive industry knowledge and implementation skills.

* The product runs exclusively on IBM iSeries, one of the world's most reliable and cost-effective business computing platforms.

PeopleSoft World Express will be generally available in North America in the second quarter of 2004, while it is planed to be introduced in countries in Europe and Asia Pacific throughout the next two quarters. In addition to English, the software is currently available in Japanese, French, Italian, Spanish, and German.
PeopleSoft World Enhancements:The announcement came at the heels of the March 18 announcement at CeBIT 2004, when PeopleSoft announced a new release of PeopleSoft World that included more than 280 new features and enhancements that span the product family's human capital management (HCM), supply chain management (SCM), and financial management (FM) applications, and a new web-based user interface (UI). The announcement marked the first release of PeopleSoft World under the PeopleSoft brand name and underscored the new owner's commitment to PeopleSoft World customers, which have for many years been disconcerted owing to the former owner's treatment of the product as ageing, legacy technology. This new release, PeopleSoft World A7.3 Cumulative Update 15, has been generally available since March 31, 2004, and is available at no cost to PeopleSoft World customers on a current maintenance agreement with PeopleSoft.

Some more notable new features and enhancements to PeopleSoft World include

* New HTML User Interface—PeopleSoft World users, both power and casual users as well as customers and partners, now have anytime, anywhere access to critical business information through an Internet browser. By automating many repetitive navigation tasks found in a data capture-productive, character-based environment, the web-based interface should enable PeopleSoft World users to take advantage of productivity tools like integrated calendars and automated field formatting.

* Manufacturing and Distribution Management—Sales order demand information can now be included throughout the forecasting processes, which should increase supply chain visibility and improve planning and forecast accuracy.

* Financial Management—New features allow users to fairly quickly respond to organizational changes, streamline balancing and reconciliation with enhanced reporting capabilities, simplify management of fixed assets, and leverage enhancements to the cash basis accounting functionality.

* Human Capital Management (HCM)—The product meets new regulatory requirements for SUI (State Unemployment Insurance) and provides employers with faster, more accurate assessments of employee benefit and accrual amounts.

* Integration with PeopleSoft Enterprise Performance Management (EPM)—New integration between the PeopleSoft Enterprise and PeopleSoft World products consolidates customer data from PeopleSoft World onto PeopleSoft's enterprise warehouse. As a result, PeopleSoft World customers can now leverage the EPM applications with their World data.

Expansion To the SMB Market Worldwide:The above moves are parts of the longstanding partnership that has been further extended on May 18. Namely, in a move to dramatically expand PeopleSoft's reach in the small and mid-size business (SMB) market worldwide, PeopleSoft and IBM (NYSE: IBM) announced during PeopleSoft 2004 Leadership Summit the plans to expand their global alliance by enabling IBM's expanding SMB reseller channel (see IBM Express-es Its Candid Desire for SMEs) to offer PeopleSoft applications. PeopleSoft and IBM pledge to deliver jointly developed, industry-specific hardware and software solutions, and will make specific solution bundles available to resellers.

The new initiative is expected to add hundreds of IBM resellers to PeopleSoft's channel efforts, as the expanded channel relationship will deliver jointly developed, pre-integrated hardware, software and services offerings through regional solution providers. Additional elements will include joint cooperative marketing to drive application software leads to the channel, and a joint advertising campaign to position and promote channel partners and the combined PeopleSoft and IBM solutions in local markets. The two companies also plan to leverage IBM's Small and Medium Business Advantage program to provide sales incentives, marketing tools and resources, training, and demonstration capabilities to the SMB channel partners.

PeopleSoft and IBM also announced an industry-tailored offering for tier two and tier three automotive suppliers that will be delivered through the new channel relationship. This announcement builds on the two vendors' Life Sciences and World Express initiatives announced earlier this year. Namely, the new IBM Automotive Solution offers PeopleSoft EnterpriseOne applications running on the IBM eServer xSeries technology, along with pre-integrated IBM middleware and industry-specific best practices from IBM consulting.

The new solution promises to enable automotive companies to become demand driven, whereas in the past, manufacturers have had to choose between being customer focused or operationally efficient. Demand-Driven Manufacturing, an initiative that has been extensively touted by PeopleSoft during its recent Summit, is the ability to deliver any product, in any configuration, at any quantity to meet customer demand at significantly lower costs to the manufacturer, driving the higher levels of profitability. PeopleSoft claims to be the only enterprise applications vendor to currently deliver a complete demand-driven manufacturing solution—from customer demand to supply chain planning (SCP) to manufacturing planning and production to in-bound supply—all operating in real-time. With its extended IBM alliance, these capabilities should now be within the reach of small and mid-sized businesses around the world.

The strength of this alliance is supported by the remarkable price performance improvements PeopleSoft applications have reportedly achieved running on the new IBM eServer i5 series. Namely, in a real world SMB environment, PeopleSoft EnterpriseOne Rapid Start running on an IBM eServer i520 supported 60 percent more users at 40 percent less cost than the same configuration on previous iSeries boxes. For PeopleSoft World Express, the i520 supported the same number of users for up to 40 percent less hardware cost. Even under demanding conditions, the i5 series with PeopleSoft maintains its high performance levels, given that recent tests running a mixed workload of web serving, collaboration, and PeopleSoft World have demonstrated the ability of the i5 to deliver sub-second response times even at 97 percent system utilization.

The companies also intend to collaborate on a new Linux program that will extend the benefits of these SMB solutions to the open source operating environment, building on the recently announced availability of EnterpriseOne on Linux. IBM and PeopleSoft will conduct a series of enhanced performance characteristic tests across a variety of Linux server configurations, for the IBM eServer xSeries, providing customers with the information they need to guide their Linux application strategies. In addition, IBM and PeopleSoft plan to launch a series of joint promotions and incentives highlighting EnterpriseOne, DB2, WebSphere, and IBM eServer xSeries on Linux, beginning with a joint marketing initiative and concentrating initially on Asia Pacific and Europe.

Benefits of a Single Database Solution: Improved Enterprise Quality Management from IQMS

Benefits of a Single Database Solution:Embedded third-party solutions in enterprise applications often deter small and medium enterprise (SME) customers. However, enterprise resource planning vendor, IQMS (www.iqms.com) has a value proposition that differentiates itself by gladly touting the benefits of a single database/single vendor software solution. Here, the one database rule creates ease of use, implementation, and maintenance, and real-time transactions because there are no unwieldy batch interfaces from third-party software. Reports also become easier to write in a cohesive environment.
EnterpriseIQ Information Flow:To illustrate, let us try to understand the typical flow of information through EnterpriseIQ. It may start with the creation of a bill of material (BOM), which defines how items are manufactured, and includes prescribed raw materials, tools, production times, packaging, work center types, instructions, etc. Then, the Quotation module allows users to examine costs and profit margins on new or existing manufacturing configurations. The structure is similar to that of BOM, but users can run unlimited "what-if" scenarios and, when satisfied, they can fairly easily roll over a satisfactory quote to a BOM without reentering the data.

Later, actual sales orders—which are the actual demand that consumes the forecasted, hypothetical demand—will drive the creation of work orders. If parts are already in inventory, they can be shipped immediately. If not, then a work order will be generated through the optional Update Schedule facility. This option analyzes both the demand and supply and then builds work orders that meet demand.

Then, the IQ RealTime Production Monitoring gives users a view of production as happens. The work-in-progress (WIP) information in EnterpriseIQ can be updated as often as every fifteen seconds, and users can see how long a machine has been running, its total cycles, or whether is has gone down during the run. Unnecessary down time can be reduced when job status is identified because operators can be alerted when to prepare material for the next order. Additionally, one can record any bad parts when they occur and the system will automatically recalculate the number of parts left to produce. Consequently, corrective decisions can be made regarding stopping and starting production runs based on the scrap.

In addition to determining quotes and monitoring, users can also automatically create production shift reports. The application fills in the data for total cycles, good parts, and production hours for the user, making both reporting and verification easier. The final step closes the manufacturing loop. Daily production of the work centers is documented and the subsequent reports tell EnterpriseIQ exactly what raw materials were consumed and what was manufactured. This puts finished goods into inventory and can backflush raw materials used to make those parts.

Because work orders are based on how BOMs are setup, precise and near real-time information is important to get work orders right. Also, inventory and open orders play a major role in determining what must be produced, purchased, and inventoried. The IQ Preventative Maintenance module can play a crucial role in this. It is an intrinsic part of the core EnterpriseIQ system that tracks machines, tools, auxiliary equipment, quality inspection gages, building maintenance, maintenance, repair, and overhaul (MRO) inventory, etc., and prevents reliance on schedules based on out of service machines and tools. The module also tracks maintenance intervals based on equipment usage, including the number of cycles on tools, hours or cycles on machines, or daily for other equipment. It also automatically generates work orders for maintenance where necessary, which can be preventive, repair, and emergency work orders. Moreover, IQ Preventative Maintenance has direct links to labor reporting, inventory, accounting, and purchasing applications, and provides up-to-date financial information on maintenance work.

Also helping to achieve real-time information is IQ WebDirect, a Web-based customer and supplier self-service portal technology, which enhances supply chain communications, improves customer and supplier relations, and reduces customer and supplier service costs. It runs on an Apache server (included) with an Oracle database (although IQMS recommends a separate Web server it there are more than five concurrent users of the module). WebDirect also has full security control features and allows 24x7 access to data. The portal allows customers to add, edit, or change orders; to check order status, inventory availability, shipments, invoicing, vendor managed inventory (VMI) entry (based on flexible rules), and to publish reports. On the other hand, suppliers can check purchase order information, inventory, receiving, invoicing, cash payments, and published reports. Similar portal solutions for the user enterprise's internal employees are still in the works, though.
Quality Management to Boot:The competitive bar for single-database software solutions and seamless ERP system access, may also be raised by IQMS with its vast, native, IQ Quality Management suite. IQ Quality Management adheres to the most stringent quality requirements including medical, automotive, International Standards Organization (ISO), and QS standards by International Automotive Sector Group (IASG). IASG is an international ad hoc working group consisting of automotive original equipment manufacturer (OEM) representatives, accreditation bodies, registrars, and suppliers. To accommodate the quality management processes of their customers (whether as a part of the lean manufacturing initiative or not), most other ERP vendors have to team with the likes of Powerway, Pilgrim Software, Qualiware, or other niche providers of quality management software for the manufacturing industry. They must ensure that these providers comply with the widely established QS-9000 quality system requirements, including Advanced Product Quality Planning (APQP) and its obligatory Products Part Approval Process (PPAP).

With the standard EnterpriseIQ system configuration, users should be able to automate paper-intensive revision processes with the Document Control module. Employees should be able to gain real-time visibility into the key documents so that the right people can view the right documents as changes occur. The module also stores documents in secure libraries allowing for secure document control throughout the enterprise. Documents can be linked and viewed throughout EnterpriseIQ, which can also automatically keep revisions for future access.

The module uses the EnterpriseIQ Workflow facility with Web- and e-mail-based collaboration, routing, and approval process, and has support for personnel outside the user enterprise. It alerts team members about issues requiring attention via e-mail notifications that contain hyperlinks to the document. Information on changes and approvals are also included. The underlying security mechanism tracks edits, notes, and even ideas through authorizations and authentication. The processes are managed by "team members" responsible for approving or reviewing changes and additions to the documents. Approvals can be handled sequentially or as a group, where all members receive notification simultaneously.

IQMS also offers a higher level of quality functionality. The corrective actions requests (CAR) module, which is linked to return material authorizations (RMA) and inventory locations, manages, schedules, assigns, and monitors the status of corrective actions for process, product, or system audits. It is customizable with user-definable formats, including pertinent 8D and 7D formats as the standard. It also has user-definable drop downs for quick adding, sorting, and tracking of information. Further, the engineering change orders (ECO) module is linked to part numbers and BOMs and monitors changes associated with BOMs and routings. It provides specific templates for tracking ECOs and can automatically update BOMs based on user-defined effectivity dates, with costing comparisons for future and current BOMs. These quality modules use EnterpriseIQ Workflow for Web-based approval processes giving easy access to remote suppliers, customers, and employees.
Useful For Repetitive Manufacturers:Last but not least, the highest optional level of the quality management system should especially help repetitive manufacturers to reduce scrap, rework, variations, and defects. Accordingly, the first module involved in this process is the Statistical Process Control (SPC) module that uses quality management tools to collect, manage, and analyze an organization's gauge and machine data to identify out-of-tolerance processes. This process is fairly quick and allows users to automate time-intensive data entry through real-time integration with their gauges and machines. The module delivers SPC data analysis with graphing and export capabilities by supporting gage selection and maintenance, part dimension maintenance, and the manual or automatic input of data from serial and universal serial bus-based (USB) devices, such as scales and calipers. Sample set sizes are user-defined and can be changed between subgroups, while output and analysis options include full access to historical data collection used for free-form reporting. The system also has ample data export capabilities that include histograms, and capability analysis. It also provides for X-bar, which is a control chart where the subgroup average (X-bar) is used to evaluate the stability of the process level; and R charting, a control chart where the subgroup range, R, is used to evaluate the stability of the variability within a process.

Further, with the Gage and Device module one can track and maintain gages and devices. Users can also access and maintain their repeatability and reproducibility (R & R) studies to identify and reduce measurement variation, capability studies, set up instructions, schedule calibrations and so on. In other words, R & R provides tools to conduct measurement system analysis to assess the accuracy of gages and operators in measuring dimensions. With this timely information, one can thereby reduce data entry efforts and identify sub-standard quality much earlier and keep customers happy. The module also has a direct link to the IQ Preventative Maintenance module.

To create visibility at the component level in quality processes, users can use the APQP module with integrated templates for automotive requirements. These requirements are based on the Ford and General Motors' APQP programs, and should tremendously help users link and manage APQP-process related component-level documents. For example, a user can design according to the Failure Modes and Effects Analysis (FMEA) methodology and analyze potential reliability problems early in the development cycle. Because it is easier to take actions and overcome issues early in the cycle, users can enhance reliability through design. FMEA is used to identify potential failure modes, determine their effect on the operation of the product, and identify actions to mitigate failure. A crucial step is anticipating what might go wrong with a product. While anticipating every failure mode is not possible, the development team should formulate as extensive a list as possible of potential failure modes.

Other pertinent documents include control plans, operator instructions, APQP checklists, and action plans. There are also user-definable steps to allow companies to customize the program based on their needs and requirements. User-definable drop-down menus for quick adding, sorting, and tracking of information are also available. Like many other quality modules, this one uses EnterpriseIQ Workflow to track the information required for process documentation and definition. It has direct links to inventory items, part dimensions, routings, etc.

Finally, the PPAP module provides tools for planning and controlling part production information, including the ability to outline the sampling process, provide checkpoints for adherence to plans, and ensure a process has the potential to consistently manufacture products that meet or exceed customer quality requirements. The module is directly linked to inventory items, and customer information. It also has a built-in control plan, FMEA management, and reporting facilities, while the Quick Inspections facility provides fast, easy, and accurate data entry.

SAP Industry Solutions for Mid-market Companies

For well over a decade, SAP AG (NYSE: SAP) has been offering market-leading enterprise applications software tailored to specific industries, starting with the oil and gas and the utilities industries (the original SAP industries). Other industries, such as media, insurance, chemicals, banking, and the public sectors have followed, highlighting SAP's lesser-known side as a market-oriented provider of industry-tailored solutions for midsized enterprises. For instance, SAP software has mapped standard business processes as well as particularly specific core banking processes in financial accounting since 1997, with solutions for other industries following suit. Over the years, the vendor has created twenty-eight industry-specific products, thus offering customers a mass of expertise, along with information technology (IT) solutions particular to their respective industries.

This segmentation is also reflected in the company's organization: in 1996, SAP started creating specialized departments called industry business units (IBUs) for groups of targeted industries, such as financial services, manufacturing, public services, trading, and service industries. Accordingly, the SAP NetWeaver platform and standard enterprise suites like mySAP ERP and mySAP CRM, as well as applications for user productivity and analytics, have all recently been designed with an industry perspective. Certainly, insights from SAP's core or standard developments, along with partner solutions, benefit all of SAP's industry units, and cover common business processes. But each industry has particular demands that cannot be met by generic solutions, and SAP thus invests in complementary programs, with the goal of a complete and integrated solution portfolio that will eventually support every process in each industry.

In close cooperation with leading industry customers, and with consulting and independent software vendor (ISV) partner companies, SAP has created more than fifty SAP "solution maps," which chart consolidated best-practice approaches for specific industries. These maps are checked and updated annually with the latest business and technical requirements, enabling SAP to promptly react to regulatory requirements such as the US Sarbanes-Oxley Act (SOX), Basel II, and a raft of other environmental compliance measures. Many SAP solution maps even provide specific requirements for sub-segments of certain industries. For instance, media customers can leverage microvertical maps designed for broadcasting, entertainment, newspapers and magazines, and premium-content publishing houses.

Consequently, perhaps, most of the chemical, high tech, and pharmaceutical Fortune 500 are SAP customers. The vendor boasts eight of the world's top ten banks, thirty-three of Europe's leading fifty financial institutions, and nine of the ten most successful insurance companies in the world. SAP also claims leadership in ten of the eleven manufacturing industries it targets, and asserts that over 900 utility companies in seventy countries are using SAP software, in nearly thirty languages. To better understand the market, SAP maintains close contact with relevant industry players, and organizes and attends industry-specific user events and forums. There are a number of regional and international information days aimed at continuing an in-depth dialog with customers, so as to identify new specific market segment requirements, and to assess the vendor's current functional and technological fits and gaps in its portfolio.

SAP has also created advisory councils and architect forums for thought leaders from the individual industries to maintain close and regular contact with the market, with the focus on ever-evolving business issues and IT infrastructure landscapes. Finally, SAP also contributes to the development and definition of industry standards as a member of industry associations, standards committees, and various user groups worldwide. The best examples include RosettaNet for the high tech and electronics industry, Chemical Industry Data Exchange (CIDX) for the chemical industry, Petroleum Industry Data Exchange (PIDX) for oil and gas, and Automotive Industry Action Group (AIAG)/ Standards for Technology in Automotive Retail (STAR) for the automotive industry.

For instance, the Chemical Industry Data Exchange (CIDX) (www.cidx.org) is a nonprofit, industry-funded standards body whose mission is to improve the ease, speed, and cost of conducting business electronically between chemical companies and their trading partners. Industry players, through the central coordination of the CIDX group, have created standards for about sixty business transactions: this standardizes the transmission of data between chemical company buyers and sellers. For example, in a transaction such as create purchase order, a 50-character alphanumeric field that shows line #1 of the vendor address might be prescribed for field #32. Using CIDX standards to transmit data via extensible markup language (XML) technology means that everyone should thus know where to store (or look for) information, allowing everyone to speak the same language when exchanging data. This enhances the industry's overall ability to automate business and increase data visibility.
One should never neglect the importance of a partner ecosystem, given that even the formidable SAP cannot be all things to all people. Thus, early in 2006, in order to expand its offering of business management software solutions for the resource and industry requirements of small and medium enterprises (SMEs), SAP introduced 39 new qualified mySAP All-in-One partner solutions to an overall portfolio of over 600 such solutions. The solutions were developed and delivered by SAP partners in countries including Australia, Belgium, China, Denmark, Germany, Hungary, India, Italy, Korea, New Zealand, South Africa, Spain, Sweden, the UK, and the US.

Each offering includes built-in best practices for managing business processes within a specific industry, giving these new solutions the ability to address diverse industries ranging from biotechnology, plant construction, and transportation services, to aviation and fashion retailing. The latest additions to the world's largest portfolio of microvertical solutions for SMEs, the thirty-nine new offerings are part of more than a hundred new solutions introduced in the last twelve months. Nearly 600 qualified mySAP All-in-One partner solutions are available in over 50 countries; they are used by more than 7,100 customers worldwide.

Midsized enterprises require business management solutions that provide the same advantages enjoyed by larger competitors, but that are also priced and sized to fit their resources and demands for fast results, rapid return on investment (ROI), and high quality support. A wealth of research shows that mid-market companies are concerned about the price and complexity of enterprise packages, along with the scope of associated implementations; all this is bundled with limited in-house IT resources and high project risks (in terms of cost overruns, project methodology, and the need to find the right partners with the necessary industry expertise). Also, there are inevitable ROI concerns, such as which measurable key performance indicators (KPIs) can be produced, and which solution is future-proof. For these enterprises, it all comes down to determining whether the headaches are worth the trouble.

The mySAP All-in-One solutions from SAP partners aim at enabling these companies to adopt industry best practices for managing core areas of the business, while allowing modifications (configurations) to maintain the unique processes that distinguish companies from competitors of all sizes. SAP channel partners build solutions based on "SAP best practices," the building blocks developed by SAP and its partners over more than thirty-three years of serving leading companies of all sizes. Templates (consisting of core processes, industry-specific processes, pre-configuration, and accompanying documentation) assemble the savvy and experience coming from user groups, representative clients in the industry, partner input, industry analysts, SAP's industry experience, and SAP's own industry surveys. Partners can then add capabilities to support microvertical processes based on their distinctive industry knowledge and expertise.

These mySAP All-in-One solutions are sold, deployed, and supported by SAP channel partners as defined- or fixed-scope implementations. The packaged implementation offering contains a specific mid-market methodology, project management, implementation roadmap, and pre-filled "accelerators." Basic services, which are part of SAP best practices (and not necessarily restricted to partner services), entail project management, delta (fit-gap) requirements workshops, implementation, key-user training (on the job), user documentation, predefined sheets for master data migration, predefined test catalogs, predefined forms, standard SAP reports, and go-live support. However, optional additional services, still within the fixed price arrangement, feature the development of offshore components (custom forms, custom reports, data migration, and authorization concept), user training, post-implementation support, and hosting.
Some of the new solutions include Ki4 Medical Devices, developed by Ki Solutions, LLC to address the needs of midsized makers of medical devices. With preconfigured capabilities for managing industry processes such as US Food and Drug Administration (FDA) compliance, patient device tracking, and shelf-life management, Ki4 Medical Devices has harnessed the power of SAP's manufacturing industry expertise to fit the price, resource, and process requirements of midsized manufacturers and distributors of medical supplies, diagnostics, and implants.

The Pharmsys solution, from CVSIT Services India, Pvt. Ltd., provides capabilities for midsized pharmaceutical companies to manage industry-specific processes such as the manufacturing of bulk drugs, generics, and formulations; loan licensing; customer material tracking; planning and costing; and active-ingredient material quantity calculations.

The KBMS solution targets midsized food and beverage manufacturers. This company's extensive operational experience in the food industry joins meaningful SAP expertise within this sector. KBMS offers preconfigured solutions, along with a series of extensions that address needs unique to the food industry, as well as specific categories within the food industry.

Additional new mySAP All-in-One solutions from SAP partners address microvertical industries including pharmaceuticals, consumer products (food), grocery retailing, sea transport, project management, construction components, trucking and warehousing, chemicals, textiles, publishing, automotive dealership, steel products, and diamond trade and promotion. For more on these new solutions, including information about where they are available, and about the partners that offer them, SAP provides fact sheets at its corporate Web site.
Mid-market companies searching for enterprise systems should certainly put SAP and its burgeoning consulting, development, and implementation service partners on their initial list, if SAP offers tailored software support for their industry.

And although SAP offers extensive functionality, these companies should compare their needs to the offerings of SAP and alternative vendors, in order to find the best fit. SAP still has a reputation as being difficult to implement, change, and manage. The company has made strides in addressing these issues, but mid-market companies should decide for themselves (via detailed real-life business scenario demonstrations) whether SAP is "overkill" for their needs or not. While SAP has done an excellent job of gaining industry knowledge from its network of customers, consultants, and so on, the majority of this input is derived from larger companies. A midsized company should inspect the SAP solution relative to the appropriate fit for a company of their size (rather than as compared to a Fortune 500 company, for example).

Using a solution based on SAP ERP may represent a significant advantage—but only if SAP is the right enterprise resource planning (ERP) system for the prospective user, and if the prepackaged business processes fit adequately. While SAP rightly claims that the packaged solution is a more rapid, lower cost, and lower risk implementation methodology, these comparisons are mainly relative to implementing SAP without the packaged solution. Companies should thus look at the potential total cost of ownership (TOC) with respect to each viable vendor before selecting an SAP ERP packaged solution as the right implementation approach. For more on avoiding awkward comparisons in situations where there is no real one-to-one correlation, see Prepackaged SAP Best Practices—Are They for You?.

There are several vital elements to consider when looking for a vendor:

* Can the vendor provide a list of pertinent industry references?
* Does the vendor take the unique requirements of the industry into consideration? (If the model does not fully define the realities of the user-specific processes and practices, it cannot possibly manage these realities.)
* Was the solution built especially for the industry in question (good), or does it use a generic solution with templates (OK, but not necessarily excellent), or is it simply a generic product (bad)?
* Is the solution a single, integrated application with a common model, or is it a collection of interfaced modules?
* Is the solution a complete application, or is it a modeling language that obliges users to create their own solution?
* Can existing personnel (such as planners or IT personnel) support the system, or does it require specialized assistance from an operations research or modeling group?

Enterprise systems have brought many benefits to various industry environments, but for specific enterprises, these benefits are contingent on the selection of a solution that can meet the unique needs of the business. Although only a few vendors claim they can support these needs, some first-class options do exist. Only by focusing on the requirements that will make or break the project will the specific industry operation select the right solution and gain these benefits.

Comparing Business Intelligence and Data Integration Best-of-breed Vendors' Extract Transform and Load Solutions

To understand the relevance of extract transform and load (ETL) components and how they fit into business intelligence (BI), one should first appreciate what data integration is and the significance of having clean, accurate data that enable successful business decisions. Within the BI industry, data integration is essential. By capturing the right information, organizations are able to perform analyses, create reports, and develop strategies that help them to not only survive, but, more importantly, to thrive.

Informatica, a leading provider of enterprise data integration software, defines data integration as "the process of combining two or more data sets together for sharing and analysis, in order to support information management inside a business". In BI terms, this means that data is extracted in its original form and stored in an interim location, where it is transformed into the format that will be used in the data warehouse. The transformation process includes validating data (e.g., filling in null zip code information in the customer database) and reformatting data fields (e.g., separating Last Name and First Name fields of customer records that are merged in one database but not others). The next step is to load the data into the data warehouse. The data is then used to create queries and data analysis builds, such as on-line analytical processing (OLAP) cubes and scorecard analyses. In a sense, extracting the proper data, transforming it by cleansing and merging records, and loading it into the target database is what allows BI solutions to build analytical tools successfully. It is also the essence of ETL functionality.

Data Integration Components

In order to determine the most suitable ETL solution for them, organizations should evaluate their needs in terms of the core components of the data integration process, as listed below.

* Data Identification. What data does the organization need to extract and where does it come from? What end result, in terms of the data, does the organization want to analyze? Essentially, answering these questions means identifying the origin of the data, and what the relationship is between the different data sources.

* Data Extraction. How frequently does the organization require the data? Is it monthly, weekly, daily, or hourly? Where should data storing and transformation activities occur (i.e., on a dedicated server or in the data warehouse, etc.)? Considering these factors identifies the data frequency needs of the organization. For example, analysis of sales data may require the organization to load data monthly or quarterly, whereas some other data transfers may be performed multiple times a day. In determining the frequency of the data loading and transformation in the data warehouse or on the dedicated server, the organization should also consider the amount of data to be transferred and its effect on product performance.

* Data Standardization. What is the format of the organization's data, and is it currently compatible with the same data elements in other systems? For example, if the organization wants to analyze customer information and to merge customer buying patterns with customer service data, it must know if the customer is identified in the same way in both places (e.g., by customer identification [ID], phone number, or first and last name). This is crucial for ensuring that the correct data is merged and that the data is attached to the right customer throughout the data standardization process. Another data standardization issue the organization should deal with is identifying how it will manage data cleansing and data integrity functions within the data warehouse over time.

* Data Transformation. The organization should consider data transformation requirements and the interaction between the transformed data components. The critical questions are how will the data be reflected in the new database, and how will that data be merged on a row by row basis? Answering these questions involves identifying the business and data rules associated with the data to ensure accuracy in data loads.

* Data Loading. Where will the data be loaded? What data monitoring activities are required? Other data loading concerns are failed data transfer identification, how failed transfers are handled, and how updates occur. For example, will each load involve re-loading the whole dataset, or will updates be made using only updated fields within the data sources?

Traditional ETL:

After evaluating the core components of data integration, the organization should investigate its traditional BI needs throughout the organization, and assess how they will evolve or change.

Until recently, ETL involved uploading data at regular (i.e., monthly or weekly) time intervals to drive business performance decisions and identify business opportunities. However, as BI tools become more integrated with overall business functions, including business performance management (BPM) and reporting and analysis requirements, data needs have shifted from monthly or weekly intervals to real time updates. This means that it has become more important for data transfers to accurately reflect real time business transactions, and that there has been an increase in the amount of data transfers required.

Nonetheless, real time ETL doesn't necessarily refer to automatic data transfer as operational databases are updated. In terms of BI, real time may mean different things to different organizations or even different departments within these organizations. Take, for instance, an automotive manufacturer whose traditional data warehouse solutions (OLAP cubes, etc.) involved capturing data at a given point in time. The automotive manufacturer might, for example, have wanted to track and compare monthly sales with last year's sales during the same month by region, car model, and dealer size, thus requiring the data warehouse to be updated on a monthly basis. However, as the manufacturer's business decisions evolved based on this analysis, its data needs shifted from a monthly requirement to a weekly one, and on to an ever more frequent basis, eventually creating the demand for real time data. In the case of the automotive manufacturer, real time data may be useful for identifying the movement of car parts within a warehouse relative to their storage locations and comparing this information with the demand for these parts.

Such a shift in data requirements affects both the volume of data required and when the data loading occurs. The end result is that, in order to meet the changing needs of user organizations, ETL and BI vendors have concentrated on moving towards real time ETL and shifting their data loading functionality to accommodate higher volumes of data transfer.

How Do Vendors Handle ETL?

Once an organization has evaluated its BI and data integration needs, it is ready to investigate BI vendors and the type of ETL functionality that they offer. It is important to note that though, for many vendors, ETL is only a part of their offering, this article will focus strictly on the ETL functionality those vendors provide. When evaluating potential vendors and their ETL functionality, there are two types to choose from. Vendors such as Cognos, SAS, and Information Builders provide integrated ETL functionality built in to their overall BI framework. Data integration or data quality vendors such as DataFlux, Ascential, and Trillium, on the other hand, provide best-of-breed ETL solutions. Which sort of vendor an organization will favor will depend on its data requirements.

In general, BI vendors accommodate customers by providing embedded support for slowly changing data requirements, as well as by allowing users to choose the location of data loads. This helps increase the speed of data transfers, accommodating industry demands for increased data loading in the data warehouse and for a greater number of data loads within a given time period.

Cognos 8 BI Data Manager allows users to extract, merge, transform, and load data in a single pass, as well as to use Web services to construct and schedule process builds and jobs on any server located within the network. Additionally, processes such as hierarchy and data validation definitions are automated, allowing embedded support for slowly changing dimensions and late arriving data. Data Manager enables the data integration process within a simple drag-and-drop environment.

SAS's Data Integration uses a wizard-driven user interface to provide ease of use for end users. Included in its ETL functionality is the ability for processing to occur natively on any platform and within any database. The solution has built in data load balancing to optimize resources, as well as scalable deployment to take into account growing data transfer needs. This last functionality eliminates the need to redesign processes as data requirements change. In addition, SAS's product has an imbedded design, test, and production environment, which allow users to synchronize data transfers and conduct testing.

Information Builders' DataMigrator offers essential ETL functionality, such as the ability to aggregate, join, merge, and apply selection criteria to information from any combination of data sources. DataMigrator can also transform data from raw forms into structured formats based on individual business needs and automatically generated and managed file transfer protocol (FTP) scripts. Additionally, DataMigrator allows for either bulk-loading or row-at-time data inserts, and has a change data capture capability that allows only changed records to be loaded into the required database, making it easier to achieve near real time results.

The following data integration vendors provide the same functionality as the aforementioned BI vendors, but with an increased focus on data cleansing and integrity.

DataFlux, acquired by SAS in 2000 to extend its data warehousing capabilities, provides a product called dfPowerStudio that can identify data accuracy, validity, and patterns to standardize data. Moreover, dfPowerStudio can monitor and audit data by providing alerts to identify the state of organizational data over time. Alerts are also provided to identify data quality levels and business rule violations. Additionally, dfPowerStudio analyzes and corrects data inconsistencies. It mattches data by clustering data into groups, merging duplicates into the best record choice through drag-and-drop functionality. Furthermore, dfPowerStudio's user friendly interface makes data profiling and data quality management easy.

IBM WebSphere Information Integration (formerly Ascential Software) is a data integration suite that enables organizations to use a single information integration platform to access, cleanse, integrate, transform, and deliver data, as well as to immediately identify data anomalies through an embedded source and target profiling and analysis system. IBM WebSphere software maintains data through the use of a single, open repository on DB2, Oracle, or SQL server platforms; validates business requirements to identify whether they are achievable or not; and ensures disparate data sources support target requirements

Trillium, a Harte-Hanks company, also provides users with a software solution suite that allows them to implement a total data quality solution. The suite, composed of Trillium Software Discovery and Trillium Software System, enables users to identify incorrect data formats, duplicates, misspellings, and redundant and missing values, and to create and define their own business rules to automatically monitor data standards. Also, Trillium software generates entity-relationship diagrams; creates a central repository of data, metadata, statistics, rules, and documentation; and has drill down capabilities down to individual rows of data. Additionally, continuous data profiling, cleansing, and monitoring activities, plus data filter and search capabilities are provided.

Conclusion

Depending on an organization's data requirements and its data integrity standards, the organization must determine whether BI vendors can provide all the appropriate functionality or whether the company should take advantage of the added data quality functionality that is built in to data integration and data quality vendors. In this regard, organizations should realize that "bad" data occurs over time when data is entered inconsistently across disparate systems within an organization. To optimize BI solutions, data must be clean and accurate, and this process needs to be maintained over time. Data quality vendors, such as DataFlux, place priority on data cleansing by providing end user features that allow data cleansing activities and monitoring to occur on a regular basis over time. With BI vendors offering integrated suites, this is not always the case. Using these integrated BI suites may require an organization to provide in-depth data cleansing functions at the end user level before data is brought into the data warehouse. This not only wastes time in man hours, but also places the burden of maintaining data standards on end user groups, where data inconsistencies are most likely to occur due to human error. Thus, for many organizations, it is advantageous to invest more money in order to integrate the solutions of both types of vendors, utilizing the enhanced analytical tools of a BI solution and the data integrity and management capabilities provided by best-of-breed data integration vendors.

Experiencing a Different Corporate Culture at QAD Explore 2008

No, my intent here is not necessarily to provide a typical analyst alert after attending a vendor’s annual user conference, in this case the QAD Explore 2008 in Orlando, Florida (US) last month. This is not to imply that there was nothing there to write home about either.

Quite the contrary, the multiple-day event was, well, eventful for market observers and hundreds of QAD’s global customers from both an official (announcements, product demos, etc.) and a fun (food, booze & entertainment) viewpoint. While all of the recorded keynote and breakout sessions can be seen here, the event revolved around the following major themes and highlights:

Human Engineering

This topic starts with the latest user interface (UI) enhancements based on harnessing Microsoft .NET Framework (while the relationship with Progress Software on the business logic and server side as well as service-oriented architecture [SOA]-based integration remains as strong as ever).

QAD has not traditionally been “accused” of offering a great UI metaphor (look-and-feel), but that might all change now as the vendor strives to appeal to new (”X” and “Y”) generations of users. QAD aptly showcased not only a prominent consumer electronics maker (with its own line of retail stores), but also a Swiss knife-like manufacturer and an automated teller machine (ATM) manufacturer as its customers. All of these products are well-known for their elegant usability and user-friendliness.

Similarly, QAD .NET UI features ease of role-based personalization, adding/removing fields, menu maintenance, desktop applications integration, messaging, etc. for end users. Other notable capabilities are data access and integration, look-and-feel consistency, eLearning, etc.

Especially impressive are the graphical process maps, modeled according to the Supply Chain Council’s SCOR metrics and intuitively arranged à la multi-layered maps of the London “tube” (subway). End users can navigate these process maps up-and-down via “business cycle - business process - individual session screen” layers, which also comes in handy for training and documenting best practices.

Blended Deployment

Since the philosophies of chief technology officers (CTOs) and/or chief information officers (CIOs) revolve around choice, industry-accepted standards, and lowering risks, the QAD Enterprise Applications 2008 (or QAD 2008) suite [evaluate this product] is offered in the following three deployment modes:

1. On Premise, a traditional perpetual license and delivery structure;
2. On Demand, a software as a service (SaaS) or an application management services offering hosted by QAD; or
3. On Appliance, with the software pre-loaded on a hard drive and shipped to customer sites, but managed remotely by QAD.

The vendor claims to be SaaS-ready when it comes to technology per se, but is treading water carefully before going in full speed ahead globally with it.

As the best example of on-demand readiness, Alpine Biomed, a global leader in specialty diagnostic devices, has chosen to implement QAD’s Life Science Vertical Business Solution coupled with QAD’s Service and Support Solution delivered through QAD’s On Demand SaaS model to support its strategic growth objectives and maintain a leaner and more focused information technology (IT) organization.

Alpine Biomed kicked off its QAD On Demand implementation in early April 2008, and is on target to take the entire company live this fall.

Total Enterprise Capability

The self-evident goal here is to expand from being regarded as a traditional divisional manufacturing planning product. This footprint broadening process was started a couple of years ago and was described at great length in TEC’s article series entitled “QAD: A Software Vendor That Has Survived (if Not Thrived) in the ERP Market.”

On the heels of its most recent product upgrade, QAD Enterprise Applications 2008, QAD continues on the painstaking path toward delivering extended-enterprise capability to “help meet customers’ ever-changing business requirements across all key levels, functions and geographies of their extended manufacturing organization”, as one of its mottos states.

Indeed, owing to a combination of wise acquisitions, partnerships and in-house development, QAD’s footprint now goes well beyond core enterprise resource planning (ERP) to encompass enterprise asset management (EAM), demand management (via the John Galt partnership), sales force automation (SFA), marketing automation, transportation management, and product information management (PIM).

One of the early adopters of QAD’s extended-enterprise capabilities, Wagon Automotive, has implemented QAD Enterprise Applications in an effort to streamline its internal and external communications, resulting in a reduction in manual intervention and inventory by 26 percent.

In addition, Wagon Automotive has deployed QAD Enterprise Applications to meet global Materials Management Operations Guideline/Logistics Evaluation (MMOG/LE) requirements.

Espousing Tier One Financial Management Capabilities

The conference also provided a showcase for the vendor to unveil the long-anticipated debut release of the new QAD Enterprise Financials suite, as a preservative and defensive move against its install base’s erosion towards the likes of SAP Business Suite, Oracle E-Business Suite or Infor FMS.

The product, which features capabilities like domain sharing, multi-currency, language, entity and multi-whatnot, internationalization, segregation of duties (SoD)/compliance, access control, role-based security, etc., stems from the acquisition of the former software partner in Belgium, Soft Cell (not to be confused with the 1980s one-hit-wonder group, the creator of the blockbuster “Tainted Love” song!). The total investment thus far has admittedly cost QAD nearly $50 million in R&D costs (but the feeling is that it was worthwhile).

As one of the early adopters, Royal Sanders, a personal care products supplier, went live on QAD 2008 with Enterprise Financials. QAD Global Services, the services and consulting arm of QAD with global services & support and global methodology capabilities, reportedly took Royal Sanders live on QAD Enterprise Applications 2008 in just under five months.

Closing Other Apparent Functional Gaps

As for closing the product lifecycle management (PLM) gap, QAD has joined the PTC’ s Channel Advantage Program, enabling QAD to deliver the PTC Windchill product suite [evaluate this product] to its customers. The partnership could be especially significant for manufacturers who already use QAD software to run their global business processes, yet who seek to further improve efficiencies by adding complementary product development and PLM solutions from PTC.

A similar partnership with Workday for the on-demand human capital management (HCM) suite is apparently in the works. My impression was that QAD’s Quality Assurance capabilities could be improved too, either via acquisition or developing in house, or by maybe deepening current partnerships with IQS and Pilgrim Software.

Striving for “Perfect Lean”

Driven by passion for the manufacturing industry, QAD is focused on helping global manufacturers realize the lofty vision of The Perfect Lean Market: a frictionless supply chain where information is freely shared in real-time, processes are reduced to only value-added tasks, and supply chain waste is eliminated throughout the value stream.

The Java-based QAD Supply Visualization (SV) module, which seems to be finally paying some dividends (given it was a bit ahead of its time with on-demand delivery a while back) and recently added transportation management and global trade management (GTM) capabilities seem to be playing a central role here.

To that end, Filtrair BV, a Netherlands-based filtration manufacturer, which supplies filtration products to customers in more than 80 countries in Europe, the Americas, Africa and Asia, streamlined its global supply chain using a combined solution of QAD Enterprise Applications and Precision Software’s GTM solution.

As a result, the production of Filtrair’s export and shipping documentation is now automated, which has led to faster and more efficient filing of customs information and a reduction in the number of days Filtrair’s goods are in transit.

QAD .NET UI Configurator and Manufacturing Execution Workbench (QAD MEW, primarily for repetitive manufacturing environments) would be two of the latest products that are worth a deeper look with regard to the “perfect lean” vision.

Tough Market Still Remains

Certainly, life at QAD is not quite a “bed of roses,” in light of the difficult economic milieu and the constant replacement threat from “bigger-and-better” competitors (and install base erosion). Also, moderate growth and hefty investment in acquisitions and R&D put constant pressure on the profitability picture, which has not been stellar, to say the least.

Still, QAD’s resilience deserves admiration, and maybe things are not that grim from the vendor’s vantage point, as I (or its competitors) might be seeing it. It is certainly difficult to win new ERP clients today, but QAD has an apparent opportunity in the automotive sector (especially in emerging markets).

Also, the abovementioned MMOG/LE initiative/participation was quite smart to give QAD credibility in the sector beyond mere software. In a nutshell, the initiative entails a checklist of about 200 compliance criteria for automotive suppliers, which is pure “know-how” and hardly anything about software per se.

The acquisitions of Precision Software and Fulltilt (still a recent one that has to be fully positioned for the consumer packaged goods industry) bring new cross-selling opportunities, as stand-alone products and autonomous divisions (with a number of SAP and Oracle clients), and mitigate the pressure of necessarily winning new ERP accounts to grow.

Sure, on the down side, they also bring new competitors like TradeBeam, Kewill or Management Dynamics in the GTM space or Cardonet in the PIM one.

Back to the Main Point of the Article

But I digress royally, and what I really meant to talk about here was my different experience in dealing with QAD staffers and customers at the event as an analyst. So, how different was it this time?

Simply said, at most other events by more established and high-and-mighty vendors, analysts work in sort of a controlled environment. Some vendors even have completely separate tracks for media & analysts vs. the program for the general population of users.

Make no mistake, these focused and high-level (strategy & directions) oriented analyst track sessions are quite useful for us industry analysts, since we don’t need to be bogged down with the amount of detail that end-users of the product need.

Yet, the feeling of “us” (analysts) vs. “them” (vendors) often cannot be avoided, since an army of press relations (PR) or analyst relations (AR) staff is there to take notes about anything that an analyst and/or the vendor’s team member said.

Sure, we can be flattered by vendors paying close attention to our questions or critique, but there is also the other side of them making sure that the vendor’s team member doesn’t disclose anything unwanted or sensitive at the time.

Well, for QAD Explore it all initially seemed as a typical event, since prior to my arrival I was given a preliminary choice to select from a list of executives for one-on-one meetings. The first surprise upon my arrival was that I was awarded more meetings that I asked for.

They also lasted much longer than the customary 30 minutes (which is about enough time for saying “hi & bye”, and maybe exchanging business cards, especially if there was a cascading delay from previous meetings). That ample time made me run out of questions in some instances, whereas the QAD speaker would then open up his/her soul on some issues even unsolicited by me.

Hmm, did I also forget to say that no single meeting had an assigned PR/AR staffer to take notes religiously and make sure that nothing sensitive is asked and answered?

Furthermore, while attending some deep-dive breakout sessions, I was surprised to hear the presenter go off on what the product cannot do, not only when asked about some nitty-gritty functionality by the well-versed user audience, but also to voice a sentiment of wishing that a certain capability was inserted in this particular release (rather than being left out for the next ones).

Don’t get me wrong, the presenters and QAD executives were all excited about their upcoming duties and latest developments, but this honest “strutting out” of the potential shortcomings made me feel that QAD had no “hidden agendas” towards customers and the market observers.

This is in a sharp contrast to many other vendors (some might even resemble the current US Administration) that are sly dogs about virtually anything, to put it mildly. They would never candidly tell customers and analysts what they do not like about their own products.

To be fair, some vendors might have been burned by some analysts running after the briefing and telling competitors even the confidential details from the briefing. Still, for some other refreshing “open door approach” vendor examples, see my very first blog post.

Thus, at the end of the day, a question for our readers, many of whom might be enterprise applications users, current or potential — is the vendor’s size and brand recognition what makes you most comfortable? Or, maybe some other, “softer” issues, like customer intimacy and vendors’ approachability can enter the viability picture?

Manufacturing Systems with an IQ: Beating the Odds, Mightily – Part 1

Some time in mid-2005 TEC published a six part article on IQMS, a relatively small and obscure enterprise resource planning (ERP) vendor based in Paso Robles, California (US), with offices across North America (i.e., in Chicago, Canada, and Mexico), Europe (i.e., Sweden and with recently announced indirect presence in the UK) and Asia (i.e., China and Taiwan). Some readers were likely wondering why I “made so much mileage” out of a seemingly unimportant vendor of fewer than 70 employees and with only a few hundred customers at the time.

Well, I might have been somewhat vindicated in early 2009, when IQMS announced that it closed 2008 with double-digit profitability and a 10 percent increase in new customer accounts. Even as manufacturing markets have tightened and doom-and-gloom sentiments have pervaded the globe, IQMS has accumulated revenue gains for several years. Namely, in 2005 and 2006, the company grew by about 25 percent each year (which was a multiple of the industry’s average growth), demonstrating its value proposition to selected manufacturing industries worldwide, including medical devices, automotive, aerospace, plastics, and consumer packaged goods (e.g., appliances, electronics, computers/business machines).

IQMS (whose name alludes to “manufacturing systems with an intelligence quotient [IQ]”) was incorporated in 1989 and has been privately held ever since without any venture capital (VC) money involved. Having been based in California and founded (and still majority-owned) by a married couple, IQMS somewhat resembles its bigger fellow ERP peer, QAD. But the differences between the two vendors are also apparent starting with QAD being publicly held for over a decade. QAD is also a much larger vendor, with typically larger customers (although overlapping and possibly competing with IQMS in many similar industries and regions), and has an incomparably better global presence.

For its part, IQMS boasts a 98 percent customer retention rate and continuous profitability and growth, which traits have not always characterized QAD. Currently, IQMS has a total of over 500 corporate customers at over 1,000 locations in 4 continents and 11 countries. These user companies range from a single site with only 5 users to companies with 10 sites and an unlimited number of users.

IQMS focuses on small-to-medium enterprises (SMEs) in make-to-order (MTO) and make-to-stock (MTS) operations in the discrete manufacturing, repetitive manufacturing, and process manufacturing environments. These companies tend to embrace lean manufacturing (and overall “lean business”) principles and thus require low-maintenance and cost-effective (but fully functional) ERP systems. To that end, perpetual licensing provides the rights to all future upgrades and includes database licensing too.

Master of Its Own Destiny (and Its Own Domain)

Being privately held and not burdened with the stifling demands of private equity firms, venture funds, or public shareholders has proven to be a blessing for IQMS. Namely, not only has IQMS stayed away from the disturbance of the ongoing vendor consolidation bonanza, but it has also been able to control its own destiny and make independent decisions about product development. IQMS customers are also intimately involved in product development via annual user meetings, an online user group, and participation in focused development teams.

In keeping with growth and its commitment to delivering leading-edge solutions, IQMS added employees to every department in 2008 (with a total head count now well over 100), and created new work units including the Automation and Oracle Data Services groups. These groups are focused exclusively on system advancements, customer satisfaction, and bridging shop floor equipment directly into functional ERP applications.

For instance, IQMS’ Automation Group’s charter is to expand the interface capabilities of IQMS’ flagship EnterpriseIQ ERP [evaluate this product] system with manufacturing equipment on the shop floor. The newly formed group, comprised of engineers and programmers, has as its goal working with existing IQMS customers to create greater efficiency and automation between shop floor hardware and ERP software. This integration is expected to result in leaner manufacturing operations.

The IQMS Automation Group was launched with several custom programmable logic controller (PLC) interfacing projects developed with customers’ input at a number of customer beta sites. Implementations included capabilities such as:

* two-way communication with PLCs to control and initiate conveyor systems, vertical lifts, scanners, palletizers, photo-eye sensors, and other pieces of equipment;
* two-way communication with stretch wrap machines via relay/digital input boards to automate final packaging of customer product;
* automated first-in-first-out (FIFO) pick/store warehouse applications for forklifts; and
* directly interfacing with work centers to automatically report scrap and production.

“Not Invented Here” Attitude

One of the key tenets of IQMS’ success has been a laser-sharp vertical industry focus, of which I have always been a big proponent, in general. Namely, when the company started in 1989, it initially catered solely to injection molding manufacturers. This focus has allowed IQMS developers to focus deeply on the requirements of this esoteric market segment and really gain subject-matter expertise on the idiosyncratic problems and issues of those customers.

Namely, if a system doesn’t understand and support tricky requirements such as family molds or multiple cavitations running at the same time, it will cost the customer dearly in terms of system customizations, lowered efficiency, and heavy-lifting maintenance. Since 1989, IQMS has judiciously expanded its focus to SME companies in related industries such as automotive suppliers, packaging manufacturers, and medical device makers.

But other tenets of IQMS’ success have seemingly been at odds with conventional wisdom and the practices of vendors of IQMS’ size and means. Namely, IQMS’ niche focus has driven the company to try to address as many of the needs of its target customers as possible. As a result, the EnterpriseIQ suite has (surprisingly to a first-time observer) a pretty wide footprint of functionality (coming from such a small vendor with limited means).

To be concrete, the suite natively provides extended-ERP applications such as enterprise asset management (EAM), customer relationship management (CRM), electronic data interchange (EDI), and warehouse management system (WMS). As if these capabilities were not impressive enough, then how about adding the abovementioned intrinsic shop-floor equipment automation and monitoring, time-clock, and quality management system (QMS) functionalities?

These features mean that all these modules run on a single database and feature out-of-the-box integration with a consistent user interface (UI) or look-and-feel. Furthermore, we are talking about real-time transactions here, rather than delayed (and thus after the fact) batch processing (e.g. data transfers) and necessary interfaces when “alien” third-party applications are involved.

Many IQMS customers have indeed benefited from an EnterpriseIQ production management application called RealTime Machine Monitoring. This application connects each work center to the EnterpriseIQ database, allowing users to follow jobs as they move through production. Because production data feeds directly into the ERP database, job status is automatically updated down to the minute. The system also supports graphical scheduling screens and reports that can be used by stationary and remote users to assess job status, track downtime, and view quality data. Pager and public announcement (PA) system alerts are also available for the plant.

Single-source Strategy

Now, there is certainly nothing wrong with the “single source,” “one-stop-shop,” and “a single-throat-to-choke” strategy. Smaller manufacturing companies especially appreciate a strategic business application that integrates financial management, human resources management system (HRMS), manufacturing systems, and other corporate software functions into a single system.

However, such homogeneous offerings are yet to be offered even by vendors that are incomparably larger. Even the market leader SAP has recently given up on its traditional “not invented here” attitude (think of the Business Objects or Visiprise acquisitions), but not tiny IQMS.

In fact, IQMS’ management strongly believes that the company has not only survived but also thrived by serving a few targeted industries with a full-function system. The system has been developed organically (in-house and with no acquisitions) to fulfill most (if not even all) of customers’ needs, while also providing a hands-off system (in terms of minimal ongoing maintenance) but with a decent technical performance.

Believe it or not, IQMS professes a strategy of being the single source for virtually everything a customer might need beyond software development and programming. Namely, “single source” also refers to sales and implementation services, training, and customer service and technical support. With some minor exceptions in optional fringe functionality (i.e., embedded Crystal Reports, Global Software for financial reporting and spreadsheet automation, Actify CAD Viewer, or CLEO for EDI communications), IQMS touts no need for using third-party applications for core-competency modules, and no third-party implementation providers.

For example, in the automotive industry, EDI is a major component in a supplier’s ability to deliver exactly what customers want. To that end, the IQMS EDI Translator module is embedded within the EnterpriseIQ system, which operates entirely within a single database, so that customers have no need for pesky third-party hardware interfaces. Incoming EDI files are automatically translated into the ERP system, thus instantly updating all of the pertinent records, while outgoing files are automatically transferred back to customers and suppliers. Since there is no need for manual data entry, suppliers (IQMS customers) can be confident that they are disseminating accurate, timely information across their supply chains.

With third-party EDI systems, which transfer EDI data via dedicated modems, automotive suppliers not only face hefty costs, but also often have trouble finding and correcting any problems associated with orders. Some IQMS customers talk about their inability (even over 80 percent of the time) to respond fast enough to EDI errors because the data transfer was slow. This problem would ironically be magnified with some accounts that are geographically close to the plant. Namely, if the customer’s plant is only 40 minutes away or so, shipping errors will be arriving at the customer’s plant before the shipping department could catch them.

This native EDI module allows a much greater degree of integration for processes such as outsourcing (subcontractor) management, where products may move through multiple nodes in the supply chain. IQMS provides visibility to this material moving within the supply chain, relying on advanced shipment notices (ASN) in its EDI capabilities to track the movement.

I Mean, Single-source in Every Aspect

When it comes to sales and implementation services, IQMS Sales and Professional Services provides complete project management and implementation services in North America (and through resellers/partners in Europe and the Far East). The involved IQMS employees are APICS-certified, which helps to deliver a typical implementation in three to six months time. IQMS claims that 95 percent of its customers meet their target “go live” date, with implementations taking on average less than 40 percent of software spending.

As for training, in February 2009 IQMS introduced Virtual Training Classes that supplement other training options offered by IQMS, including classroom training, on-site facility training, single-customer Internet-based training, and free online videos. Virtual training classes bring together the best of two worlds (class training and the online user forums), in one convenient place. Finally, the multilingual customer service and technical support includes expected channels such as the telephone, the Internet, e-mail, and online user groups.

Part 2 of this blog series will continue with the analysis of the product’s architecture and the latest developments at IQMS. In the meantime, what are your views, comments, opinions, etc., about IQMS’ strategy and approach?

Do you think a homogenous enterprise applications suite is possible and desired, or that heterogeneous IT environments are simply today’s reality and how the ball rolls? If you are EnterpriseIQ users, I would appreciate you sharing your experiences with the product and the company.

QAD Pulling Through, Patiently But Passionately Part Four: Market Impact Continued

On August 20, QAD Inc. (NASDAQ: QADI), a global provider of collaborative enterprise applications for manufacturing and distributing organizations, reported upbeat financial results for the fiscal 2004 second quarter and six-month period ended July 31, 2003. The improved financial performance has not come without astute moves with regard to product functionality enhancements. These moves include:

• A partnership with Johnson Controls (NYSE:JCI) to develop a next-generation Just-In-Time (JIT) Sequencing software module for MFG/PRO
  
  
• Announcement of Kanban Visualization, which enhances QAD's existing Supply Visualization (SV) solution
  
  
• More than two dozen important new functions and enhancements to MFG/PRO eB2, specifically designed in collaboration with QAD's manufacturing customers to help address their specific needs
  
  
• Announcement of healthy sales momentum in Asia, with the MFG/PRO suite becoming a platform of choice for automotive manufacturers in China to automate business operations and collaborate with partners worldwide

The "fortune favors the bold" and "patience is a virtue" adages would be applicable to QAD's endeavor of finally getting far beyond its most trying days. "Patience" would stand for the reason of QAD staying true (and being finally vindicated) even during its most difficult times in the last few years (see Figure 2), to what had made it successful in the first place—solving manufacturers' real-world problems.

Figure 2

This is Part Four of a six-part note.

Part One detailed the above moves.

Part Two presented the Company Background.

Part Three began a discussion of the Market Impact.

Part Five will cover Challenges and

Part Six will make User Recommendations.

QAD Strategy for Lean and JIT Manufacturing:

While MFG/PRO eB2 supports traditional manufacturing (MRP-based) methods of planning, it also incorporates many enhancements in support of lean and JIT manufacturing. Traditional manufacturing methods rely on the movement of materials through functionally-oriented work centers or production lines, and are designed to maximize efficiencies and lower unit cost by producing products in large lots. Production is planned, scheduled, and managed to meet a combination of actual and forecast demand, and thus, production orders stemming from the MPS and MRP planned orders are "pushed" out to the factory floor and in stock. External suppliers also work to support planned production, while materials management often relies on maintaining sufficient inventory, using a make-to-stock (MTS) rather than make-to-order (MTO) or assemble-to-order (ATO) approach. In traditional manufacturing, the time and cost of changeover to produce different products is high, as are the costs of inventory, planning, and expediting.

Lean manufacturing and JIT concepts, by contrast, emphasize reduced inventory throughout the supply chain, shorter lead times, and faster cycle times, all enabling improved response to customer demands. QAD has again bolstered its commitment to lean manufacturing practices with functionality designed to promote rapid response to customer orders based on demand "pull", including kanban, mixed-mode manufacturing, and the flexibility to schedule and manage flow orders for products within product families, with or without using MRP. The idea is for products to arrive exactly when they are needed, in the mix and quantities that are required, while production begins immediately after a customer order is confirmed, without having to run MRP, or create and release a work order.

Materials are consumed from point-of-use locations or raw-in-process (RIP) locations, whereby both internal and external material suppliers receive replenishment signals at point-of-use locations and RIP, and build or supply material when the location needs to be replenished. To that end, enhancements in MFG/PRO eB2 that should promote lean and JIT manufacturing include: Available to Promise (ATP), Distribution Order Entry, EDI Ecommerce, Supplier Consignment Inventory, Enterprise Material Transfer (EMT), Kanban Management Phase II (allows users to track and manage the move of Kanban-controlled items into and out of inventory), Linked Site Costing (allows users to specify default source cot sites for items held at multiple sites but in one database), Purchase Order/Work Order Accounting and Logistics Accounting. These features will have been attractive at least to existing QAD customers, particularly automotive suppliers, who have been pinched by a tightening economy and under pressure to speed up operations and adopt JIT and lean manufacturing practices. Even in the accounting arena, the requirements for the automotive industry are critical with evaluated receipt settlement, self-billing and retro-billing, all speeding up processes while helping suppliers optimize their limited resources.

While QAD uses MRP for mid- and long-term planning, on the execution side, however, it caters to both JIT that is used for build-to-order or final assembly manufacturing, and to lean manufacturing, which is suitable for build-to-demand pull for finished and component items. Namely, most companies will still use MRP to ascertain longer-term dependent demand (i.e., based on forecasts), but replenishment will be based on independent demand (i.e., actual customer orders), with closely managed inventory buffers.

To illustrate the differences between these three methods, Mrs. Lopker, who was recently hailed by the IT press as "the queen of elegant software", during her keynote presentation at Explore 2003, compared the AMPM Convenience stores with Wendy's and McDonalds burger chains modes of operation.

• For one, AMPM, whose slogan is "Always there to serve your needs", is an MRP-based planning operation, whereby hamburgers are made in daily batches, which often results with scrap leftovers and lost sales.
  
  
• McDonalds, with the "Serving 46 million customers each day" motto, has done well at lean execution and dishing burgers out fast (often in one minute), but the problem occurs with MTO requests like "I would like no onions, with five tomatoes instead, and I want American cheese instead of Swiss cheese, please". Thus, the franchises still have to stock finished goods buffers that cater for the demand pull, and the replenishment tact is adjusted to the buffer. Consequently, standard finished products are served from stock, while any special orders will take some time to be delivered.
  
  
• Finally Wendy's, whose slogan is "Made fresh, tastes best", has done a pretty good job at MTO because the final assembly of the final item does not happen until the actual order. Single customer line therefore creates pull, there are no stocked finished goods, and the buffer is only at the component level (e.g., pickles, cheese leaves, etc.).
  

The above burgers' example would be quite applicable to e.g., computer or automobile manufacturers, where QAD really figures. The issue becomes much more complex when the customer would say, "I don't want a beef burger, but rather an ostrich burger" or "I would like a car with a sunroof and painted with the US flag motif" and these peculiar instructions would have to be ordered and propagated down the supply chain. Consequently, more recently, the vendor has focused on its solutions for supply management and visualization. In other words, while still adding to ERP (e.g., lean manufacturing and JIT management modules), the vendor has been fleshing out the components of extended enterprise (e.g., distributed order management, flexible schedules, customer self-service, consignment inventory, vendor managed inventory (VMI) and supplier managed inventory (SMI), replenishment management, and B2B eCommerce) and of manufacturing community (i.e., consolidated visibility via a portal of inventory, production, product lifecycle, payments and invoices).

Execution Becomes Critical:

Particularly during these calamitous times, manufacturing and distribution companies continue their effort to meet high customer expectations for on-time delivery by achieving general responsiveness, speed and agility. While core back-office ERP and not any less-cumbersome SCP systems might have traditionally excelled at planning, conceptual optimization and financial integration functions, they have not, however, addressed warehousing, distribution network planning, or transportation/logistics management aspects of replenishment. The execution side is therefore gaining increasing awareness among companies that realize that planning can do only so much without the ability to make the right and timely decisions and execute on the shop floor, in the warehouses and/or within the entire distribution chain.

To be able to react to fluctuating demand, respond to customer specifications, and coordinate real-time event messages from multiple disparate systems, these systems are being further enhanced with decision support capabilities and planning engines aimed at order fulfillment and inventory and order status visibility. Therefore, the most regular and justifiable enhancements have been Web-based order-fulfillment modules, which typically include real-time supply chain event management (SCEM), alert messaging, order tracking, and complicated workflow management. Harnessing this technology should lead to the so-called "self-healing" or adaptive supply chain — when a software engine monitors all the numerous events taking place supply-chain-wide, identifies and escalates exceptions, sends notification, and reacts appropriately to those exceptions, ideally without human intervention.

QAD has jumped on this bandwagon since its focus has also evolved to target collaborative e-Business and event-driven manufacturing. These markets need support for demand events such as a customer order, supply events such as a supply disruption, process events, product events, or others. QAD has thereby created a notable business-to-business (B2B) collaboration vision to appeal to its mid-market user base, but it acknowledges that it will take much more doing for the vendor to capture the entire replenishment order model whereby every link in the supply chain will react to the demand pull, create the needed product and then drive the demand pull all the way down the supply chain.

Nevertheless, QAD has long shifted its focus from being a mere ERP vendor dedicated to the industrial mid-market to fully leveraging the Internet in the applications it provides to manufacturers and distributors to link their back-office systems to those of their business partners via private trading exchanges. To that end, QAD eQ product, might be viable for some focused areas such as direct materials procurement and/or replenishment and sales order fulfillment.

The eQ is a PTX (Private Trade Exchanges) suite that contains four applications: Commerce Foundation Management, Sell-Side, Buy-Side, and Replenishment, providing the backbone to allow a manufacturer to establish a private trading exchange among its suppliers and/or customers, with support for XML messaging, Java, HTML, and no need for a client side of the software. QAD eQ is also devised to support private Internet exchanges that are connected to multiple sites, run on diverse ERP systems, and to accommodate a rule-based order management functionality. Particularly notable is eQ Commerce Foundation Management framework (formerly Commerce Relationship Management), which allows users to define the collaborative, many-to-many relationships and accompanying business rules supporting personalized buying and selling on the Internet among trading partners along the supply chain.

One potential virtue of private trade exchanges is that enterprises should automate procurement without necessarily opening up sensitive information to unwanted eyes. Increasing velocity, visibility and accuracy—and subsequent cost savings—is what makes PTX attractive as a B2B application framework. Moreover, while most Internet exchange strategies rely heavily on procurement software, QAD eQ acts as a holistic order management hub by including commerce relationship management (relationshhip modeling), sell-side, buy-side, and replenishment applications. Through this hub, user can make the sales, purchase, and replenishment orders issued by MFG/PRO, even advance ship notices (ASN), available to the entire supply chain. The latest version of eQ includes eQ Replenishment, which lets real-time consumption about material usage drive the flow of material through production to customer sites. In other words, the actual customer usage, not the receipt of purchase orders, not min/max economic order quantities (EOQs), is driving replenishment. Similarly, real downstream demand, not forecasts, triggers production and procurement processes.

By combining eQ (for supply chain management requirements) and MFG/PRO (for traditional manufacturing ERP requirements), QAD often additionally competes with SAP, Oracle and PeopleSoft in its sectors of focus, where it provides the individual factory level ERP solution while these giants remain the preferences at the corporate level. Additionally, QADs 'collaborative commerce' eQ system not only works with its flagship MFG/PRO, but also with others ERP and legacy systems. It also connects with supply chain planning systems like QAD's partner Adexa, and demand planning systems like Demantra. Thus, there is the potential to build functionality on the usual heterogeneous mix of systems one may find in multi-national companies at this level. Look for QAD continuing to build on its early to market 'collaborative commerce' suite which might be ever appealing as more upper mid-market manufacturers seek to improve their external trade partner interactions to realize efficiency, responsiveness and reduced costs.

QAD also offers MFGx.net, a manufacturing-based network already integrated into QAD, which includes hosted Internet application services such as basic alert-based management. SV lets suppliers see all the information regarding the items they supply to the customer and which have been authorized to see through browser and password only. SV gets this information for inventory, purchase orders, supplier schedules, and receipts from a customer's ERP system using an XML interface called "the poller," which sends the ERP information to the SV web server. Suppliers can also load information for shipping forecasts and ASNs directly into SV, as well as export information from SV to their external systems. Suppliers without EDI can import their shipping forecasts and ASNs into SV using spreadsheet.

Essentially, it is a basic vendor-managed inventory solution that lets suppliers monitor how items are consumed. QAD plans to add a link to its eQ Replenishment application, which will add more complex algorithms allowing suppliers to determine when to replenish stock to its customers. To execute the portal-based applications, the supplier will need a Web browser such as Internet Explorer or Netscape, and the customer must install a small poller on their MFG/PRO server. From MFGx.net, users that are not necessarily the MFG/PRO users can download the software, which updates the system at certain time intervals by replicating data from the QAD MFG/PRO database and uploading it to SV. The result of this, ideally, is streamlined material replenishment up and down the supply chain. QAD SV is the first application made available on a subscription basis through QAD's new MFGx.net manufacturing exchange, and it comes pre-integrated with the most recent versions of MFG/PRO, namely eB and 9.0 releases. QAD MFGx.net is the vertical exchange, which also offers associated education and services, while QAD provides full consulting, implementation, migration and support services.