AUTOMOTIVE INDUSTRIES

Pelion Systems Champions Manufacturing Process Optimization

2009-12-04T06:30:00.000-08:00

Globalization and outsourcing are proliferating within the manufacturing industry, and most successful companies are implementing demand-driven business models as they seek ways to capture, shape, and respond to the demands of the dynamic global marketplace. This is because as demand visibility improves, manufacturers are called upon to respond to that demand more quickly and with more predictable results. Thus, increasingly, organizational visibility into the capacity and performance of production assets, whether wholly owned or outsourced, is needed to support decisions about where and how to meet production demands in a profitable and predictable fashion. In sum, manufacturing operations today are characterized by a significant need for factory transformation management.

Evolution of Tiered Manufacturing Operations

A top-down approach to manufacturing coordination and visibility is clearly in order. Consequently, manufacturers are looking beyond the realm of local execution capabilities to architectures and systems that support interdependent supply networks (ISN), synchronizing the execution of compliant manufacturing and logistics processes across a dynamic supply network (see Supply Chain Management is Evolving toward Interdependent Supply Networks).

In addition, the lines between familiar production applications have blurred. Modern production execution management applications combining traditional manufacturing execution systems (MES), quality, asset, and performance management functionality are beginning to emerge. These will offer manufacturers a more cost effective and integrated approach to contemporary manufacturing challenges, while providing an integrated view of site-level performance.
ISNs require the orchestration of manufacturing operations on a global scale. Progressive enterprises view manufacturing as a strategic node in their ISNs. Brand owners are embracing the growing role of contract manufacturing and logistics to supply product in increasingly volatile supply networks. This is fueling the rapid evolution of a market for applications that provide brand owners with visibility into the performance of distributed arrays of manufacturing assets. ISN involves leveraging current investments, as well as making long overdue investments in the dynamic closed-loop scheduling of distributed assets, such as plants and distribution centers.

Local Manufacturing Operations Require Manufacturing Performance Optimization

First and foremost, production operations must focus on local execution excellence. Manufacturing capabilities vary dramatically across industries, geographies, individual manufacturing sites, and even production lines within those sites. Mergers and acquisitions have compounded the problem of highly heterogeneous plant software, instrumentation, and control landscapes, resulting in poor replication of manufacturing best practices. Moreover, for the past five to ten years, upgrading plant systems has taken a back seat to preferential investments in enterprise transactional systems, including enterprise resource planning (ERP), supply chain management (SCM), customer relationship management (CRM), and supplier relationship management (SRM).

Global manufacturers are now finding that in-house and contract manufacturing requires local investments in plant automation and control to ensure agile, compliant, first-time responses, as well as the associated visibility into the status and performance of all manufacturing assets. Enterprises are changing how they source, manufacture, and distribute products. They are gaining a greater appreciation for speed, timeliness, reach, execution, and integration with manufacturing operations strategies, including demand management, supplier management, product, and transportation and logistics strategies.

What Are Manufacturing Execution Systems?

2009-12-04T06:28:00.000-08:00

Plant execution software systems have many different scopes, forms, and formats, and they mean different things to different folks. Although plant execution software is used widely in a number of industries, it is rarely described similarly, and its functions are hardly ever identical.

An execution system used at an electronics discrete manufacturing facility is similar only in concept to one used at a food processing plant, and these differ substantially from that used by a pharmaceutical or chemical manufacturer. Time and experience have led the most successful vendors to pursue a “narrow-and-deep” strategy, and to devote their software development to the industries they know best. Even still, the names given to the various components of the execution systems vary greatly among industries and even among companies within an industry—if not between plants within a company.

To add further confusion, official definitions of a manufacturing execution system (MES) differ as well. APICS Dictionary (11th edition) defines it as

[p]rograms and systems that participate in shop floor control, including programmed logic controllers and process control computers for direct and supervisory control of manufacturing equipment; process information systems that gather historical performance information, then generate reports; graphical displays; and alarms that inform operations personnel what is going on in the plant currently and a very short history into the past. Quality control information is also gathered and a laboratory information management system [LIMS—applications used to manage the collection of samples, collection and formatting of test results, and the reporting of results by sample or product category, whereas these applications may be environmental-, medical- or research-focused] may be part of this configuration to tie process conditions to the quality data that are generated. Thereby, cause-and-effect relationships can be determined. The quality data at times affect the control parameters that are used to meet product specifications either dynamically or off line. [italics added]

Gartner’s IT Glossary defines MES as a

computerized system that formalizes production methods and procedures within the manufacturing environment, providing online tools to execute work orders. The term is generally used to encompass any manufacturing system not already classified in the enterprise resource planning (ERP) or open control system [OCS—a manufacturing system that is based on a set of commercially available, standards-based technologies, and that permits the open exchange of process data with plant systems and business systems throughout a manufacturing enterprise, whereas "control" refers to process control for discrete, batch, and continuous-process manufacturing, as well as computer numerical control and other motion controls] categories. In the broadest definition, MESs include computerized maintenance management systems (CMMSs), LIMSs, shop floor controls (SFC—a system of computers and controllers used to schedule, dispatch and track the progress of work orders through manufacturing based on defined routings), statistical process control [SPC] systems, quality control systems, and specialized applications such as batch reporting and control. [italics added]

What these lengthy definitions illustrate is that it can be difficult to easily identify or define the full range of applications used on the plant floor, let alone determine what falls exclusively under MES. Moreover, vendors never hesitate to add to the confusion by using creative labeling to suggest difference.

To put MES into perspective, it can be defined both broadly and specifically. Broadly speaking, MES can be regarded as a collection of business processes that provide event-by-event, real-time execution of planned production requirements. For example, it can calculate what and how much to produce, based on information from the enterprise planning level. From electronic production management systems to shop floor data capture, MES functions manage operations from point of order release to manufacturing, to point of product delivery to finished goods.

A narrow definition of MES is that it serves as a work order–driven, work-in-process (WIP) tracking system that manages and monitors production events and reporting activities. It captures “live” information about setups, run times, throughput, yields, etc., allowing managers to better measure constraints, identify bottlenecks, and get a better understanding of capacity. It closes the loop for production management and helps ensure production is followed as planned.

MES Today

Seen as a bridge from the plant floor to the rest of the enterprise, MES has become the principal means of delivering real-time order status to the supply chain, for available-to-promise (ATP) processing, and for “closing the loop” with sophisticated enterprise and supply chain planning systems.

PPM Software Vendors

2009-12-02T06:36:00.001-08:00

With many PPM vendors focusing their attention on IT governance, here are some vendors to consider when searching for a solution to model an organization's governance framework (a future article will provide more in-depth coverage of these vendors).

Computer Associate's (formerly Niku) Clarity product incorporates strong resource planning and financial management functionality with top-down portfolio analysis capabilities. Sophisticated real time capture and control of financials make Niku a strong candidate for regulatory compliance (e.g., SOX). Also, its robust resource planning module provides extensive resource management capabilities to support sophisticated IT governance policies. As one of the originators of PPM, Niku is a serious contender for organizations looking for extensive functionality to support their IT governance framework.

ProSight's portfolio management software's real strength lies in PPM and compliance for the government sector. ProSight's focus on government agencies help IT departments comply with a number of government-specific compliance regulations, such as Section 508 of the US Rehabilitation Act, the Federal Information Security Management Act (FISMA), privacy compliance, the Clinger-Cohen Act (CCA), and the Government Performance and Results Act (GPRA), to name a few. A good number of their clients are US federal government agencies.

Pacific Edge offers a different approach to IT governance by providing its maturity-based Accelerators solution, which allows organizations to incorporate their governance framework in a staged manner. Pacific Edge offers three stages of accelerators with the initiation and visibility of IT governance, the maturity of the execution of a governance framework, and the investment focus of project portfolios. These IT governance stages are priced and packaged to grow with an organization.

Augeo Software offers a PPM solution that is strong in tracking a high number of short term projects that need to comply with an organization's IT governance framework. Augeo 5 is strong in supporting many projects in multiple locations by using project templates and accurately tracking financials and resource utilization. Known for its strong resource planning capabilities, Augeo has attracted large multinational organizations in pharmaceutical, automotive, media, government, high technology, and financial services, especially in Europe.

PlanView's IT governance solution, PRISMS, offers its own best practices process maturity model based on PlanView's functionality. PRISMS provides the ability to measure performance and actuals, analyze and document decisions, execute changes efficiently, and monitor service deliveries with key performance indicators. In addition, PRISMS offers continuous improvement processes, allowing an organization to adapt to new best practices for IT governance. Supporting many of the top companies in the financial and insurance industries has made PlanView a strong vendor to consider for IT governance in those sectors.

Mercury Interactive provides IT Governance Center, where dashboard technology integrates all major components of demands, portfolios, programs, projects, resources, financials, and application changes for real time visibility of project portfolios. Mercury's IT Governance Center tracks all demands made from IT and allows an organization to adapt to the major processes and project control frameworks, such as Six Sigma, CobiT, and ITIL. Known for its testing toolls, service level management (SLM), and focus on application management, Mercury is an important vendor to consider for IT governance frameworks covering SLM and application development (e.g., Six Sigma and CMMI), as well as regulatory compliance (e.g., Health Insurance Portability and Accountability Act [HIPAA] and SOX).

Defining IT Governance

2009-12-02T06:35:00.000-08:00

The differences between success and failure in today's high technology environment, for many organizations, are based on the IT governance framework they adopt. IT governance recognizes that information technology is what drives today's businesses. Implementing a framework of best practices to support and to efficiently run an organization's IT infrastructure facilitates an IT department's efforts to effectively carry out its objectives, while closely monitoring any bottlenecks along the way.

There are numerous vendor neutral governance frameworks that have been widely adopted by large IT departments. The most widely recognized and adopted for IT governance are Control Objectives for Information and Related Technology (CobiT) and ITIL:

CobiT is a best practices framework developed by the IT Governance Institute (ITGI). CobiT's best practices focus on the control and measurability of IT. Tools are provided to assess and measure all aspects of IT within the thirty-four identified CobiT processes. Increasingly, CobiT standards are adopted as best practices in the governance of information, IT, and risk. For CobiT, the purpose of IT governance is to ensure that IT's performance meets the following objectives.

* For IT to be aligned with the enterprise and to realize the promised benefits
* For IT to enable the enterprise by exploiting opportunities and maximizing benefits
* For IT resources to be used responsibly
* For IT-related risks to be managed appropriately

ITIL is a set of best practices documents and standards originally developed by the UK Government of Commerce, and directed at IT service management. ITIL is organized into a series of best practices referring to service support, service delivery, planning to implement service management, information and communications technology (ICT) infrastructure

PPM's Role in IT Governance

By nature, internal IT departments are project-centric. Consequently, the tools implemented to manage projects and their operational realities play a central role in the governance of all IT activities. PPM vendors have seized the opportunity to address this growing area of IT governance. PPM tools provide IT organizations with the ability to implement governance strategies while ensuring that the processes in place are adhered to by all relevant parties. PPM tools contribute to IT governance by providing the following core components.

1. Portfolio planning and selection allows vendors to align their IT processes with strict controls on the planning of projects within the context of the portfolio. Risk, cost, and benefit analysis, as well as what�if scenario reports, contribute to the IT governance adage of maximizing return on investment (ROI).

2. Executing best practices provides flexible resource utilization, project planning, time tracking, collaboration, and business intelligence functionality in line with best practice methodologies outlined by an IT department's governance framework.

3. Assessment of performance and cost allows IT organizations to evaluate the true cost and benefit that a portfolio of projects contributes to the future incorporation of best practices and standard processes put in place. Portfolio analysis, project accounting, and real time system tracking of works, projects, and cost facilitate IT organizations' ability to measure compliance with internal policies, as well as external compliance regulation (such as SOX).

These components ensure that from inception to planning, execution, and post-assessment of projects, an IT organization's governance framework is in line with its business objectives from a cost and benefit perspective.

IT Governance: Maximizing the Business Investment

2009-12-02T06:34:00.000-08:00

Information technology (IT) management and chief information officers (CIO) share a common goal to maximize the value of their IT investments. Achieving this requires a strong foothold on the multiple projects taking place at any given time. Identifying risk, resource utilization, and earned value with a portfolio of IT projects necessitates the implementation and adoption of standards processes to track and respond to any "red flags" that may appear. This is accomplished by establishing IT governance, where a structure of relationships and processes will direct and control an organization in order to achieve its goals to add value and to balance risk. Moreover, the standards and processes put in place can assist organizations with compliance issues surrounding the Sarbanes-Oxley Act (SOX) and other governance standards (Organizational Project Management Maturity Model [OPM3], Capability Maturity Model Integration [CMMI], Information Technology Infrastructure Library [ITIL], etc.).

In light of the increasing interest in IT governance, numerous project portfolio management (PPM) vendors have directed their focus on addressing the pain points expressed by internal IT departments. With the inherent functionalities of portfolio analysis, budget/cost controls, risk analysis, and audit trails found in PPM software, many PPM vendors have recognized the value they provide to the challenge of putting in place an IT governance framework.

PPM's Place within IT Governance

A number of today's PPM vendors originally were established in response to the lack of available tools addressing the needs of internal IT departments. With the onset of professional services automation (PSA), these tools eventually extended their functionality to address professional services organizations. As the PSA industry matured, major enterprise resource planning (ERP) players entered the billable services space. In turn, a number of best-of-breed vendors, weaker in the area of financials, repositioned their offering by focusing their efforts on functionality for internal IT departments in resource planning and portfolio management. Thus, a number of vendors have adopted the IT governance mantra to differentiate their best-of breed functionality from the integrated PPM solutions offered by the ERP industry.

Vendors such as Computer Associate's Niku, ProSight, Pacific Edge, Augeo Software, PlanView, and Mercury Interactive, among others, recognize the value of positioning themselves as niche vendors in IT governance. In response to the strong billing and project accounting functionality offered by ERP and accounting vendors, these best-of-breed PPM vendors have focused their marketing efforts on IT governance to strengthen their offering.

PPM Vendors for NPD

2009-12-02T06:33:00.000-08:00

As PPM becomes increasingly important in NPD projects, numerous PPM vendors have extended their offerings in this area. Organizations looking for a PPM solution for their NPD projects should consider the PPM vendors below.

Niku's Clarity solution provides the tools that are necessary from the decision stage to the development and delivery stages of NPD. Niku provides reporting tools (bubble diagrams and histograms), as well as collaboration and decision support applications to support PPM for NPD and R&D projects. Key to Niku's offering is its People Powered Innovation concept, which provides companies with tools to facilitate collaboration and to gain increased visibility into people-related processes such as idea development, resource capacity planning, and project staffing.

Planisware's OPX2 NPD solution targets NPD projects based on Stage-Gate� best practices. OPX2 NPD offers a single system with four strategic tools for product development. These include project management, NPD process management, collaboration, and project information management tools. Planisware plans to include its Project Intelligence application, which improves predictability, collaboration, and visibility of NPD projects, as a part of OPX2 NPD in the future.

Pacific Edge's NPD solution seeks to align NPD projects with corporate strategies. At the core of its solution lies the Pacific Edge Mariner product. Pacific Edge Mariner provides users with a Web-enabled solution built on portfolio management functionality. For NPD projects, Pacific Edge adopts a stage-gate approach, providing tools to monitor lifecycle, resource, financial, and project data in an integrated decision support framework where trade-offs are examined, impacts are analyzed, and performance is tracked and optimized.

Artemis Software's NPD solution focuses on the manufacturing, high technology, life sciences, and consumer goods markets. Artemis for NPD delivers PPM, lifecycle management, financial management, idea management, project management, and resource management components. Artemis also incorporates stage-gate processes, and has recently introduced an idea management module to capture, manage, and route multiple ideas for NPD projects.

Augeo Software handles the production side of R&D projects with Augeo 5, its NPD solution for the pharmaceutical, automotive, and high technology sectors. For NPD, Augeo's PPM solution focuses on resource allocation and project lifecycle functionality. However, Augeo lacks functionality in the areas of idea generation and product launching.

Sopheon is a best-of-breed vendor that offers a PPM solution uniquely for the NPD market. Sopheon Accolade integrates the stage-gate process (as well as other phase-based processes) into its offering to allow tracking of NPD projects from both a day-to-day activity and a business strategy point of view. Sopheon delivers dashboard technology, customizable portals, centralization of project phase data, and alignment monitoring functionality.

Realization offers a PPM solution that is specifically designed for NPD in the IT, defense, and manufacturing sectors. Realization's product, Concerto Engine>, adopts the "critical chain" concept, factoring in the uncertain elements that are prevalent when managing multiple projects. Concerto Engine facilitates management by level loading resources based on the pipeline of projects and providing buffer management to calculate unscheduled time and resources when uncertainties arise during project execution. This is all achieved in a single relational database.

PPM Phases for NPD

2009-12-02T06:32:00.000-08:00

Traditionally, organizations have focused on capturing and organizing documents, content, bill of materials (BOM), and specifications for new products. In contrast, PPM emphasizes the human resources (HR) component of NPD, which can drive the success or failure of projects. PPM software uses the following phases to address NPD projects.

1. Planning. Planning enables an organization to share and prioritize ideas, ensure projects are aligned with business and financial goals, and determine resource capacity. PPM solutions facilitate planning by offering Web-based bubble diagrams, "what-if" scenario reports, and collaboration or repository applications to help rank and share ideas.

2. Development. This phase allows managers to build resource teams based on templates; provides quick access to information and collaboration capabilities for team members; and allows access to forecasting, scheduling, and costs reports. PPM solutions contribute to development by providing resource planning tools, dashboard capabilities for visibility and collaboration, and real time executive reporting.

3. Delivery. The delivery phase helps organizations to successfully launch a product by improving collaboration between production and marketing, optimizing marketing by providing a single repository for consistent information, and managing product engagements and installations. In aid of this, PPM solutions provide collaboration tools, workflows, and dashboard technology to view and control all aspects of the product delivery process.

Supporting Stage-Gate with PPM

Though tools that gauge the aforementioned NPD and R&D project phases are important, implementing a best practices framework is also a critical factor in the success of a project. According to Robert G. Cooper's 2001 book, Winning at New Products: Accelerating the Process from Idea to Launch, Stage-Gate is one of the more popular NPD methodologies adopted by organizations seeking to closely monitor the progress of their projects.

(Source: http://www.prod-dev.com/stage-gate.shtml)

Stage-Gate is a best practices road map that divides NPD projects into distinct stages in order to formalize the careful evaluation of projects by management. As the above diagram shows, each stage is divided by decision gates where key decision makers can impose a go or kill command or determine the prioritization of the project at hand.

From the inception of an idea to the launching of a product, a gate acts as a decision point for key decision makers in an organization. Acting as a funnel to determine where resources are best allocated, the gate allows management to confirm if project deliverables are met based on predetermined qualitative and financial criteria. The output of the gate review will determine whether NPD or R&D projects will continue, be cancelled, be placed on hold, or be reprioritized (these outcomes are also known as go, kill, hold, and recycle, respectively). Furthermore, the gate review sets the plan for the next stage in the process.

During these various stages, tasks are executed by project managers and staff. Each stage costs more than the preceding stage, and project commitments are incremental. The following list catalogs the five stages of the Stage-Gate process.

* Stage one involves scoping. This is an assessment of the market adoption and technological merits of the projects.

* Stage two involves building the business case. Stage two is a critical decision point for moving forward with a project based on the product definition, justification, and plan.

* Stage three is development. Plans are translated into actual deliverables, where manufacturing or operations map out marketing, operating plans, and testing.

* Stage four involves testing and validation. This step requires total validation of the product, production process, customer acceptance, and financial viability.

* Stage five is the launch—the complete commercial launch and production of the product.

Stage-Gate imposes discipline on the rather chaotic processes typically found in NPD projects. Stage-Gate also clarifies requirements and manages business risk by breaking resource commitments into stages, thus greatly improving the success rate of NPD projects.

Project Portfolio Management for New Product Development: Tracking the Project Cycle from Idea to Launch

2009-12-02T06:30:00.000-08:00

Besides being relevant to professional services organizations (PSO) and internal information technology (IT) departments, project portfolio management (PPM) software is applied in multiple vertical markets in the area of new product development (NPD). In industries ranging from manufacturing and high technology to consumer goods and biotechnology, PPM solutions help manage the corporate objectives associated with NPD projects.

PPM for NPD and research and development (R&D) projects addresses the needs of organizations seeking to maximize resource utilization for a portfolio of projects. PPM software empowers decision makers to select, evaluate, and prioritize their NPD and R&D projects. Furthermore, existing projects can be accelerated, terminated, or de-prioritized by the allocation or re-allocation of the resources that deliver project tasks. In the area of NPD, the primary objective of a PPM solution is to facilitate strategic and financial control throughout the project or product lifecycle.

The following article will examine the features and benefits of PPM in the NPD arena, as well as some of the vendors that provide specific functionality for this growing market segment.

Challenges in NPD

PPM is a key component of an organization's NPD strategy. The main challenge faced by managers and executives tracking NPD projects is the identification of bottlenecks within the NPD process that are relevant to their unique function within an organization. For instance, at any given time, project managers need to identify the short term availability of resources in relation to the requirements of a portfolio of projects. Vice presidents (VP) and "C" level executives, on the other hand, need to identify mid-term and long-term viability, return on investment (ROI), and strategic business decisions regarding their resource investments.

According to the Product Development Institute (http://www.prod-dev.com), organizations apply PPM methodology to address the following three critical issues in NPD and R&D projects.

1. Maximizing the value of portfolios by effectively managing and allocating resources to optimize profitability, maximize ROI, and reduce risk. This is achieved through the financial controls and scoring models offered by PPM solutions.

2. Achieving balance between business goals, risks, vertical markets, business strategies, and technologies. PPM solutions offer bubble diagrams, histograms, and other graphical reports to assist organizations in benchmarking their balance.

3. Aligning portfolio spending with the organization's business strategy. This can be achieved by implementing a PPM solution that provides strategic cross-referencing between projects, as well as a "gating" process, which enforces checkpoints to evaluate the viability of projects.

It is important to note that PPM solutions help provide the streamlined system that is necessary to address these critical issues by centralizing the information needed to track and evaluate NPD and R&D projects from idea to launch.

Geac Trying Its Luck in Partnering:Market Impact

2009-11-16T06:30:00.002-08:00

After a slew of acquisitions in the past, which have resulted in varied outcomes, Geac seems to be trying another tack to expand its product offering and to convince the market about its commitment to further develop certain attractive product lines.

We maintain our position that Geac will not establish itself as an enterprise applications leader as long as it remains perceived as a company that acquires, botches up, and possibly divests other under performing software vendors and/or products. The company will have to become a true software-developing vendor, not simply a software collector and/or dealer within some esoteric market segments. It will need to add much more value to its products and services to attract and retain customers instead of simply increasing the investment in the existing, possibly outdated, core products and support services. For these reasons, we endorse Geac's recent partnering initiatives in case as well as its alliance with IBM from the beginning of this year, which features Geac's System 21 on IBM hardware, with IBM consulting services and e-Business solutions.

Its applications must be able to support future business requirements, which are nowadays directly related to customers' e-business strategies. While the company is currently not in a position to offer a comprehensive e-business and CRM solution on its own, it should, nevertheless, be able to at least provide a back-office hub and bridges to e-business components in the fashion similar to J.D. Edwards' EAI strategy. To that end, Geac must develop standard, common components that will be readily available within its product portfolio.

Geac acquired System 21 through its acquisition of JBA International. In spite of the fact that Geac, which is a large software company with a track record for profitability and growth, has significantly enhanced System 21 by embedding acquired CRM and SCE products for the apparel industry, Geac has been unable to be successful in marketing its System 21 business. The revenue from the product in the last year was embarrassingly low ($67 million) compared to the level attained in 1998, when JBA reported $487 million in sales. Therefore, its recent partnering initiatives are only an initial necessary step in creating its market recognition as a strong global business applications vendor to be reckoned with.

Geac Trying Its Luck in Partnering

2009-11-16T06:30:00.001-08:00

According to a press release from August 21, Applix, Inc., a global e-business solutions company, and Geac Enterprise Solutions, a division of Geac Computer Corporation Limited, a Canadian supplier of enterprise management software, have partnered to deliver a global, Web-based iCRM solution to customers. Geac will distribute Applix's iCRM solution on a worldwide basis as both a component of its own solution offering and as a standalone application in select markets. As proof of its commitment, Geac will implement Applix's iEnterprise iCRM solution for its own internal use.

Geac will use Applix iEnterprise software to interface the customer-facing front office business processes to its back office applications. Subsequently, it will use Applix's iTM1 business intelligence solution to analyze customer data to help users improve business efficiency and provide customers with the information and services they need. By accessing enterprise-wide data, businesses will be able to accurately measure levels and patterns of customer demand in real time. Also, when the highly flexible iEnterprise is configured to Geac's solutions (SmartStream, System21, E Series, M Series, SQL Financials, TotalHR), the browser access will enable customer data to be viewed and analyzed remotely, regardless of where the transactions are made. The extensive information available relating to customer sales, previous orders, service levels and prior performance will give organizations the necessary data to fully understand the cost of transactions and streamline the entire process of customer interaction, such as matching the most suitable process with the right customer.

"In the New Economy, maintaining both new and established customer relationships is not an option - it is a necessity," explains Harry Debes, President, Geac Enterprise Solutions. "By partnering with Applix, Geac Enterprise Solutions can now show businesses how to use the data that our applications maintain to improve and streamline the way their e-business interacts with the customer. It is yet another example of Geac Enterprise Solutions' commitment to supply mid-market companies with unrivalled and specialized end-to-end solutions to help them prosper in the new digital age. This represents a significant step in Geac's strategy of enhancing its customers' existing investments to participate wholeheartedly in the New Economy."

Earlier, on August 7, FRx Software Corporation, a Denver-based company specializing in the development of advanced financial reporting and analytical application software, announced a strategic partnership with Geac Enterprise Solutions. As part of the agreement, Geac will make FRx available to its SmartStream customer base and will extend its pre-existing interface with FRx for SQL Financials customers. Geac will also include FRx with all new license agreements into its SmartStream, SQL Financials and E Series and M Series product suites. In addition to bundling FRx into future solution packages, Geac will market and sell the product to its existing customer base, which includes businesses in the hospitality, property, banking and publishing industries. This combination will allow Geac customers rapid access to critical financial information and reports needed to make more informed business decisions.

"We chose to partner with FRx Software based on its reputation, quality of product and commitment to its customers," said Peter Quinn, vice president of Product Marketing, Geac Enterprise Solutions. "Through this partnership we can offer our clients the ability to provide their customers with industry-leading financial reporting capabilities that maximize Geac's ERP solutions."

IFS Has A Magic Growth Formula:Market Impact

2009-11-16T06:29:00.001-08:00

We have only praise for IFS' fast growth and international expansion. Its formula for success seems simple, although apparently not easily emulated by competitors:

* a flexible and technologically superior componentized product

* a comprehensive e-commerce strategy

* deep feature-rich vertical functionality

* a number of standard APIs or XML-based interfaces

* reputable customer service & support

* prudent acquisitions and/or partnering moves in the past

Particularly at the lower end of the market segment and in regions where IFS has a strong presence (e.g., Nordic Region), it represents a generally low-cost, but viable option.

While the North American business unit, with headquarters in Tucson, AZ achieved very impressive results - a 234% revenue increase over the same period of last year - IFS' track record of successful regional implementations is still being made. Currently it is at the level of a couple of hundred customers. These results are crucial for the following two reasons: 1) to build the company's mind share in the world's most prospective business applications market, and 2) to show that the heavy investments IFS has made in North America over the past several years have begun to pay dividends. Although a newcomer in the North American market, IFS shows promise with a component-based product that enables it to more feasibly integrate traditional ERP with e-business, CRM and other extended-ERP applications. The company will also likely pursue the opportunity of preying on the customer base of currently struggling or all but vanished vendors.

IFS announced the availability of its new release, IFS Applications 2001, in August 2000. This release included 500 major product enhancements and the addition of 10 new modules. IFS Applications 2001 includes web-based components, Internet storefronts, customer relationship management (CRM) applications, connectivity to other business applications, and collaboration with process control systems with a variety of e-commerce engines. IFS Applications offers over 50 functional business components for improving business processes in medium-to-large size companies. Some major enhancements were:

* Completely integrated CRM Solution with Sales & Marketing, Call Management, Sales Configurator and WEB Store.

* Portals implemented for the whole IFS Application product suite.

* Flow manufacturing with support for Kanban.

* Integrated Business Performance solution with Data Warehouse and Cube configurator capabilities.

Despite IFS' presence in 42 countries, the challenge of further international expansion and brand awareness remains. The perception of poor scalability and less-than-global presence within the higher-end of the market are the hurdles yet to be overcome. There is also room for improvement in its currently undeveloped indirect channel, which has been a major success factor for other companies in the mid-market. Moreover, one should closely watch IFS' future profitability track. The company has posted five losing quarters out of the last six (See Figure 1), and its shareholders' confidence may deteriorate until they see a more consistent profitable performance. The mitigating factor in this regard is IFS' solid current stockholders equity.

IFS Has A Magic Growth Formula; But What About Profitability

2009-11-16T06:27:00.000-08:00

Bengt Nilsson, president and CEO of IFS, commented, "We are pleased with the significant increase in license sales in the third quarter. Results for the third quarter are always considerably affected by vacation periods throughout Europe. However, the market is recovering strongly, particularly in the US. The positive consulting margins in September are evidence of better utilization of our consultants. With our consulting organization intact, we are well equipped to meet growing demand for IFS products and services. While we still aim to report a positive net earnings result for 2000, the late recovery of the market will make it difficult to achieve this goal. Our continued investment in product development has enabled us to remain in the forefront in terms of technology. An increase in sales of over 106% in the third quarter speaks for itself. IFS Applications 2001, our new product release that includes a wide array of e-business components, has met with an enthusiastic reception."

IFS was particularly pleased to announce strong momentum in the North American market with the last quarter producing the best performance to date in number and value of contracts in the United States. From July through September, the company closed deals valued at more than $20 million in products and services with 20 customers, predominately in the mid-sized manufacturing market segment.

IFS North America President and Chief Executive Officer Terje Vangbo commented, "This strong performance is further evidence that our component-based solution is gaining ever increasing acceptance among enterprises that need to evolve their operations one step at a time into e-business. With the North American market rebounding from the industry-wide slowdown of 1999, IFS is seeing not only an increase in the number of deals, but in the size of the deals as well. I believe IFS will continue to emerge as a business solutions leader in North America, particularly with the recent release of IFS Applications 2001 software. With its proven component technology, we expect IFS Applications 2001 to set the pace in the U.S. for e-business/supply chain integration. It will be difficult to match our solution with its integration capabilities, unlimited scalability, and new off-the-shelf e-business components."

IFS' newest U.S. customers represent a diverse range of industries, including plastics, automotive, fiber optics, civil aviation, electronic components, steel, and wood products.

Defining ERP for Services

2009-11-10T06:01:00.001-08:00

The main difference in functionality between best-of breed service applications and ERP for services is the back-office component. ERP for services applications provide complete functionality for both the transactional (or operational) components, and the project-oriented components of service organizations. However, best-of breed service applications typically refer only to industry-specific functionality. Some vendors may include a back-office piece, and others may only deliver vertical functionality that communicates with other ERP systems or financial packages. As a result, there are two categories of vendors for service organizations:

1. Best-of-breed service vendors: Vendor solutions such as Compuware's Changepoint and OpenAir PSA focus primarily on professional services organizations, and are typically marketed to the small to medium business (SMB) market. These offerings vary in breadth and depth, and the vendors tend to target a few key vertical markets. Depending on the vendor, their business models are diverse and can deliver software as a service (SaaS) and license models to their clients.

2.
ERP for services: These vendors are typically traditional ERP vendors that provide a fully integrated solution with complete back-office functionality. Since they provide their clients with complete operational and transactional functionality, their offerings tend to be broader in application. In addition to project-oriented functionality that vendors such as Epicor and Deltek deliver for professional services organizations, ERP for services vendors provide fully integrated, operational functionality for non-project organizations, such as Lawson in the health care sector, and Unit 4 Agresso for the public sector.

ERP for Services
Back Office	Service Industries
Human resources	Health care components
Procurement	Distribution components
Financials	Government components
Customer relationship management	Higher education components
Business intelligence	Financial services components
Knowledge management	Hospitality component
	Nonprofit components
	Professional services components

The Evolution of Enterprise Resource Planning Includes Service Industries

2009-11-10T06:00:00.000-08:00

Since the late nineties, the enterprise resource planning (ERP) vendors that originally targeted the needs of manufacturing organizations have slowly extended their functionality to service the needs of non-manufacturing industries as well. By 2000, when many of the major ERP implementations for the manufacturing industry had tapered off, tier one ERP vendors such as SAP and Oracle had refocused efforts to market their integrated solutions in the greener pastures of service-oriented vertical markets, including health care, government, higher education, banking, insurance, and other service-based businesses.

Today, ERP vendors are aggressively marketing industry-specific and project-oriented functionality to service industries. Unlike best-of breed solutions, these systems provide a fully integrated, mature back-office system originally developed for manufacturing industries. Consequently, this raises the question: Is ERP for services a new category? Or is it "ERP less manufacturing?"

From a vendor's point of view, the answers to these questions vary according to which side of the ERP fence you stand on. On one hand, ERP vendors claim that ERP for services is a well-developed software category customized for the service industries they serve. On the other hand, best-of-breed vendors for service verticals (such as professional services, health care, government, and financial services) push their industry expertise and vertical solutions built from the ground up for those respective service industries. Consequently, organizations in service industries are faced with the challenge of determining which vendors best fit their functional requirements.

SCT and G-Log Form Alliance For Collaborative Logistics in the Process Industries

2009-11-10T05:53:00.000-08:00

SCT (www.sct.com/manufacturing) and G-Log (www.g-log.com), both leaders in their respective fields have announced a partnership that brings together SCT's process industry manufacturing execution, planning, and optimization with G-Log's global logistics platform. The partnership is aimed at process manufacturers and distributors in the food, beverage, chemical, CPG, pharmaceutical, biotechnology, and related process industries worldwide. Both companies currently have impressive lists of customers in these industries using their solutions. G-Log's customers include Eastman Chemical, Dupont, and Kimball International. SCT's customers include Coca Cola, Kroger, Cargill, and Basic American Foods.

Typically, the process industries have robust logistics needs due to the nature of the materials transported. These materials tend to be bulky, heavy and often have special requirements like environmental demands, shelf life or regulatory issues. Many process companies are global in nature and ship using a variety of modes (truck, barge, ocean freight, etc.) further complicating their logistics management needs. This partnership addresses those needs by the expansion of SCT's iProcess.sct solution by improving distribution service and efficiency, while considering real-world transportation constraints.

The G-Log logistics platform supports the mission-critical process of managing all freight, all over the world, in a multi-client environment, by incorporating traditional domestic and international transportation components into a single system. It provides planning, optimization, visibility, control, and settlement of shipments and orders. SCT's iProcess.sct, is a process industry-specific solution that provides supply chain planning, Internet commerce, relationship network management, and supply chain execution/ERP capabilities. The SCT products provide collaborative supply chain distribution and network optimization capabilities. Together, these products will help process enterprises optimize manufacturing, distribution and transportation decisions based on accurate real-time information from their logistics networks.

Darcy MacClaren, senior vice president, business development, of G-Log states, "We believe the combined solution will enable companies to collaborate more effectively with their suppliers, improve customer service, and respond more quickly to market opportunities."

"With the addition of the G-Log solutions, SCT is able to bring a full suite of supply chain planning and execution solutions to the process industries, ranging from network planning and design and enterprise planning all the way down to plant scheduling and transportation execution" states Jim Brown, VP Solutions Strategy and Marketing.

An Analyst's View of Process Industry SMB Challenges

2009-10-28T06:01:00.000-07:00

The process industry provides many of the products we use in our daily lives for food, shelter, and health. Such products are created as materials and transformed through the use of energy resources and chemical products. In addition, the process industry manufactures products that are essential to advanced industries such as computing, biotechnology, telecommunications, automotive, scientific, and space exploration.

These industries are facing major pressures not only to meet the present needs of our global economy, but also to do so without compromising future generations by ensuring that processes

* meet environmental guidelines
* optimize energy resources efficiently
* result in products that are safer, more reliable, and more functional
* provide features that meet both industry and consumers needs

This article focuses on how enterprise resource planning (ERP) vendors are helping the process industry meet both the needs of today and deliver on anticipated functional requirements that will help meet the needs of tomorrow.

Process Industry Manufacturing Challenges

Manufacturers in the process industry are at a difficult crossroads. Although the industry is not facing any imminent substantial decrease in its overall profit margins, there is concern in the industry according to a recent study by the Canadian Manufacturers and Exporters Association, which cites the following issues:

* increased global competition
* foreign currency fluctuation
* changing patterns of customer demand
* escalating business costs
* problems in implementing new technologies
* competitive business pressures
* shortage of skilled workers

To address these issues, process industry manufacturers and distributors must manage the following key activities, and ensure they use an enterprise system that supports these activities:

* Planning production for both materials and capacity—to develop a production plan, manufacturers must ensure that there are sufficient available resources and materials, production capacity, and labor.
* Inventory tracking and controlling work-in-process (WIP)—monitoring material consumption and tracking work order progress is the basis of manufacturers' being able to meet sales order, demand, and delivery dates.
* Replenishment and demand planning—the ability to review variances between forecasted and actual sales is the basis of managing vendor lead times and raw material replenishment.
* Managing the supply chain for order fulfillment—reviewing the global supply chain provides manufacturers with the ability to coordinate logistics and operational activity to meet customer order fulfillment expectations.

Specific Requirements of an ERP System for the Process Industry

Here's an overview of how some of the functionalities of an ERP system for process industries help manufacturers better perform the activities listed above.

1. Conversion process capability
In the process industry, the bill of materials (BOM) used in discrete manufacturing is replaced by the master product formula, or simply the formula. The formula requires a conversion table for measures, such as weights from grams to pounds, and must have the ability to record liquid units of measure, in both metric and US-standard. The formula must also record specific information related to product characteristics that can affect manufacturing processes. For example, in the blending process, the system can record product information such as percentage calculations of raw materials, and the effective specific gravity, potency, density, and number of reactives of those raw materials.

2. Interface to other modules
The master formula can also be linked to submodules like quality assurance (QA), procurement, inventory, and accounts payable (A/P) for government compliance and safety issues. Also, the manufacturer must be able to trace products in order to manage dating of inventory lot control and the amount of inventory available at the distribution level. Furthermore, there are government and regulatory concerns that deal with the nature of the materials, as there may be a controlled substance with specific shipping, handling, and storage regulations. Or, the manufacturing process may emit hazardous by-products. Or, there may be logistical concerns within the manufacturing process itself.

Key Benefits of a Mixed-mode ERP System

2009-10-28T05:59:00.002-07:00

Following are some of the major benefits a mixed-mode ERP system can offer:

elimination of duplicate data entry
a Web portal or executive dashboard that displays accurate, real-time data on key costs and trends, in a concise, graphical format
a common user interface and a single set of processing goals to reduce training costs and to smooth IT operations
a phased implementation rather than a single implementation, which means that not all legacy systems require implementation, thus resulting in a smoother transition
the ability to support both discrete and process manufacturing modes

Vendor Solutions for a Mixed-mode Environment

An organization's decision-makers must be educated about the software applications and their key features in order to make the right choice. Each of the five major ERP vendors mentioned below can address the needs of both large-scale and small to medium size businesses with its software packages. Listed are the types of packages these vendors offer, including key features and functionality.

1. Lawson Process Manufacturing
Based in Saint Paul, Minnesota (US), Lawson Software has 40 offices worldwide. The vendor's software system has received broad industry acceptance, and features standard product functionality, along with a few interesting features. Lawson Process Manufacturing

supports mixed-mode, discrete, and process manufacturing environments
supports service-oriented architecture (SOA)
offers a fully integrated suite of modules that can be integrated either individually or separately

2. Infor ERP XA
Infor one of the world's largest providers of business software, is based in Atlanta, Georgia (US). The vendor has acquired and developed ERP systems to serve both discrete and process manufacturing. Infor ERP XA

supports mixed-mode, discrete, and process manufacturing environments
integrates with shop floor services and the supply chain to aid material supply, distribution, warehousing, and freight management
supports SOA
links to radio frequency identification (RFID) and transportation management systems (TMSs)
supports lean manufacturing

3. SAP
SAP,headquartered in Walldorf (Germany), has applied a great deal of its research on process industries into its product offerings. SAP's software packages

support mixed-mode manufacturing environments
offer easier integration through merged companies
receive maintenance and support directly from SAP

4. Epicor Vantage
An Irvine, California (US)-based firm established in 1984, Epicor serves the mid-market, with over 20,000 installations globally. An integrated, out-of-the-box solution, Epicor Vantage

offers integrated workflow processes that work collaboratively across modules
supports paperless transactions as well as SOA
provides a built-in project management feature as part of its planning and scheduling module
features vendor portals (from its eBusiness Suite), which enable vendors to manage issues

5. JD Edwards by oracal
JD Edwards Enterprise One (formerly PeopleSoft) is a suite of modular, pre-integrated, industry-specific business applications designed on a pure Internet architecture. It is suited for organizations that manufacture, construct, distribute, service, or manage products or physical assets. JD Edwards Enterprise One

offers an integrated modular approach
provides manufacturing management dashboards with real-time metrics on key performance indicators (KPIs)
features rapid deployment
supports global installation based on localized versions of software available

Getting It Right: ERP Solutions for Mixed-mode Manufacturers

2009-10-28T05:59:00.001-07:00

Mixed-mode manufacturers operate in both discrete and process environments. In the past, these organizations have not been well served by traditional discrete or process enterprise resource planning (ERP) solutions. But a recent trend in the ERP market has been the offering of software solutions by major discrete ERP vendors to the mixed-mode manufacturing sector. However, in terms of criteria and the overall weight assigned to them in a request for proposal (RFP), these vendors must consider the industry sector the mixed-mode manufacturer's operations serve, the manufacturing processes, government regulations, and the quality standards of the particular industry.

Key Differences between Discrete and Process Manufacturing

Discrete manufacturing uses bills of materials (BOMs); process manufacturing uses formulations, also known as recipes. A discrete manufacturer assembles products along a production sequence routing, whereas a process manufacturer blends in a batch.

In discrete manufacturing, a multi-level BOM is used to produce a finished good, indicating the base unit of measure with all the lower level assemblies and subassemblies featured below. In process manufacturing, all sequential steps are held within the product formula, including all relative secondary products. Batch sizes are based on specific units of measure and vary according to the formula and product yields. Process manufacturing systems must be able to track the equipment and materials used, equipment settings, and labor.

Table 1 lists examples of discrete and process manufacturing sectors.

Discrete Industry	Process Industry

aerospace manufacturing	lubricant manufacturing
automotive manufacturing	water treatment manufacturing
furniture manufacturing	mining companies
machines precision parts	organic and inorganic chemicals
electronics	pigments
	coatings and paints
	inks and dyes
	adhesive manufacturers
	oil and gas fields
	pool chemicals
	cleaning products and solvents
	pharmaceutical
	food and beverage
	biotechnology

Table 1. Discrete and process manufacturing sectors.

The Trouble with Traditional Discrete and Process ERP Systems

Because mixed-mode manufacturers fall somewhere in between discrete and process manufacturing, ERP systems geared solely toward one type or the other often fail to support key mixed-mode manufacturing processes, resulting in decreased productivity and customer satisfaction, not to mention a lower return on investment (ROI) for the manufacturer.

For example, the challenge faced by a mixed-mode manufacturer when attempting to use an ERP package designed for the discrete manufacturer is the system's limitations in being able to account for the following process manufacturing requirements:

yield estimation of products per job
calculation of the available to promise (ATP) inventory allocation of finished goods
increase or decrease in production yields based on ingredient levels or on lot or batch size limitations
governmental and regulatory compliance related to lot control and traceability, as well as product quality—issues that the pharmaceutical and the food and beverage industries in particular must consider
maintenance and tracking of quantities and costs of raw material process variances within the manufacturing process

Furthermore, a mixed-mode manufacturer may encounter the problems of longer implementation time and additional expense with an ERP system designed for discrete manufacturers, as modifications to the core functionality of the system may be required.

System Flexibility

Mixed-mode manufacturers need an ERP system that can handle formulations, batching, and other practices specific to process manufacturing in addition to the specific requirements of discrete manufacturing. What compounds mixed-mode manufacturers' malaise with ERP systems designed specifically for either discrete or process manufacturing is that these systems lock the mixed-mode manufacturer into a single line of business. They force companies to work around the software used for their other product lines by constructing spreadsheets or databases to compile data from various sources. When an organization's business model changes, the organization is usually forced to choose a whole new ERP system. For a mixed-mode manufacturer, the way around this scenario is to implement mixed-mode enterprise software instead. Mixed-mode software enables companies to switch manufacturing styles, and provides the flexibility needed to meet market demands.

Since implementing an ERP system is a time-consuming and costly undertaking, collaborative effort and research by all departments involved is required before a system is selected. A review of the current business processes and a documented view of the processes each department seeks to improve are essential to making the right choice. This review must be aligned with management's long-term objectives for the organization.

One way to shorten this cycle within the scoping phase is to obtain vital, up-to-date market and software solution information. Organizations can purchase relevant information on software systems from reputable software evaluation companies to save time and gain firsthand knowledge on the ERP market, as well as the proper tools to evaluate the product offerings that match their criteria. The goal of this exercise is to avoid making a costly investment in a system that is not flexible and that was not written with the mixed-mode manufacturer in mind.

Five Steps to Business Intelligence Project Success

2009-10-28T05:58:00.000-07:00

Successful business intelligence (BI) projects encompass more than implementation of a solution on time and within budget. True success should be measured by how the BI solution improves the organization's overall performance through increased efficiency in reporting, planning, financial functions, and performance measurements. This will help ensure organizations' BI projects fall into the estimated 30 percent success rate.

Much has been written about measuring return on investment (ROI) for BI, and the general conclusion is that gaining tangible insight into the initial benefits is not easy. Identifying long-term benefits becomes more practical as planning and analysis, compliancy, and forward-looking approaches become more mainstream within organizations. To gain insight into how to implement a BI solution successfully, organizations should benchmark the success of other organizations—including their implementations and use of BI—against their own current initiatives. It is equally important that organizations learn from other organizations' failures—and avoid repeating them.

This article identifies and explores five steps organizations should take to avoid the common pitfalls encountered by many businesses when implementing a BI solution. These steps also provide an overview of items that need to be considered before implementing BI within an organization or business unit.

Step 1. Identifying the Business Problem

Identifying the BI business problem is the first step to ensuring a successful project. Once an organization knows what is broken, not only can it start to find ways to fix the problem, but it can also identify the proper resources, create user buy-in, and prioritize how to tackle the project. To produce an ROI, a BI solution needs to address specific business problems. Otherwise, implementing an ad hoc query tool, an online analytical process (OLAP) cube, or a dashboard will not result in lasting benefits.

Unfortunately, it is common for BI solutions to be pushed onto a business unit in order to meet an IT objective rather than an organizational need. Sometimes organizations get caught up with general initiatives and lose sight of the actual benefits BI provides in terms of performance management, collaboration, workflow, process improvement, etc.

To attain buy-in, the user community should be a part of the problem identification process. An implementation decision that comes from management still requires input from users as to what their requirements are, and this information can make the difference between the implementation of a tool that works as a value proposition and an implementation that may be seen as useless.

Step 2. Determining Expectations of Use

Once BI is implemented within an organization, its usage usually grows beyond initial expectations. For example, an organization may assume that its BI solution will be used by 10 to 20 users, when in reality over 400 users query data on a monthly basis. Because the initial design of the platform will have been based on a low number of potential users, the system may not be able to sustain such a high number of queries, and will most likely "crash" (fail), causing users to lose faith in the new system and potentially revert to their pre-BI environment for stability. In addition to lacking confidence in the new system, the organization may see the challenge of getting an unstable system up and running as not worth the effort, delays, and time required.

With unrealistic expectations, frustration may cause the organization to rethink its use of BI. Generally, once BI adoption occurs within one part of the organization and other departments or business units see its benefits, adoption begins to spread throughout the entire organization. For a BI solution to meet these increasing needs, organizations should anticipate the use of BI before implementation of a solution.

Another consideration is the type of BI tool use. For example, if a sales manager needs to increase sales and therefore wants to analyze trends, product distribution, and sales performance, creating a set of static reports will not be helpful. A data visualization tool to manage these items and to develop a plan based on trend analysis will more likely produce the appropriate results.
The BI solution's ability to collect the right information for reporting and analysis is essential if it is to deliver value to organizations. Although identifying the data required is time-consuming, it is the backbone of BI. Additionally, determining how data will be delivered, what the appropriate data cleansing activities should be, and whether the data is to be delivered in batch or in real time, should all be defined in advance. If data is not cleansed or delivered when needed, then the front-end BI tools will not provide the proper value to the organization. BI solutions impart value through the analysis of data, so it is essential that data arrives when required, in the proper format, and at the right time.

In addition to extract, transform, and load (ETL) tools, data quality and data cleansing need to be inherent aspects of the delivery of BI within the organization. In reality, short of an organization-wide master data management (MDM) initiative, the responsibility of providing accurate data will fall on the shoulders of the business units implementing BI.

Some organizations are misguided and think that their BI solution will provide the tools to fix their data problems. BI solutions can provide ongoing data quality processes, but these are not innate to software offerings. Some vendors' BI tools include enhanced data quality and integration features, and other vendors assume this responsibility should fall to the organization. Organizations should implement data management structures to minimize frustrations that result from data issues.

Step 4. Rolling Out Training Initiatives

Deciding when to roll out training contributes to project success. Training initiatives should begin right before or during the implementation phase. However, in many organizations, training is rolled out months before actual implementation, creating hype among the employees about the new system and what they will be able to do with it. By the time implementation actually occurs—sometimes months later—the initial excitement and buy-in has subsided, and more importantly, users have forgotten their newfound skills. To build momentum again, training needs to be repeated—wasting time and money.

Buy-in related to change is never easily achieved within organizations. Users become attached to their current processes, whether or not those processes are productive. Buy-in does not occur immediately upon showing users the inherent value of BI because it means the entire way they do business will change. Creating a training program—and delivering that training in a timely fashion—helps users apply their newfound skills immediately, thus helping to increase user buy-in.

Step 5. Choosing a Vertical- or Horizontal-based Solution

Organizations should identify whether more value will be provided by a vertical solution that is built specifically for the organization's industry or department, or by a horizontal solution that can grow with the organization. For example, does the organization need a generic reporting, querying, and analysis tool that will extend across the organization, or does the organization need to develop a process and compliancy that will adhere to the US Sarbanes-Oxley Act (SOX) or Health Insurance Portability and Accountability Act (HIPAA) standards? The answer to this question will help the organization define which type of solution will best meet its needs.

In addition, anticipated use of BI in the future may help determine whether a horizontal or a vertical solution will best meet the organization's needs. Organizations that must adhere to compliance standards should take advantage of vertical-based solutions, because vendors have developed solutions that meet specific compliance requirements. Horizontal solutions need a large degree of customization to bring them up to par, leading to extra time and money spent on developing the solutions.

Organizations in key vertical industries should strongly consider vertical-based solutions that will meet their needs, out of the box. Vertical-based solutions are likely to meet the general requirements of a specific industry or department, but since horizontal BI solutions do not base themselves on specified data models, they may be more versatile to the changing demands of the organization. Therefore, if an organization anticipates rapid BI growth across the organization, having the ability to develop solutions based on individual needs may be more beneficial. This relates to identifying the business problem and anticipating the future needs of the organization.

Conclusion

All too often, BI projects fail to meet an organization's expectations. But with research, planning, and a solid methodology, failure can be avoided. To help ensure BI project success, organizations should work through these five essential steps: identifying the business problems, determining how a BI solution will be used, knowing how and when data is delivered, rolling out user training initiatives at appropriate times, and developing a framework for selecting the type of solution that will best fit their organizations' needs.

The Blurry Line between ERP and PLM

2009-10-28T05:57:00.002-07:00

The purpose of integrating ERP and PLM is to ensure that product definition information (which is mainly generated by the product design and development department) is accessible instantly by the following processes (e.g., production and services). Also, data from non-design phases can be a valuable input for the decision-making process during the design and development stages. ERP and PLM vendors and implementers have developed technologies to integrate the two systems and to integrate CAD design information with enterprise software applications as well.

In the past, the boundary between the ERP camp and the PLM camp was quite clear. However, after seeing the market potential of PLM solutions, almost all major ERP players have entered into the PLM market. This doesn't necessarily mean that PLM solutions provided by ERP vendors integrate with ERP systems better than those provided by pure PLM vendors (sometimes it may take very long for an acquired PLM solution to be well integrated with its new owner's ERP system), but it should be somewhat easier to coordinate the efforts of integrating two systems together.

Both ERP and PLM vendors are trying to extend their respective solutions' capabilities to the other side. This effort makes the line between ERP and PLM blurrier—ERP solutions are now more capable of managing product data and PLM vendors are adding more transactional functionality in their offerings.

On one side, ERP solutions are increasing their inward capability of managing product data. This phenomenon can be found more significantly in ERP solutions specifically for the ETO industry. To explain how ETO ERP is advancing in providing PLM functionality, I selected two common sub-modules: product data management and product/item configurator. Both submodules are available in ETO ERP and Discrete ERP (which has more generic coverage on manufacturing industries) categories within the Technology Evaluation Centers' (TEC's) knowledge bases (KBs). The comparison of average rating scores (based on TEC's software selection methodology) of the two types of ERP on the selected submodules clearly shows that ETO ERP provides better PLM capability than Discrete ERP (see figure 1). These average scores are quite representative since they are based on 111 Discrete ERP and 35 ETO ERP solutions recorded in TEC's knowledge base. Although PLM-like functionality within an ETO ERP solution can't match what PLM can do, this extension may reflect that ETO manufacturers are eager to enhance the connectivity between product data and operation data.

Figure 1. Rating scores of two submodules within ETO ERP and Discrete ERP

On the other side, PLM vendors are now working on expanding to the ERP-like functionality. A good example is the increasing availability of sourcing solutions from non-ERP PLM vendors. No matter how a PLM vendor positions its products (i.e., sourcing as a part of the PLM package or as a parallel offering alongside PLM), it makes perfect sense to increase the proximity between product definition information and sourcing. For ETO manufacturers, delivering high-quality products on time requires efficient sourcing, decision-making, and operations which rely on instant access to accurate product definition information and streamlined collaboration around it.

The Blurry Line between ERP and PLM in Engineer-to-order (ETO) Manufacturing

2009-10-28T05:57:00.001-07:00

The Need for ERP–PLM Integration in ETO Manufacturing

It is important for all manufacturers that have implemented ERP and PLM systems to build connections between the two software applications. For engineer-to-order (ETO) manufacturers (who design and manufacture products to the specific needs of the customer), the connection between ERP and PLM is even more important due to the specificity of the ETO sector.

Facilitating Engineering Changes

For ETO manufacturers, the probability of product and process changes is high. During the time between receiving customer requirements and delivering final products, changes happen (whether the customer modifies their requirements; design modifications are requested by the shop floor; or issues on the supplier's side result in using alternative parts). Quite often, a change initiated in one system (either ERP or PLM) will have a consequence in the other. For ETO manufacturers, the capability of efficiently capturing change requests and implementing change actions throughout the entire value chain (customer, manufacturer, and supplier) in a synchronized manner is one of the key success factors.

Reducing Rework and Scrap

Every manufacturer wants to reduce rework and scrap but ETO manufacturers dislike these costly activities more than the average manufacturer. In the ETO sector, the quantity of each product is usually small—unlike mass production manufacturing. This manufacturing process allows for a certain percentage of rework and scrap and costs are allocated to finished products without significant increase on unit price. For ETO companies to avoid catastrophic wastes in manufacturing processes, they have to make sure that the design department knows what can be made on the shop floor and that the production side always works on the up-to-date design specifications that reflect correct customer requirements.

Meeting Delivery Time
One of the major responsibilities that product/project managers at ETO manufacturers have is to ensure that the product can be delivered on time. Although one delivery delay may result in only one unhappy customer, for some ETO manufacturers, this customer may mean their entire business. The need to oversee both the development and production processes for every product poses a challenge for managers in the ETO sector. . The collaboration between product development and production is even more challenging since the two processes are mainly handled by two different information systems—PLM and ERP, respectively. Unless the two systems can talk to each other consistently, the collaboration won't be effective and efficient.

Providing High-quality After-sales Services

For many ETO manufacturers, after-sales services are not only obligations attached to the product but also an important revenue source. High-quality after-sales services rely on accurate product definition information (usually maintained in PLM systems), traceable service activities (which more likely reside in transactional systems such as ERP), and a convenient reference between the two sides. The entire perception of after-sales services is based on the experience dealing with the product provider as a single entity regardless if customers have access to ETO manufacturers' systems or have to interact using traditional communication means. That being said, ERP and PLM systems have to work as if they are a single system. For more discussion on the integration between PLM and ERP-like systems for service purposes, please read the blog post What Keeps EAM/CMMS Away From PLM?
Alongside other business objectives, the four factors mentioned above make the connectivity between ERP and PLM a necessity for ETO companies. Ideally, it would be great if there was a single system handling everything that an ETO manufacturer needs. However, during the early days of development, the product development application camp (e.g., computer aided design [CAD] and product data management [PDM] vendors) and the transactional enterprise system camp (e.g., ERP and supply chain management [SCM] vendors) were developing solutions in significant ignorance of each other. Also, ERP and PLM systems were not implemented at the same time for many organizations (often ERP was implemented earlier that PLM) and integration between the two systems seemed to be the only realistic option.

Tip Two: Extend Systems to Suppliers

2009-10-28T05:56:00.001-07:00

Once the basic problem of aligning manufacturing schedules with demand is taken care of, the greatest bottleneck to improved supply chain efficiency is often the disconnect between internal scheduling processes and those of external suppliers. Companies that are vendors to major original equipment manufacturers (OEMs) know that large manufacturers are working to eliminate this bottleneck, and are often working with suppliers on a proactive basis to help them become more responsive.

Technology can play a vital role in eliminating this constraint. In the case of our paint and coatings manufacturer, one of their main bottlenecks was packaging. They outsourced printing on the cans their product was shipped in, which meant that the supplier cannot finalize their own can production schedule until they know the exact product numbers that will be filled. Their packaging actually took longer to produce than the manufacture of the product itself. Even though the cost of the packaging is low in comparison to the actual product to be filled, the scheduling of the packaging supply is one of the most critical and difficult parts of production planning.

The solution was to set up a supplier portal, so that the packaging vendor and other suppliers could look into the production plan and prepare their own schedule accordingly. This eliminated a lot of the manual and administrative work involved with interfacing with a supply chain partner in real time, removing all manual intervention and administrative delays. Portals of this nature can also provide a longer view of anticipated production so that vendors can manage their own inventories and plan their own capacity according to anticipated demand.

Figure 1. A supplier portal eliminates administrative waste and integrates the supply chain in real time.

Tip Three: Run Parallel MRP Processes

To clarify, this tip does not have as much to do with running parallel systems for manufacturing resources planning (MRP) as much as it is about delaying the commitment to manufacture to a point where demand is visible, known or certain.

Even as companies try to focus on the disciplines normally associated with the idea of a lean supply chain, this another fundamental paradigm shift that must take place within their organization, and it is often overlooked.

For instance, many companies operate with one single MRP process. Consider that company that manufactures in a make-to-stock (MTS) mode, whose executives feel that this single MTS enterprise system is adequate for their needs. This attitude is fine—if a manufacturer has a stable, predictable demand for all of its products. But in reality, few manufacturers have the luxury of flat demand. More often the rule of Pareto is applicable. This rule suggests that 20 percent of products have a stable demand, and you can manufacture them efficiently in large quantities. But the other 80 percent of a manufacturers' part numbers are ordered less frequently, and therefore need to be treated differently in the company's processes, systems, and scheduling. This is why virtually any MTS manufacturer should run in multiple manufacturing modes. Most MTS manufacturers would gain from a parallel make-to-order (MTO) system. This will avoid the stockpiling of a large number of items that are more effectively handled in MTO mode, freeing up both capital and production capacity for other products, all without sacrificing responsiveness or customer service. By continually analyzing demand patterns and inventory turns, the point of postponement can be changed over time to achieve the optimal balance between efficiency and responsiveness.

A modern, agile enterprise application will include all of the necessary tools to handle these multiple modes. Apart from ensuring that they have the proper enabling technology, manufacturers will need to carefully analyze the demand patterns for their finished goods and divide them into MTS and MTO.

Figure 2. Demand Planning—Minimize the forecast error and improve customer service without sacrificing inventory turns.

Nine Ways to Use ERP to Make the Manufacturing Supply Chain Lean

2009-10-28T05:52:00.000-07:00

Lean in a supply chain context is about a holistic view of procurement, manufacturing distribution, and sales order processing. This means that some level of enterprise technology is necessary to view the organization in an integrated context instead of as functional islands. However, before technology can facilitate the lean supply chain, manufacturing executives need to start thinking in lean supply chain terms. We will be reviewing those terms and sharing the key concepts that are the foundation for the lean effort. In short, we will discuss:

* Four tips to help you bring lean supply chain improvements to your manufacturing operation.
* Five technology tools that help automate these lean supply chain practices.

We'll use a few practical examples along the way to illustrate these concepts, but our main goal will be to define the specific things manufacturing executives can do to make their supply chain lean.

Tip One: Resolve Conflict Between Manufacturing Efficiency and Customer Service

One company that I have been involved with from a lean supply chain perspective, is a manufacturer of paints and coatings. After implementing their new enterprise application, they wanted to use the new-found visibility of their operations to implement a lean supply chain program. They found that before you can lean an organization, you have to have a good idea of what your current operations and processes really are. Then, once you know what you are doing, you can decide on process changes and then measure to what extent those changes have reduced non-value-added work.

What became immediately apparent is that like most manufacturers, this company faced the same conflict between the need to be efficient in production and the need to be responsive to customers. The manufacturing department tended to schedule for maximum efficiency by producing very large batches. This enabled efficient purchase or raw materials , maximum return on machine set-up time, manufacturing personnel, and other costs. Large batches are simply a good way to minimize the cost per produced unit. Low cost-per-unit is attractive, but it is in conflict with the goals of the sales organization. While manufacturing is rewarded for efficiency, the sales department is rewarded for serving the customer, which in turn leads to increased revenue and commissions. If manufacturing commits production capacity to large runs that are not immediately tied to customer demand, it might be difficult to meet the needs of customers as those needs change and fluctuate during the year. An item that is requested might not be in stock and may not be scheduled for production at a time when immediate capacity is committed due to the high-volume production schedule. Moreover, these large production runs mean that large amounts of capital are tied up in finished product inventory long before any revenue can be realized.

In the case of food and beverage and some other process industries, these large production runs can also result in spoilage as the effective life of raw materials and finished goods is spent sitting on the shelf.

The paint manufacturer did the obvious thing—decrease its batch sizes. Going forward, manufacturing would not be making unilateral decisions about batch sizes and production schedules, circumventing their natural tendency to focus on manufacturing efficiency. Instead, they would now be obliged to produce only enough to cover a certain period of time based on the sales projection. That means that every product will now be produced more frequently and in smaller batches. To encourage this behavior, other metrics and key performance indicators (KPIs) can be introduced that are more holistic and based on customer service levels and inventory turns, rather than just production output.
There are any number of formal disciplines designed to tie production in with sales forecasts. Sales and operations planning is one such method. By tying manufacturing schedules to sales projections that typically look a short distance into the future, you will be manufacturing what customers are actually asking for, improving customer service, and allowing greater responsiveness. Your inventory levels will decrease in proportion to your inventory turns. The higher the speed through the supply chain, the faster the inventory turns, and the less capital that will tied up in inventory at any given time. At the same time, the faster raw materials move through the supply chain, the less obsolescence you have and the less expired materials you have.

Merging Disparate IT Systems and Exploiting Multichannels

2009-10-03T23:38:00.000-07:00

Companies that engage customers across many channels, earn trust and repeat business. In fact, there are some indications that multichannel customers spend even 50 percent or more during the holiday season than their traditional single-channel counterparts. For instance, Amazon.com is reportedly celebrating its best ever holiday season with record sales and bullish claims about the number of orders it was able to successfully fulfill. Yet, despite the affability of multichannels, except for a few groundbreaking companies, this is still uncharted territory.

Part Three of the Retailers Join Forces for a "Make or Break" Attempt Their Competitive Landscape series.

Better Web design and wider selections of products offered on-line are important to multichannel success; however it is crucial to understand that factors mitigating revenues and to ability to fulfill Web orders are also key. A good Web site design—one that has streamlined site navigation, search, and checkout processes—enables the kind of sales process that best fits the customer's and retailer's needs, as does good site performance, and a well-designed user interface. One will indeed never achieve proper order fulfillment without a self-evident navigational structure, the right search, help, linking of the site to the support center for synchronous user support, etc. Front-end business-to-customer (B2C) e-commerce success also requires good product information and pricing, because it is easy for Internet customers to comparison-shop. A $2 or so difference in the retail price of a DVD can have a large impact on sales volume when the competition is only one click away.

For a detailed discussion multi-channel sales see "Consumers Shop Everywhere: Understanding Multi-Channel Sales".

Once the retailer has designed its process to take advantage of the multi-channel sales opportunities, it must build a strong infrastructure that supports on-time delivery handles returns, instead of simply focusing on reducing costs. Multichannel retailers must be able to flawlessly execute a full range of services to engage, transact, and fulfill Web placed orders. Hence, most successful multichannel retailers of today had to either build a complete set o in-house or outsource some or all of them.

What's more, traditional brick and mortar retail stores still rely on store clerks and managers to support customers, while multichannel retailers must provide similar support via call centers that are adequately staffed so that customers are not on hold for too long. Additionally, these centers should be available around the clock. There should also be a number of appropriate financial services available, such as payment gateways, merchant accounts, fraud screening, and business payment services. For more information, see Differences in Complexity between B2C and B2B E-commerce.

Apart from Amazon as the Internet retailer pioneer, the likes of Best Buy, Staples, Ahold, Target, and Lowe's have also been carving out their niches. They are capturing growth and profits from multichannel, customer-centric marketing in a competitive market dominated by Wal-Mart's well-oiled retail machine. While Wal-Mart can match the growth of these retailers in absolute numbers just by opening new stores, it will hardly take more business in the competitive multichannel market serving customers with individual, personalized shopping experiences and by delivering on their complex requirements.
Considering the use of technology for supply chain effectiveness and differentiation, new technology will be indispensable for Sears Holdings, which will be created when Kmart Holding Corporation (NASDAQ:KMRT) and Sears, Roebuck and Co. (NASDAQ:S) complete their merger. Yet, so far, neither merging party has been a dominant force in any retail segment and neither are they known for their respective IT or supply chain management (SCM) proficiency. They have only had sporadic investments in some applications with less than limited success (to put it mildly). An astute IT strategy should help any company develop a strong competitive advantage whether it be improved time-to-market, better insights about customers behavior and preferences, or devising a more efficient supply chain.

But, with the impending merger, the two giants will likely be preoccupied with rationalizing their numerous diverse IT assets, decommissioning redundant ones, and integrating the rest without losing crucial sales and inventory data, that there will be little time and resources to pursue anything else. Already lagging behind the competition technology-wise, it is difficult for us to see how Sears Holding will not fall further behind, let alone overtake the competition.

One should also bear in mind that poorly leveraged technology had been a major reason for Kmart's bankruptcy. Since the 1980s, Kmart seemed fall into complacency. It failed to stick to the traditional tenets of business—impressive customer service, constant innovation that keeps customers' attention, and cost savings. Moreover, while Kmart attempted to harness technology to address supply chain efficiency, it did not follow through to get value out of its solutions. For example, in mid 2000, Kmart deployed a number of SCM products including i2 Technologies and former EXE Technologies (now part of SSA Global), to launch an ambitious renovation attempt worth $1.4 billion (USD) of software to improve its supply chain systems. It aim to reduce store-level out-of-stocks and to increase inventory turns (see i2 Will Come Out Ahead in Kmart Deal). Unfortunately, Kmart had seemingly fallen prey to the misperception that packaged applications, in plain "vanilla mode," and without significant modification could run a complex organization of its size. The project had all but stalled. A year and a half later, before the systems ever went live, the company announced that it was abandoning most of its software and was instead buying a warehouse management system (WMS) worth $600 million (USD) from Manhattan Associates. This too apparently failed to solve the company's supply chain problems, and it went into bankruptcy in early 2002.

Yet, a significant software investment is necessary to effectively meet the needs of multichannel shoppers. Once can hardly imagine the success of Amazon.com without a significant application investment. Complex organizations need a level of applications customization. Given the potential of multichannels, the need for technology and of all these factors, Sears Holding must become more technically daring and innovative as it strives for a possible differentiation. Unlike the chaotic moves Kmart undertook a few years ago, at the same time the company was faltering, Sears must view IT as the enabler for business success, not the "be all, end all". A mitigating factor to Kmart's faulty forays may very well be that Sears seems to be more innovative and aggressive when it comes to leveraging technology to achieve operational efficiency.

Indeed, behind many success stories in American business lies an innovation. Going back a century, in the case of Sears, the innovation was the mail order catalog. At the time the company began in the late nineteenth century, rural general stores were ripping customers off by often charging 100 percent mark-ups on goods. Rural customers eventually rebelled by spending their dollars with mail-order pioneers, especially with Sears, whose model supported cheaper prices and higher volumes than the rural stores. Further, the system was backed by an ever-improving postal service. When Sears' catalog sales were at their peak, customers often ordered from the catalog over the telephone and picked up the goods at the nearest store. Since its introduction a few decades ago, the catalog pick-up area has always been very busy.

Fast forward to the 1990s. Sears did not sell anything on-line until 1997, and until 1999, it offered only one product category. From the beginning of the Internet revolution, Sears' strategy was to maintain at least one face to the customer. It wanted to ensure there were no rifts between "on-line" and "off-line" Sears. Today, products bought on-line can be picked up and returned to the stores, if necessary. Customers can also schedule in-store service visits on-line. Sears also provides near real-time inventory visibility across all stores.

Challenging the Competition: Mega-mergers and Supply Chain Technology

2009-10-03T23:36:00.000-07:00

In the face of the mega-retail stores, like Wal-Mart and Target, some of America's oldest retailers have joined forces to remain competitive. Late 2004, Kmart Holding Corporation (NASDAQ:KMRT) and Sears, Roebuck and Co. (NASDAQ:S) signed a definitive agreement to merge. Following suit, Federated Department Stores, Inc. (NYSE:FD) and The May Department Stores Company (NYSE:MAY) announced February that they also entered into a merger agreement.

Part Two of the Retailers Join Forces for a "Make or Break" Attempt Their Competitive Landscape series.

On paper and in terms of numbers, these acquisitions look like idyllic marriages of convenience—they will, theoretically, create more powerful revenues players in the retail industry with their respective $55 and $30 billion (USD). Points of distribution and renowned proprietary home and apparel brands will be expanded and significant opportunities for improved scale and operating efficiencies will surely emerge. In the short term, by combining supply chains and aggregating their purchasing powers by, for example, consolidating shipments or leveraging volume deals with carriers, Sears and Kmart, estimates at least $300 million (USD) in savings. In theory, the merger could produce a new layer of competitive challenge to two undisputed mega-retailers, Wal-Mart and Target, by giving Sears Holdings a combined total of nearly 3,500 stores and by creating a service organization capable of a major expansion to serve the needs of existing Kmart and Sears customers.

The merger should generally enable the combined businesses of Sears and Kmart and of Federated and May, respectively, to produce higher profits or profit margins than any of these companies could achieve on their own. This may particularly be true for Kmart, for whom this merger is a virtue made out of necessity and likely the only way it could continue its long-term existence. While Kmart has improved its financial performance and operations since coming out of bankruptcy in 2003 to the point where it even become a buyer, it has not been able to distinguish itself from Wal-Mart and Target, not to mention an army of boutique specialty stores, catalog retailers, and Internet-based sellers. Without this merger, its stand-alone, long-term survival is difficult, at best.

The Kmart's conundrum has long been its inability to position itself clearly within the retail market. It was caught in a twilight zone between an extremely efficient low-cost retailer, Wal-Mart, and a fashion-oriented brand-name discounter, Target. At the same time, the company appeared to be oblivious to customers' voices of dissatisfaction as seen in its poor customer service, run-down stores, and indolent merchandising and outdated product lines.

Thus, Sears might provide a better corporate foundation, brand tradition, and more demand-driven growth strategy that can better leverage Kmart's extensive real estate assets more effectively in the highly competitive retail marketplace. Namely, the amalgamation might make the Sears and Kmart franchises stronger by accelerating Sears' much needed off-mall growth strategy by using existing, convenient Kmart locations.

As a proof of concept for the off-mall model, Sears is experiencing early positive results with three "grand" store formats. Instead of taking the time-consuming approach to assess a new site location and to build a store, Kmart's current store assets, distribution, and logistics infrastructure allows for a relatively immediate set of options that can be re-brand into Sears Grand and be broadened into new geographies. In fact, the idea for the merger was born during the recent sales transaction of several dozens stores between Sears and Kmart when they were independent.

Ultimately, the savings from the merger should certainly bolster Sears and Kmart's competitive strength, since their combined purchasing clout and streamlined supply chain capabilities is projected to result in $300 million (USD) of financial improvements. This may be cost equivalent to Target and somewhat improve costing against Wal-Mart. The volume of this combined portfolio can increased the opportunities for new private-label product development. According to some calculations, if improved process flows like stock availability, promotion planning, and price management are combined with (though not yet fully fleshed out) supply chain improvements, the combined entity could produce nearly $1 billion (USD) in cost and operational efficiencies. Still, these advantages, coupled with potential savings from workforce wages spiraling down across several industries, may reflect an emulation of Wal-Mart's practices rather than any sort of differentiation.

In the case of Federated and May, the cost efficiencies from their merger may not necessarily reverse the protracted decline in their department store sales, given its scale is much smaller than the behemoths like Wal-Mart and Home Depot. In fact, the merger might even increase the risk of brand equity erosion, given that in the future, their presence will no longer be as geographically dispersed, and that there will be a subsequent, reduced distinction between the stores' brand recognition.
The Sears-Kmart merger should "beef up" their brand portfolios, since each will benefit from the other's distinctive merchandise assortment. On one hand, as Sears continues to fine-tune its merchandise strategy, successful product lines like the Kmart's Martha Stewart Everyday or Jaclyn Smith should become viable options to include in the Sears mix. Conversely, Kmart's remaining branded locations could see the introduction of longstanding Sears product lines, including Craftsman, Kenmore, or even the new Lands' End apparel products. Merchandising is to retailers what rosters of pitchers and hitters are to baseball sport clubs: the broader assortment of options should, in principle, allow each retailer to fine-tune products to the appropriate target customer demographics for each of the remaining product lines.

However, one should note that though Kmart and Sears are large retailers, they do sell to different groups of consumers— Sears sells mainly to married men in their late thirties and early forties who are looking for Craftsmen tools. Kmart targets largely senior citizens with lower incomes. This might impair future cross-selling. Moreover, Sears has not proven its proficiency with apparel. Its 2002 acquisition of Land's End, which pioneered the virtual fitting room back in 1999, has been poorly exploited.

The Land's End customer profile seemed to be a good fit with the demographics of buyers of Sears appliances and tools, and Sears attempted to use the preppy brand to lure well-off shoppers to its combined apparel and home appliances department stores. However, with apparel being a stocking nightmare with nearly a gazillion styles, sizes, and colors that completely change every three months or so (see Intentia: Stepping Out With Fashion and Style; Part One: Characteristics and Trends of the Fashion Industry), Sears often had meager selections at each locations, discouraging its middle-class clientele. Thus, the merger with Kmart provides both an opportunity and challenge of how Sears should handle the popular Land's End brand. However, one should note, that Sears may have already decided as there are early indications that it is seeking a buyer for the Land's End division .

In general, Sears Holding will have to force customers through a new learning curve with significant advertising campaigns to increase market share and customer loyalty to certain product brands. Customers will have to change their perception from discount mass merchandise stores to more upscale stores. However, Sears Holding will have to make sure that customers are not pressured by too aggressive sales associates trying to push the new retail image, because customers need to feel they are making informed decisions about their purchases. If not, customer loyalty may be compromised.
Moreover, these potential benefits come with a number of significant "ifs and buts." The main question is whether Sears Holding can develop a successful, competitive strategy. At this stage, most consumers have different perceptions of merging parties. Kmart is still associated with low prices, boring store layouts, and mediocre services, while Sears, despite losing market share to equivalent general stores like Target, Lowe's or Kohl's, is synonymous with higher-quality merchandize and above-average customer service.

If Kmart is going to remain a mass discounter, how will it succeed in the long term if its prices remain even 15 percent higher than those of Wal-Mart? On the other hand, how will Sears, with its aura of a genuine North American retailer, differentiate from its competitors in terms of its product categories and the way its stores will be arranged, located, and stocked? In other words, the combined parties will have to figure out, first of all, what (or, if still diversified, in which ratio) they want to be. Do they want to be a mid-size retailer in the malls or a mega-store operator in the suburbs or rural areas? Once decided, they need to devise the merchandizing, pricing, payment, and other processes to back up their strategy.

The decisions the future Sears Holdings makes in the area of a coherent merchandizing strategy will not only have an impact on its future brand recognition, revenues, and margin, but also on the performance of its supply chain and downstream business processes. It must first figure out and then bring into line the capabilities and goals of merchandising, supply chain management (SCM), and its accompanying IT assets. It is expected that Sears Holdings will build its SCM capabilities around efficiency like Wal-Mart, but, for the sake of some differentiation, these competencies should also envelop speed and flexibility to compete with more versatile competitors.

Even if the two retailers merge their different corporate cultures, store formats, working procedures, and target demographics, perhaps the biggest challenge will be instilling a pervasive culture that embraces IT as an enabler.

Retailers Join Forces for a "Make or Break" Attempt in Their Competitive Landscape

2009-10-03T23:33:00.000-07:00

Amid the ongoing spate of mergers in the business software market, our attention was drawn to the recent mega-merger of two of the oldest retailers in the US. In late in 2004, just before the holiday rush, Kmart Holding Corporation (NASDAQ:KMRT), and Sears, Roebuck and Co. (NYSE:S), announced a definitive merger agreement to form the Sears Holdings Corporation. What is interesting, is not that Sears Holdings will become the US' third largest retailer, with approximately $55 billion in annual revenues, 2,350 full-line and off-mall stores, and 1,100 specialty retail stores. It is how they will merge two disparate information technology departments and supply chains.

Part One of the Retailers Join Forces for a "Make or Break" Attempt Their Competitive Landscape series.

The issue isn't that they offer diametrically opposed products and services. Kmart is a mass merchandising company that offers customers products through a portfolio of exclusive brands that include Thalia Sodi, Jaclyn Smith, Joe Boxer, Martha Stewart Everyday, Route 66 and Sesame Street. Similarly, Sears is a broad-line retailer providing merchandise and services including home merchandise, apparel, and automotive products and services through more than 2,300 Sears-branded and affiliated stores in the US and Canada. While the combined business will supposedly create a broader retail presence and improved scale through a national footprint of nearly 3,500 retail stores, it also will create significant issues for their supply chain systems. Alone, the sheer size of these enterprises can make internal coordination difficult with their odd conglomerations of business practices and enterprise application packages from a variety of vendors. The problem is further exasperated by how these systems will be amalgamated. Recognizing this issue, both Sears and Kmart have lately made significant strides in transforming their organizations. The merger is hoped to further accelerate this process. It hopes to also benefit from improved operational efficiency in areas such as procurement, marketing, IT and supply chain management (SCM).
he fruits of this merger were borne when Sears purchased around fifty Kmart store locations for approximately $575 million (USD) earlier in 2004. Edward S. Lampert, a savvy financier who acquired the $23 billion Kmart for less than $1 billion of Kmart bonds and other debt in bankruptcy court and became its largest shareholder and chairman of the board, has since orchestrated the merger.

Under the terms of the agreement, which was unanimously approved by both companies' boards of directors, Sears Holdings will be headquartered in Hoffman Estates, Illinois (US), and Kmart will continue to have a significant presence in Troy, Michigan (US). Kmart shareholders will receive one share of new Sears Holdings common stock for each Kmart share. Sears shareholders, in turn, can elect to receive $50.00 (USD) in cash or 0.5 shares of Sears Holdings (valued at $50.61 based on the closing price of Kmart shares at the time of the announcement) for each Sears share. Shareholder elections will be prorated to ensure that in the aggregate 55 percent of Sears shares will be converted into Sears Holdings shares and 45 percent of Sears shares will be converted into cash. The value of the transaction to Sears shareholders was, at the time, valued at approximately $11 billion (USD). Additionally, ESL Investments Inc., a Greenwich, Connecticut-based hedge fund, and its affiliates, which were founded and controlled by Kmart's chairman Lampert, agreed to vote all their Kmart and Sears shares in favor of the merger. They also elected the stock option with respect to their shares of Sears. Lampert will become the chairman of Sears Holdings.

Lampert will be joined in the office of the chairman by Alan J. Lacy, current chair and chief executive officer (CEO) of Sears, and Aylwin B. Lewis, current president and CEO of Kmart. Lacy will be vice chairman and CEO of Sears Holdings, and Lewis will be president of Sears Holdings and CEO of Kmart and Sears Retail. Glenn R. Richter, currently executive vice president (EVP) and chief financial officer (CFO) of Sears, will be EVP and CFO of Sears Holdings. William C. Crowley, currently senior vice president (SVP) of finance of Kmart and a Kmart Board member will be EVP of finance and integration of Sears Holdings. Lampert, Lacy, and Lewis will join the ten-member Sears Holdings board of directors, which will include seven members of the current Kmart board and three members of the current Sears board. Sears Holdings will act as the holding company for the Sears and Kmart businesses, which will continue to operate separately under their respective brand names.

Kmart has made great progress over the past eighteen months to strengthen the organization in terms of profitability and product offerings. The merger marks a remarkable comeback for Kmart, which filled for Chapter 11 bankruptcy protection in early 2002 (see Wet Quarter Postpones Amazon's Desiccation While Kmart Drowns), which lead to about 600 stores (one third of stores at the time) to close; the termination of 57,000 former Kmart employees; and cancellation of company stock.

In March 2004, Kmart posted its first profitable quarter in three years, and the new management believes the merger will create a true leader in the retail industry—both as a key part of local communities and as a national presence. Together, Sears and Kmart hope to further enhance their capabilities to better serve customers by improving in-store execution and ultimately transform the customer's in-store experience.

Sears Holdings will strive to feature a renowned home appliance franchise as well as strong positions in the tools, lawn and garden, home electronics, and automotive repair and maintenance categories. Key proprietary brands coming from Sears include Kenmore, Craftsman, and DieHard. The combined company will naturally have a broader apparel offering, including well-known labels such as Lands' End, Jaclyn Smith, and Joe Boxer as well as the Apostrophe and Covington brands. It will also have Martha Stewart Everyday products, which are now offered exclusively in the US by Kmart and in Canada by Sears Canada.

With revenues in 2003 of $41.1 billion (USD), the independent Sears has been offering its wide range of merchandise through its stores and through sears.com, landsend.com, and specialty catalogs. It is also possibly the largest provider of product repair services with more than 14 million (USD) service calls made annually. Kmart specialty retail stores will, for some time, continue to carry their current lineup in propriThe combined companies is conservatively estimated to generate $500 million (USD) of annualized cost and revenue synergies to be fully realized by the end of the third year after closing. The transaction is reportedly expected to be significantly accretive to earnings per share in the first year before one-time restructuring costs. For one, the companies expect approximately $200 million (USD) in incremental gross margin by capitalizing on cross-selling opportunities between Kmart and Sears' proprietary brands and by converting a substantial number of off-mall Kmart stores to the Sears nameplate in addition to the fifty Kmart stores Sears acquired earlier in year.

Namely, in mid 2004, Kmart announced that it has signed a definitive agreement with Sears to sell up to 54 of its stores for a maximum purchase price of $621 million (USD) in cash. Kmart will continue to operate them until March or April 2005. Sears initially agreed to consider offering employment to any Kmart employee at the converted stores. Earlier in June, Kmart announced that it has also signed similar definitive agreements with The Home Depot, Inc., to sell up to twenty-four stores for a maximum purchase price of $365 million (USD) in cash. The exact number of stores, locations, and total purchase amount were based upon the satisfaction of certain conditions to occur within the next sixty days.

Eventually, the transactions with Sears and Home Depot represented a total purchase price of almost $1 billion (USD) for less than eighty of Kmart stores, or approximately 5 percent of its erstwhile store base. Thus, for each of the past several quarters, Kmart has consistently delivered improved year-over-year profitability and cash flow by focusing on the fundamental aspects of its business. Operationally, it touts improved several areas including product design, buying, inventory management, distribution and the in-store environment. By the same token, the retailer pledges to take advantage of opportunities to create value that include the sale of existing stores, or the acquisition of new stores and businesses. Some who follow Kmart have speculated solely on the real estate value of the company; however, the company counters that it has been taking action on many different fronts simultaneously, all with the goal of making Kmart a great retail company once again.

Additionally, Sears Holdings expects to achieve annual cost savings of over $300 million (USD) through improved merchandising and non-merchandising purchasing scale and improved supply chain, administrative, and other operational efficiencies. Further, the combined company will complete a full store asset review as part of a plan to monetize non-strategic real estate assets as appropriate. Crowley and Richter will jointly lead an integration team of key operating executives from both companies to drive planning and execution of the integration of the companies' operations. The merger, which is expected to close by the end of March 2005, is subject to approval by Kmart and Sears shareholders, regulatory approvals, and customary closing conditions. Lehman Brothers served as financial advisor to Kmart, and Simpson Thacher & Bartlett LLP provided legal counsel to Kmart, whereas Morgan Stanley served as financial advisor to Sears, and Wachtell, Lipton, Rosen & Katz provided legal counsel to Sears.

Early in 2005 Kmart Holding Corporation announced strong profitability and cash generation for November and December of 2004 (period ending December 29, 2004). At that time, Kmart's same store sales has a significantly moderate rate of decline. Kmart expected to generate a net income (excluding any asset sales and bankruptcy-related expenses) of approximately $250 million (USD) for November and December of 2004 with income before interest and income taxes (excluding any asset sales and bankruptcy-related expenses) of approximately $400 million (USD). This will represented an increase income of approximately $23 million (USD), or 10 percent over the same period in 2003. Same store sales for November and December declined by 4.6 percent—in December alone, same store sales declined approximately 2.6 percent. This, however, represented a significant improvement compared to trends from earlier in 2004. Gross margin improved by over 100 basis points over the prior year period. The goal for the combined company is to achieve a 10 percent operating margin like those of Gap and Target.

At the end of December, Kmart's inventory levels were approximately $3.1 billion (USD), while its cash balance grew from $2.1 billion (USD) at the end of its 2003 fiscal year on January 28, 2004 to approximately $3.9 billion (USD) at the end of December. Kmart is expected to be approximately $3.2 billion (USD) at the end of its 2004 fiscal year on January 26, 2005. The $3.2 billion (USD) does not include the roughly $400 million (USD) receivable from Sears, expected in March and April of 2005.

As a result of its cash balances and cash generation, Kmart has terminated the balance of an existing credit agreement which it has never drawn from, with the exception of letters of credit. Kmart also has stated that several banks have committed $3.5 billion of a $4 billion (USD) loan for capital to be used once during its $11 billion (USD) deal to buy Sears. The loan will be effective when Kmart buys retailer Sears, and the money will be available for five years to pay for working capital needs, capital expenditures, acquisitions, and other general corporate purposes. Banks providing money for the loan include JPMorgan Chase, Citigroup, and Bank of America.
etary home and fashion lines

New Dimensions in EC and SCM Part 3: E-Procurement Can Broaden the Supplier Pool

2009-10-03T23:31:00.000-07:00

Every business is a purchaser as well as a supplier, with many routinely processing hundreds of buying activities daily. Typically, purchases represent 50 to 90% of a company's cost structure — making procurement strategy and execution a critical lever for effective supply chain operations and superior business profitability.

Electronic commerce offers exciting new possibilities for businesses to improve their performance on this important "upstream" supply chain activity, both for indirect or support items and, increasingly, for materials that are direct components of the products and services that businesses make and sell.

As in many areas of e-commerce, the wide variety of alternatives can be confusing. This article outlines some of the major recent developments in e-procurement and the important strategic and tactical choices that companies need to make in order to answer these questions and to take full advantage of new "buy" side e-commerce developments.

This part discusses how e-procurement can Broaden the Supplier Pool and the pros and cons of this approach to procurement.
* Plethora of horizontal and vertical marketplaces makes comparison shopping easier.

* Don't expect to get the best prices just cruising the Web.

* Repeated switching of suppliers to chase lowest prices can be hard to manage and cause other problems that offset savings.

Broadening the Pool of Suppliers Discussion

Typically, a 1% improvement in the overall cost of purchased materials and services can increase a company's bottom line by 10 to 20% or more — a dramatic impact on profitability and shareholder value. It is no wonder a wide variety of e-procurement solutions have been developed to help companies access a broader range of suppliers and achieve price and service improvements.

This has quickly become a crowded and confusing area, with trade magazines and television ads touting the benefits of alternative Internet sites and start-ups that have emerged to improve the process of bringing buyers and sellers together in a more competitive way. These marketplaces or exchanges offer a defined set of materials and services from a number of different suppliers, where you can view and compare supplier catalogs and price lists, seek supplier quotations for specific needs, and make supplier selection decisions.

These services are typically organized in one of two ways:

* Horizontal marketplaces focus on product lines that companies in a number of different industries utilize, such as Maintenance, Repair, and Operations (MRO) items, office products, and capital equipment. As well, there are sites that focus exclusively on categories of purchased services that have become increasingly important in today's economy — information technology, shipping, management consulting, and others.

* Vertical marketplaces are designed to meet the unique needs of particular industries - plastics, high-tech, and automotive to name a few. Here, you can access information and pricing from suppliers of resins, integrated circuits, castings, and a broad range of other parts and components used extensively in your specific industry. Exchanges have also developed to cover excess inventory, used equipment, and other items and types of transactions that historically have been particularly inefficient or time-consuming.

The primary e-procurement benefit of these marketplaces is that they facilitate much easier comparison shopping. The substantial legwork that used to be required to identify potential new suppliers, understand what they offer and obtain price quotations from them now can often occur in a matter of minutes. In an increasingly global economy, it has become more and more important for companies to find and use appropriate suppliers anywhere in the world, and e-procurement marketplaces provide a valuable method for increasing the access to these new potential supply sources.

These marketplaces and exchanges initially focused mostly on indirect materials and support services, since they were arguably the items that are critical to a business and least risky to buy through these new methods. However, there has been a rapid expansion of categories that are covered, and now just about anything a business needs, including critical raw materials, components, subassemblies, and even basic commodities such as fuel and agricultural products can be bought using horizontal or vertical exchanges.
In most major categories of goods and services, and in most major industries, multiple marketplaces or exchanges now exist. The "land grab" in business-to-business e-commerce has largely been completed, with dot-coms having obtained venture capital financing, recruited leading industry and category experts, locked up the best Internet addresses, and established their presence in the marketplace through media advertising, industry marketing programs, e-mail discount offers, and other high-visibility activities.

The original concept of these exchanges was for independent operators to facilitate interactions between buyers and sellers in fragmented markets. But new developments occur quickly in electronic commerce. Most recently, in many industries the major buying companies in that industry have set up and are operating their own exchanges — in the automotive industry, high-tech manufacturing, retailing, agri-business, and many others. While these "buyer-centric" exchanges can no doubt be effective, there is a growing concern among suppliers that their purpose is not to broaden the pool of suppliers but to enable the biggest corporate buyers to exert their combined clout over their smaller suppliers and extract lower and lower prices. Using e-procurement tools to achieve volume leverage is discussed in more detail in the next section.

With extensive competition both within and between exchanges, suppliers need to offer sharper pricing, better quality, and more value-added services to differentiate themselves and retain and grow their businesses — at least in theory.

So which of these many alternatives provides the best e-procurement value? And are they significantly better than more traditional methods? A personal market test of the alternatives available to small professional services businesses is described in a sidebar to this article — and concludes there is some modest value that is available but that a substantial amount of legwork is still required to achieve it.

An Analyst’s View of Process Industry SMB Challenges

2009-10-03T23:25:00.000-07:00

The process industry provides many of the products we use in our daily lives for food, shelter, and health. Such products are created when materials are transformed through the use of energy resources and chemical products. In addition, the process industry manufactures products that are essential to advanced industries such as computing, biotechnology, telecommunications, automotive, scientific, and space exploration.

These industries are facing major pressures not only to meet the present needs of our global economy, but also to do so without compromising future generations by ensuring that processes

* meet environmental guidelines
* optimize energy resources efficiently
* result in products that are safer, more reliable, and more functional
* provide features that meet both industry and consumers needs

This article focuses on how enterprise resource planning (ERP) vendors are helping the process industry meet both the needs of today and deliver on anticipated functional requirements that will help meet the needs of tomorrow.

Process Industry Manufacturing Challenges

Manufacturers in the process industry are at a difficult crossroads. Although the industry is not facing any imminent substantial decrease in its overall profit margins, there is concern in the industry according to a recent study by the Canadian Manufacturers and Exporters Association, which cites the following issues:

* increased global competition
* foreign currency fluctuation
* changing patterns of customer demand
* escalating business costs
* problems in implementing new technologies
* competitive business pressures
* shortage of skilled workers

To address these issues, process industry manufacturers and distributors must manage the following key activities, and ensure they use an enterprise system that supports these activities:

* Planning production for both materials and capacity—to develop a production plan, manufacturers must ensure that there are sufficient available resources and materials, production capacity, and labor.
* Inventory tracking and controlling work-in-process (WIP)—monitoring material consumption and tracking work order progress is the basis of manufacturers’ being able to meet sales order, demand, and delivery dates.
* Replenishment and demand planning—the ability to review variances between forecasted and actual sales is the basis of managing vendor lead times and raw material replenishment.
* Managing the supply chain for order fulfillment—reviewing the global supply chain provides manufacturers with the ability to coordinate logistics and operational activity to meet customer order fulfillment expectations.

Specific Requirements of an ERP System for the Process Industry

Here’s an overview of how some of the functionalities of an ERP system for process industries help manufacturers better perform the activities listed above.

1. Conversion process capability
In the process industry, the bill of materials (BOM) used in discrete manufacturing is replaced by the master product formula, or simply the formula. The formula requires a conversion table for measures, such as weights from grams to pounds, and must have the ability to record liquid units of measure, in both metric and US-standard. The formula must also record specific information related to product characteristics that can affect manufacturing processes. For example, in the blending process, the system can record product information such as percentage calculations of raw materials, and the effective specific gravity, potency, density, and number of reactives of those raw materials.

2. Interface to other modules
The master formula can also be linked to submodules like quality assurance (QA), procurement, inventory, and accounts payable (A/P) for government compliance and safety issues. Also, the manufacturer must be able to trace products in order to manage dating of inventory lot control and the amount of inventory available at the distribution level. Furthermore, there are government and regulatory concerns that deal with the nature of the materials, as there may be a controlled substance with specific shipping, handling, and storage regulations. Or, the manufacturing process may emit hazardous by-products. Or, there may be logistical concerns within the manufacturing process itself.
3. QA module and flexible formula adjustments
A process industry ERP system must also have a formulation-balancing operation based on the premise that the QA group tests random samplings of production batches. The system needs the ability to adjust, through a program logic control (PLC) interface, any variations in materials used and external factors such as humidity, temperature, cool-down speeds, etc. Also, the material flow and consumption is recorded back into the ERP system. The system’s routing functionalities reflect those capabilities as a requirement or not, depending on the user’s specifications.

4. Reworking all co-products and scrap materials
As a result of manufacturing processes, residual materials (by-products) may be created. These by-products can be collected as waste and reused. This is the case within the plastics industry, for which the collection and re-entry of materials into process creates very specific criteria. In the process industry, due to a continuous production flow operation, the production process generates a theoretical production yield, which may be calculated by the downstream packaging operation as units for case-pack quantities. The residual amount generated from the production process may vary within a percentage point, but in the downstream conversion process, the residual quantities may be aligned to complete full, case-size box quantities. By using flexible formulas, process ERP systems can demonstrate how the residual materials can be reworked from waste back into materials used in production.

5. Supply chain management (SCM)
Collaborative forecasting and planning are essential features of the process industry ERP system, especially for the automotive and consumer products industries. Some the most important functionalities include

* visibility over inventory across the global supply chain
* enterprise-wide planning in the areas of sales and marketing, procurement, and production
* the ability to integrate planning for what-if scenarios
* the ability to benchmark quality and vendor performance issues
* detailed reporting that highlights areas where parameters may be out of scope
* real-time available-to-promise (ATP) information for customer service

6. Process industry costing
The financial system for the process industry must also be able to provide for multiple-level formulas on the same production work order, and for outside processing at subcontract facilities. Given the nature of process industry products, most plants must operate on a continuous basis, which drives maintenance costs up. As a result, maintenance costs usually comprise 30 percent of a process industry plant’s operating budget. Thus, an ERP system must integrate with some type of best-of-breed system to meet the requirements of the operation, and with some form of asset management system, which takes into account predictive and preventative maintenance.

ERP System Constraints in the Process Industry

For lack of an available solution designed for their needs, some process manufacturers have attempted to implement an ERP system for discrete manufacturing. As there are several fundamental differences between the operations and practices of process and discrete manufacturing, opting for such a stop-gap measure is not always effective. Process manufacturers have no doubt noted the constraints that are placed on their operations as a result of using a system that was not designed for their needs. The nature of the process manufacturing business is such that it is difficult to manage inventories and profits. Process manufacturers experience large quantities of finished product in transit and of raw inventory. The products often have low yields with substantial scrap (fine chemicals, pharmaceuticals, or plastics).

Business dynamics is putting demands on ERP systems to help with

* maintaining a lead over competition
* simplifying the product lines
* responding to shorter product life cycles
* providing mass customizations (car options, computer system accessories, etc.)
* complying with regulations compliances

In an attempt to meet these demands, many manufacturers have looked at ways to improve supply chain optimization by re-examining manufacturing processes, relocating closer to markets, and looking at cheaper energy, transportation, and labor. The businesses’ needs are such that an ERP system must be powerful enough and diverse enough in functionality to do more than simple process manufacturing.

Global Trade Solutions: Competition, Challenges, and User Recommendations

2009-10-03T23:24:00.000-07:00

TradeBeam, one of the largest global trade management (GTM) solution providers in the market, provides an indisputably competitive product. Through a series of mergers and in-house, organic developments, TradeBeam has developed or is in the process of cultivating a holistic approach to global trade, encompassing import shipment visibility to trade compliance. However, the GTM market is characterized by early adopters and is rapidly evolving and a company of TradeBeam's current stature, with only several years of existence and an estimated (less than) $20 million (USD) in annual revenues, might not be able to maintain its competitive position. Despite TradeBeam's immaculate financial position and slew of marquee customers, TradeBeam may find itself struggling against current and potential competitors in the long term, especially against those with greater name recognition, and financial and other resources. The market is competitive, rapidly evolving, and highly fragmented, and one should expect only intense competition in the future. In-house development efforts, consulting companies, other software companies, financial institutions, logistic companies, customs brokers, forwarders, and third-party development efforts will strive to increase their market share.

In addition to the changing role of banks, third-party logistics (3PL) providers are also focusing predominantly on the management of the shipment booking through proof of delivery process and the management of logistics costs. As user companies continue to embrace the value of broader GTM solutions, logistics providers will be looked upon to provide leadership and to add more value to the entire order life cycle, including purchase order management, total landed cost modeling, insurance and claims, import/export compliance, and security regulations. 3PL providers will also be sought to seamlessly integrate invoice reconciliation and trade financing systems.

Like other involved parties in global trade, 3PL providers must still mitigate the risks of providing correct and timely documentation relative to transportation, customs, and settlement, including letters of credit (LC). They will need a corporate-wide solution to protect them from liability from trade compliance issues such as denied parties and anti-boycott. Thus, while TradeBeam would prefer to partner with banks, 3PL providers, or even some logistics management vendors like G-Log or Xporta (now defunct), these entities will likely decide to grab a "bigger slice" of the GTM pie for themselves via acquisitions � la JPMorgan Chase and Vastera, or through in-house developments and competency building. For more information on the JPMorgan Chase acquisition of Vastera, see Merging Global Trade Management with Global Finance.

Recently, the number of standalone GTM vendors is quickly dwindling, as a result of mergers including SSA Global and Arzoon (see SSA Global Forms a Strategic Unit with an Extended-ERP Savvy); TradeBeam with Open Harbor, Qiva, etc.; and Kewill and TradePoint (which had previously acquired ClearCross). One should also expect GTM software technology and managed services to continue to merge. These acquisitions continue to indicate that more accelerated restructuring in the logistics services market is inevitable, because there is a plethora of point solution providers that specialize in narrow areas, from land cost calculation, visibility, collaboration, export compliance, trading document generation, hazardous material handling, to more complete transportation management capabilities.

There are, however, a number of remaining players in several niches—just enough to muddle the message and nibble at the potential revenues of full-fledged GTM players. For example, we could talk about the remaining ITL players like NextLinx, Precision Software, Intermart, Nistevo, MercuryGate, Xporta (now defunct), Tarrific.com, OCR Services, Importers Software Services, MSR Customs Corp., Questaweb, GT Nexus, and LOG-NET; global settlement players like Bolero.net, TradeCard and S1; and a number of others vendors that are, arguably, more specialized in supply chain electronic management (SCEM), and visibility and shipment tracking like Viwelocity, Descartes Systems, Management Dynamics (through recently acquired BridgePoint), Timogen, etc. However, none of these vendors handle all the requirements of automating global e-business. To provide more complete offerings, some of these vendors have apparently merged or have acquired other companies.
Still, companies that are comfortable with using freight forwarders to handle the details of cross-border movement and only want critical events like departed origin, estimated arrival date and time, arrived at customs, cleared customs, etc., to be visible, may be better served by supply chain management (SCM) vendors, and stand-alone SCEM and visibility solutions. Namely, supply chain planning (SCP) vendors like i2 Technologies, Manugistics or Logility, and SCE vendors like Manhattan Associates, RedPrairie, HighJump, and Provia offer visibility and trading partner collaboration components to provide transparency of inventory, orders, and shipments across the entire trading network. These systems do not typically have the capability of sharing demand forecasts with suppliers, but, in addition to products like TradeBeam's CIM Solution, there are others offered by the likes of OneNetwork, weSupply, RiverOne, or Valdero.

Furthermore, to build a complete and fully-functional GTM system, any user enterprise will have to integrate it with transportation management systems (TMS), enterprise resource planning (ERP), supplier relationship management (SRM), partner relationship management (PRM), and other adjacent enterprise applications. We may very well be talking about a full-fledged logistics resources management (LRM) system that would provide total "command and control" over the entire spectrum of global logistics activities, including transportation procurement contracting, shipment planning and optimization, load tendering, trade compliance, customs reporting, shipment and inventory visibility, warehousing, reverse logistics. Such a system would manage all of these events over the Internet, so that all internal managers and trading partners can access logistics information. This approach would still be limited in assisting all the critical elements of global trade including LC, foreign exchange, invoice management, and trade financing, but, at this stage, there is no such thing as a native LRM application that covers all these bases.
Currently, TradeBeam is far from espousing an LRM system, as it is focusing on delivering intrinsic GTM capabilities, such as foreign exchange, transfer pricing, contract management, compliance audit, and inter-company orders. On the other hand, some point solutions might still have exceptional functional traits that appeal to customers who are still cutting-back on enterprise-wide software purchases. Due to weak economic developments, shippers currently favor purchasing specific pieces of a vendor's software lineup, as customers often want partial solutions, not the entire product line. Consequently, many are buying one piece at a time and are adding modules on an as-needed basis.

Some believe that there are too many silos of technology for any vendor to handle all aspects of global logistics. Many companies may decide to opt for separate packages for trade compliance, TMS, forecasting, and other tasks. Given logistics and manufacturing is frequently outsourced, companies need technology to work with the counterpart systems used by their carriers and 3PL providers. Trying to roll all of these diverse capabilities into a single application, based on a single set of universal data standards, is certainly daunting, if not the wrong approach. No doubt, trying to integrate disparate systems has always been a challenge; however, the emergence of Web services-based architectures may ease some of these integration issues, at least in a loose-coupled and hosted mode.

For instance, a freight forwarder and customs broker may first buy modules to help conduct denied-party screenings and put together landed-cost quotations, based on customers' requests for assistance on specific activities. The software typically steps in when automation can meet customers' requirements faster and more efficiently than existing, pedestrian capabilities. TradeBeam rightfully hopes that many of its seed applications, such as inventory replenishment, trade compliance, event management, LC management or trade financing, which are scattered, though widely used throughout its install base, will lead to up- and cross-sell opportunities within the broader TradeBeam 3.0 GTM platform. Trouble, however, might come from the many best-of-breed solutions featuring exceptional functional traits, which will give TradeBeam a "run for its money," so to speak.

For example, landed cost field providers like Vastera, Kewill, TradeBeam, and NextLinx are primarily subscription consultants and information brokers who provide up-to-date, nation-by-nation trade information on complex and changing terms; the rules and conditions that dictate duties; trade agreements; and transfer of ownership. However, Xporta (now defunct) brings something new to the table—a decision support engine that can combine total landed cost with the customer's sourcing inputs to deliver the total cost of ownership (TCO) rationale for multiple plant and supplier scenarios. The vendor has an optimization tool that could truly adjust a large number of variables and what-if scenarios to fully understand the user enterprise's best alternatives when considering TCO.

Possibly the most important things Xporta (now defunct) can contribute (beyond landed cost data) is the betterment of sourcing on inventory and cash flow, since the engine also allows the user to assign risk in its calculations. In turn, this may allow users to estimate required buffer stocks of inventory, or determine if it would be profitable to negotiate with the supplier to build a local distribution center. The risk does not only have to apply to a country. It might be the risk associated with a specific supplier, based on quality level and yield rate, such as the cost of switching new suppliers, in terms of the cost of evaluating their capability, or the cost of introducing new tooling for the supplier. These costs do not show up in the nominal unit price, but the customer will still incur them if and when the customer makes the switch. Xporta's (now defunct) TCO optimization solution may often be a complementary add-on to GTM or landed cost vendors, sourcing, or SRM/e-procurement platform vendors.

Confronting Core Global Trade Problems: Order, Shipment, and Financial Settlement

2009-10-03T23:23:00.000-07:00

To reach its aspirations of creating an end-to-end global trade management (GTM) solution, TradeBeam, a leading provider of global trade solutions, has designed several so-called "solution blueprints" for solving specific global trade issues. Solutions range from providing import shipment visibility and trade compliance to eliminating financial discrepancies while managing letters of credit (LC). TradeBeam's Solution Blueprints begin with the key pain points of global trade and identify tools and strategies available to corporations seeking the advantages of optimized GTM. They include a non-prescriptive set of GTM applications that, individually, may add significant value to a user corporation while solving specific export management problems. The idea is to align strategies with finance and logistics organizations and to establish a beachhead with a relatively quick proof of concept that starts automating a defined set of processes and provides payback in several months. Given that the GTM market is still relatively new, TradeBeam has done an impressive job establishing itself as a pioneer.

Part Four of the TradeBeam Keeps on Rounding Out Its GTM Set series.

To broaden its offering, TradeBeam has embarked on a series of careful acquisitions. Its acquisition of SupplySolution has helped TradeBeam produce its collaborative inventory management (CIM) solution blueprint, which shares and communicate parts levels, shipment data, and forecast to anticipate and manage shortages and schedule changes through event driven alerts. In doing so, the solution solves business problems like poor inventory visibility through the networked supply chain, excessive buffer inventories, and costly impact of shortages and schedule changes. TradeBeam also has other acquisitions bundled with its in-house, organic development.. Export management, import management, trade finance, legalization, global trade content, insurance and claims management, letter of credit, and supply chain electronic management are other solution blueprints that TradeBeam has developed or is in the process of releasing. TradeBeam's Letter of Credit Solution Blueprint and SCEM Solution Blueprint are two that are particularly noteworthy because both their core functionality came from acquisitions and lead to significant advances in the field of global trade settlement solutions
TradeBeam aimed to reduce discrepancies and improve efficiencies in the financial supply chain through automated document preparation and collections, managed LC creation, and issuance expiry and draws. Thus it acquired LC Express in 2003, IFR, and eTime Capital in 2002, which has allowed TradeBeam to develop its impressive LC methodology. The transactions were stock and cash deals, where TradeBeam acquired the companies out of bankruptcy. eTime Capital had spent over $45 million (USD) developing solutions for its customers to helped them optimize their cash flow cycle by applying a groundbreaking technology and a differentiated capability linking financial settlement to the global trade logistics business processes through reconciliation, exception management and real-time reporting. These capabilities have meanwhile provided an excellent complement to TradeBeam's global trade business process and document management solution. Automating the overall letters of credit (LC) process to ensure accuracy and reduce the discrepancy rate is not simply a matter of automating LC issuance. The process if far more complicated because automation is a necessary precursor to integrating the entire supply chain. LC are one of the most important payment and financing vehicles for international trade, because they offer security and risk mitigation. However, in exchange for this security, there are additional costs and challenges. For example, up to 70 percent of all LC documents submitted to the bank for payment are rejected upon first presentation because the documentation has been issued incorrectly. This leads to payment delays, additional fees, and in some cases, non-payment of the drawing. Other LC-related challenges are complicated and lengthy application process, delays in conducting the transaction due to the long issuance process, the strict and often complex documentary requirements, associated secondary and penalty fees, and the high susceptibility to errors because multiple parties must produce documentation.

The result was TradeBeam's Letter of Credit Solution Blueprint, which manages existing LC use and relationships for over one hundred and fifty corporate clients. It synchronizes payment terms and critical supporting documents to enable both electronic LC creation and bank presentation. Part of the secret to TradeBeam's success lies in its document management and reconciliation capability that generates documents based on the LC terms, making use of business partner profiles, electronic data transmission, and templates to minimize data entry. Paper and electronic distribution of LC documentation can be made to banks, trading partners, or any service provider. All documents created and managed by TradeBeam are compliant with Uniform Customs and Practice for Documentary Credits (UCP500) and Electronic Uniform Customs and Practice (eUCP).
Another acquisition helped TradeBeam further expand its solution offering. In mid 2003, TradeBeam acquired certain assets of Qiva Inc., which had previously spent over $50 million (USD) developing solutions to help customers manage global logistics and compliance activities. Qiva's customers were predominantly in the hi-tech and retail markets, and the vendor, which had originally only sold transportation and supply chain electronic management (SCEM) software acquired Capstan in 2002 to strengthen its ability to handle import and export compliance, landed cost calculations, and trade document generation. Qiva's solution capabilities have enhanced TradeBeam's existing GTM application suite in terms of transportation event management.

Like virtually all global supply chain execution (SCE) and logistics systems, Qiva has a SCEM function that detects disruptions, delays and other exceptions across the supply chain (see SCP and SCE Need to Collaborate for Better Fulfillment). In addition to managing time-related exceptions, Qiva's SCEM tool would look for other anomalies. For example, if a shipment weighed 1,000 kilograms when it left the factory, but weighs 2,000 kilograms at the pier, a security alert would be issued because contraband could have been introduced into the shipment. The system would look for tolerances at the service level, as well as from a security perspective in terms of weights and measures and descriptions of products. Also, Qiva's trade compliance engine screens against prohibited parties and other rules to comply with government regulations, like most ITL applications, but this same rules engine also flag companies that have been refused credit or for other reasons are considered poor risks. If a new sales person takes an order from one of these buyers, the system would catch it before the user enterprise engages in a trade and produces the product for a problematic customer.

As a result of the Qiva's functional contribution, TradeBeam will soon release the latest version of TradeBeam SCEM Solution Blueprint. This new release will reportedly bring important new features to existing customers, so that supply chain and treasury professionals will now have greater control and visibility to both the physical and financial supply chains. Invoices, letters of credit, and trade finance requests will be tied directly to orders and transportation documents such as transport orders, shipping notifications, and physical supply chain events. This will create a unified view of all global trading activity from one central dashboard.

With the application's increased configurability, customers will supposedly be able to tailor more comprehensive event plans that automatically detail all expected activity associated with a global transaction across the order, shipment, and settlement functions. The application should also allow alerts if there is unusual activity, if key deadlines are being missed, or if items need further attention. With the security model, customers can extend participation to suppliers, forwarders, and other third parties critical to the trading process and address issues interactively with supply chain partners via a Web-based user interface (UI). This purports to further remedy the high costs to maintain unnecessarily high inventory (buffer stocks) and the problems of insufficient warnings to shipment problems.

TradeBeam SCEM Solution Blueprint solution includes an OnDemand set of GTM applications that individually contribute to adding significant value to a corporation while solving specific event management problems. This supply chain monitoring system enables businesses to proactively monitor their supply chain performance by automatically alerting users to exceptions in the order fulfillment process. TradeBeam harnesses data to provide integrated decision support giving managers the best response to out-of-tolerance situations pertaining to order execution and fulfillment. TradeBeam provides near real time monitoring, measuring, and visibility of order and shipment tracking across the entire global supply chain. Solution capabilities include shipment; order and finance tracking; measurement of supply chain; and proactive notification. The solution is also RFID enabled and provides real time visibility of goods in transit through integration with EPC- and RFID-based technology. It combines with TradeBeam's Event Management Blueprint to provide alerts and to monitors the flow of goods through RFID and GPS systems. Another feature is the solution's configuration and integration flexibility. Here event management can be implemented as a component of an entire solution or used stand alone for supply chain monitoring and measurement. When integrated with the rest of the TradeBeam Product Suite, the user can plan, monitor, and execute supply chain activity and compare against the planned activity and measure actual versus planned results. The system can interface with trading partners through an array of communication capabilities including EDI, XML, middleware technologies, or simple e-mail and fax alerts.

Confronting International Regulatory Compliance: Web-based GTM Solution

2009-10-03T23:22:00.001-07:00

Since its founding in 2000, TradeBeam has grown rapidly to become a major force in the GTM marketplace. Through a series of strategic acquisitions and the integration work of its management and product development teams, the company has embarked on a mission to bring to a hosted, eventually end-to-end GTM solution to market. This solution aims to link the physical and financial supply chains enabling companies to manage and execute global trade activities from within a single software platform. More than 3,000 enterprises worldwide currently leverage TradeBeam's GTM solution, including such industry giants as Neiman Marcus, Liz Claiborne, General Motors Holden, Delphi Automotive Solutions, and Stryker Instruments. In an effort to expand its product footprint, TradeBeam announced the acquisition of Open Harbor, a leading provider of international trade logistics (ITL) solutions. The terms of the 2004 deal were not disclosed.

Part Two of the TradeBeam Keeps on Rounding Out Its GTM Set series.

With a forecast for positive cash flow in 2005 and no current debt, TradeBeam has the funds to expand sales, marketing, and international operations to further establish its leadership within GTM. In addition to expanding its sales and channel development, the vendor plans to extend product functionality, to areas such as cargo insurance, foreign exchange, customs auditing, and transfer pricing. It also may use its capital resources to pursue additional acquisitions that support its strategy for long-term growth and leadership.

Currently, TradeBeam targets customers in cash sensitive industries. Organizations can quickly realize the value of automating the entire global transaction, from order through to payment. It also helps organizations benefit from moving beyond physical optimization towards improving operations. Improved visibility, security and regulatory compliance, contract compliance, vendor management, speed-to-market, quality of service and risk mitigation are some of the areas it targets. TradeBeam also helps companies achieve financial optimization in terms of accounts receivable reduction, inventory levels reduction, interest costs savings, and promises reduced penalties, write-offs, and overhead.

At the end of 2004, TradeBeam announced that it had successfully completed two deployments of its software in support of the DHS' OSC initiative. DHS is one of the largest international shippers and its OSC initiative is a collaborative effort between the federal government, the business sector, and the maritime industry to develop and share best practices for the safe and expeditious movement of cargo. Its goal is to protect the global supply chain while facilitating the flow of commerce. TradeBeam's solution was implemented in fewer than fifty days across two global trade lanes, and is now providing real-time tracking, monitoring, exception management, and reporting on dozens of physical and financial supply chain events and exception conditions. DHS uses TradeBeam's GTM platform to manage security from the foreign factory to port, for the ocean and land transportation of cargo shipping containers. It uses global trade event tracking for order, logistics, and payment management and the shipping system integrates radio frequency identification (RFID), global positioning system (GPS) fencing, and chemical and biological sensors.

TradeBeam was reportedly selected to be a key participant in DHS' OSC trade lane trials because of its ability to monitor, evaluate, and manage the physical and financial supply chains for inbound international shipments. Its software also detects and responds to potential security issues across an enterprise's global operations. TradeBeam's OSC solution ensures shipment visibility and compliance for import processes that touch multiple systems and supply chain partners. Time-consuming and error-prone manual processes are replaced by an automated collaborative solution that provides supply chain electronic management (SCEM), order management, party screening, risk management, trade documentation management, reconciliation, and RFID tracking.
A major funding announcement (see part one) to expand its functional footprint, the deployment its solution for DHS, and the Open Harbor acquisition, further validates TradeBeam's definition of GTM. TradeBeam's aspirations of "managing the entire life cycle of a trade across domestic and international order, logistics, and settlement activities to improve operating efficiencies and working capital" appears to becoming into fruition. Considering the impact and applicability of global trade information across various functions, such as sourcing, network design, logistics, product development, etc., companies should view their entire enterprise platform as a GTM solution. In other words, in order to gain maximum value, companies must integrate GTM functionality across multiple business processes and applications.

TradeBeam also defines global trade as encompassing the life cycle of a global buy-sell transaction comprising of participants (sellers, buyers, freight forwarders, banks, etc.); tasks (compliance check, booking transportation, clearing customs, applying for letters of credit etc.); and documents (sales order, invoice, packing list, letter of credit, bill of lading, etc.). These global trade processes require the concurrent management of the flow of goods, funds, and information.

Therefore, some enterprise applications, such as ITL and GTM, simply to lend themselves well to the hosted model. Due to their widespread nature, they cannot efficiently work the other way. Namely, global import/export "procure-to-pay" or "order-to-cash" processes entail a number of activities, such as sourcing suppliers and customers; processing purchase and sales orders; insuring goods; and issuing and receiving letters of credits (LC). It also involves financing trade; arranging shipping; creating trade documents; ensuing customs compliance for export and import; sending and receiving goods; sending and receiving invoices; reconciliation; and initiating and receiving payment (see figure 1).

On a more granular level, these activities belong to the following sub-processes:

* Order. Plans demand needs, manages bills of materials (BOM), manages product catalogs, checks inventory status, creates purchase orders, checks compliances, manages inventory, manages purchase orders, assesses supply chain management (SCM) risk, acknowledges order, classify goods, calculates landed costs, manages contract, insures goods, and obtains credit insurance

* Finance. Applies and manages LC, manages documents collection, manages open account, requests financing pre- and post-shipment, checks compliance, assesses SCM risk, and arranges foreign exchange

* Ship. Requests booking, books shipment, creates ship notification, creates shipping documents, manages shipping notification, manages shipping guarantee, tracks shipments, manages events, assesses SCM risk, manages customs, clears customs, receives goods, and manages returns

* Settle. Creates and presents invoices, reconciles documents, manages disputes, prepares and presents documents, manages insurance claims, and receives remittance

Given the detail involved in each of these processes, plus the fact that they stretch over many jurisdictions, many of these can only be efficiently fulfilled through a Web-based hosted solution, which prices per transaction. To optimally complete the global trade cycle, a business must automate, track, and provide visibility to the entire GTM process to optimize its supply and distribution chains. Because Web-based services are steadily growing, TradeBeam's model seems to be ideal.
The average global trade cycle of order through settlement is 120 days, whereas a comprehensive hosted GTM solution like the from TradeBeam, can reduce this cycle by an average of 12 days, improving the users' cash flow by 10 percent or so. TradeBeam's ability to do this has been made possible by its acquisition of over twenty GTM/ITL-related application components during last few years. All have been rewritten to function in concert. Its recent acquisition of ITL specialist Open Harbor is also technologically compatibility with TradeBeam. Like its new parent, Open Harbor is an application service provider (ASP) built for on-demand Web services developed on an n-tier architecture. The architecture includes application servers, a storage area network (SAN), database servers, reporting servers and database clusters with the firewall and file transfer protocol (FTP), gateway servers, domain name system (DNS), simple mail transfer protocol (SMTP) servers, Web servers, and load balancers, and routers outside the firewall.

TradeBeam's solution was built on a platform that leverages many commonly accepted industry standards such as Java 2 Enterprise Edition (J2EE), extensible markup language (XML), or Java Messaging System (JMS). Additionally, by using collaborative workflow, business rules engine, security architecture, third-party integration via XML or electronic data interchange (EDI) transformation, the solution extracts relevant information from diverse enterprise resource planning (ERP), SCM, customer relationship management (CRM), supplier relationship management (SRM), and legacy systems. It provides a comprehensive suite of on-demand application services for order fulfillment across a multi-tier supply chain consisting of buyers, suppliers, distributors, forwarders, brokers, government, carriers, banks and insurance institutions. The system supports both online transaction processing (OLTP) and on-line analytical processing (OLAP) modes, BEA Systems' application server, Oracle Database, MicroStrategy's reporting and analytical solutions, and webMethods' Web servers. It provides stable performance for over 10,000 users, has high availability of 99.87 percent, and 24x7, around the clock operations.

TradeBeam Keeps on Rounding Out Its GTM Set

2009-10-03T23:20:00.000-07:00

At the end of 2004, TradeBeam Holdings, Inc., a leading provider of global trade management (GTM) solutions that streamline global trading processes for enterprises and their partners, announced that it has acquired the assets of Open Harbor, a leading provider of international trade logistics (ITL) solutions. TradeBeam solutions include import and export compliance and global trade finance solutions like open account and letter of credit (LC) management, but also inventory management, shipment tracking, and supply chain electronic management (SCEM). The vendor has over 3,000 customers with users in over 100 countries worldwide. Terms of the deal were not disclosed.

Founded in 1999, Open Harbor possessed deep expertise in trade compliance, including a comprehensive centralized repository of global trade content (harmonization engine) containing millions of trade rules from more than sixty countries, in a one-to-one relationship manner. The company was considered a leading player in the landed cost management arena. Customers leveraged its technology and experience to gain crucial accurate pricing for international orders based on an aggregate of product cost, shipping costs, and fees charged by exporting and importing countries. However, the failure of Open Harbor, however, was not caused by lack of market demand and opportunities, but unfortunately by poor management.

Almost any business process, particularly GTM practices need to have access to trade experts that can interpret and apply trade regulations to improve operational and financial performance and Open Harbor was no exception. TradeBeam, on the other had focused more on the application side of trade management, such as creating shipment tracking, insurance, event management, and other applications central to the actual movement of goods.

Nowadays even small shippers can leverage import/export software through third parties. Specialized software and managed service providers working behind the scenes make it possible for carriers and freight forwarders to offer selected services to their customers, such as landed-cost calculators, product classification, and document preparation, often on a fee-per-transaction basis. For example, international shipping and freight companies DHL and FedEx partnered with Open Harbor and NextLinx respectively. NextLinx, database carries nearly 20,000 HTS product classifications and more than 40 landed cost components for 100 countries, accounting for about 95 percent of the entire world's trade.

TradeBeam believes that Open Harbor brings a logical extension to its current offering, because customers will now have enhanced access to the latest global trade content of more than sixty countries, as well as landed cost management functions. The move continues the strategic expansion of TradeBeam's product footprint, which covers the entire life cycle of global trade across order, logistics, and financial settlement activities—all to improve operating efficiencies and working capital. This should also provide a complimentary vertical focus, since Open Harbor had developed solutions and attracted clients in the hi-tech and automotive markets.

As seen by this move by TradeBeam, the GTM space is consolidating and point solution providers are disappearing. The leaders seem understand that to truly improve global trade, one must be able to manage both the physical and financial supply chain. Across the entire trade transaction export/import compliance, document management, SCEM, security and contract issues must be managed along side purchase order processing, LC management, pre- and post-shipment financing, reconciliation, invoice presentment, foreign exchange, and insurance management.

Product integration between TradeBeam and Open Harbor should be complete by the second half of 2005, with TradeBeam pledging to maintain uninterrupted service and support to a key group of Open Harbor clients during immediate transition phase and post contract execution. TradeBeam has also been communicating with Open Harbor's customers to understand their specific circumstances, the scope of their projects, and to jointly agree on terms to work together to ensure business goals are aligned for both companies.
According to the World Trade Organization (WTO), global trade has grown at a compound annual growth rate (CAGR) of 9.3 percent since 1980. Furthermore because global trade volume is in excess of $8 trillion (USD) per year, it is clear that the management of this process is becoming an integral part of business. The expansion of free trade agreements, outsourcing, and increased government security requirements make implementing a GTM solution a strategic priority.

Most supply chain management (SCM), let alone enterprise resource planning (ERP) vendors typically lack strong international trade logistics (ITL) and global trade management (GTM) capabilities. Simply put, while technology may be rendering a world that appears a lot smaller, in reality, the world has become a lot more complicated in the process. Most businesses are ill-prepared for the many barriers that inevitably still exist to conducting international business over the Internet.

The Internet has enabled a networked world enabling a communication infrastructure and emerging enterprise applications, which have opened the door for international trade in earnest. But not many applications really offer multi-enterprise services and software to automate the complex multimodal transportation and Internet-based logistics management needs of a global trading network. In other words, most modern Web-based, buy- and sell-side applications fall well short of providing automated global trade management and a traditional international trade logistics.

As described in more detail in International Trade or ITL Adoption, ITL and GTM, which are execution systems designed to automate the import/export business process. Their basic functional components are trade documentation generation and transmission, and regulatory compliance validation, and include a complex exchange of information between multiple entities. Among these entries are suppliers, carriers, freight forwarders, customs brokers, banking institutions, and other third party transportation and storage providers. A true ITL/GTM system is, in effect, an inter-enterprise resource management system, and requires a data model that takes into account the breadth and depth of information exchanged between this multiplicity of interrelated entities. Thus, ITL/GTM systems should support export and import borders-crossing processes, documentation, and compliance (which are incomprehensible to ordinary mortals), accounting, and financial reporting in a multicurrency, multilingual, and multi-units of measure (UOM) environment.

When we talk about the risks of globalization, many are usually referring to the threat of domestic jobs moving overseas. Global trade compliance is rarely discussed, even though it poses a risk that might affect almost every manufacturer that either imports or exports. Namely, getting these goods and parts shipped from one country to another is a daunting task and needs the support of a GTM software and service provider with a combination of global trade domain knowledge, proven processes, and international trade best practices.

Each of the nearly 200 countries in the world has individual governmental requirements for importing and exporting goods, where one has to account for factors like tariffs and duties, country-to-country preferences and anti-dumping laws—with the danger of incurring hidden costs at every step. If that is not complex enough, the events of September 11, 2001 have increased the scrutiny countries place on global trade and can impact costs adversely. According to the Brookings Institution, the cost of slowing the delivery of imported goods by just one day because of additional security checks could amount to $7 billion (USD) per year. Stringent new documentation and homeland security requirements are placing serious legal and financial consequences on importers and exporters that violate these constantly changing trade regulations. Furthermore, the burden is on the importer/exporter to know exactly what the regulations are and how to comply with them.

Although global trade requires the multimodal transportation of goods across borders, many international shippers do not yet have e-logistics software that provides the necessary visibility and flexibility to e-businesses wanting to automate their global supply chains. They also do not have e-procurement software that can analyze the total landed cost, including all the costs of sourcing and shipping a product internationally, customs management, tariffs, transportation, cost of goods, etc. However, a number of Internet-based logistics tools are helping companies analyze and reduce costs by automating the processes of booking shipments, keeping customers informed, and making sure goods arrive on time (for more information, see Understanding the True Cost of Sourcing). Savvy customers have increasingly been asking for help in researching costs for importing from different countries. By using software to check duties, taxes, and trade regulations in the potential countries of origin, GTM experts should be able to create "what-if" scenarios that will help importers make the right decision.
GTM is a new and potentially very large enterprise applications space that has been compared by some to be the next corporate paradigm after enterprise resource planning (ERP). TradeBeam is increasingly considered as a category thought-leader owing to its significant "first mover advantage". It has had a few years head start compared to most competitors, and it started with an "end-to-end" GTM portfolio in mind, instead of trying to retrofit its GTM solution into similar enterprise applications. So far, TradeBeam has an impressive functional scope progress and promises much more to come in the future.

TradeBeam is a GTM company providing both software and services. Its offering is an on-demand suite of applications that are integrated into one platform. The suite is based on the idea of allowing corporations to manage their global orders, control global shipments, and optimize global finance. Because managing global trade involves two parallel and interrelated supply chains, the physical and the financial, sharing data between the two chains throughout an international transaction, is crucial (see figure 1). Leveraging this concept, TradeBeam helps corporations save time and improve working capital for order-to-cash and procure-to-pay cycles.

TradeBeam's integrated solutions provide import and export compliance, inventory management, shipment tracking, SCEM, and global trade finance solutions such as open account and LC management. Implementing TradeBeam solutions might thus enable corporations to grow top-line revenue and reduce supply chain costs; provide full visibility into shipments; minimize working capital in inventory and accounts receivable (AR); comply with required governmental reporting and security mandates; and measure the efficiency and performance of global trade policies, procedures and trading partners. TradeBeam believes its innovative offering represents a major step forward for companies that want to address cross-border security concerns while improving both their physical supply chain processes and their cash flow and working capital management.

What On Earth Is Going On With SSA?

2009-10-03T23:07:00.000-07:00

According to the October release of LiveWire, a public electronic newsletter of SSA Global Technologies (formerly SSA Inc.), once a leading mid-market ERP vendor, the company has set out on "a major push around the world to reestablish itself as the key supplier of integrated enterprise and e-business enabling solutions for the industrial sector." SSA Global Technologies cites its commitment to returning to long-term profitability to benefit all stakeholders. To accomplish this the company plans to return to its core competencies, re-focus on the demands of established customers in its key industrial sector and deliver new offerings through its Open eRP approach and strategic partnerships.

"Our flagship eBPCS enterprise solution will serve as the core product and springboard for enhanced capabilities and strategic partnerships," stated Vic Shepherd, Chief Executive Officer. "Our initial focus involved looking at the needs of our customer base and building a strategy that takes our clients and new business into the next phase of solution development. As enhancements in key areas of eBPCS functionality are introduced, together with extended solution capabilities, we will aggressively target the industrial market."

Developments that SSA claims to have currently been involved with include vertical industry enhancements for automotive and engineering, consumer packaged goods, pharmaceutical and chemical industries, a browser front end for eBPCS and eBPCS NT. Strategic relationships and tighter product integration with leaders in business-to-business (B2B), and supply chain management will underpin SSA Global Technologies' delivery of added value to its customers. SSA Global Technologies has also set its sights on a new frontier with business modeling and knowledge management solutions due for general availability later this year.
The good news is the notion of resolving the company's past viability issue and the continued commitment to development of the eBPCS product. On the other hand the glossies cannot conceal the fact that SSA does not yet offer much more than its core unfashionable ERP product in conjunction with assistance integrating extended-ERP software components from third-parties. So much for any differentiation in the market!

Much has been published regarding SSA's troubles that led to its demise (for more information, see Another One Bites the Dust - SSA Gored to Death, and SSA: Evolving Into Systems Integrator To Survive). In brief, the company's all-out attempt in 1996 to rewrite BPCS as an object-oriented system was ill timed and badly executed. From this vantage point, the critical period from 1996 - 1999 should have been used to deliver a mature product and preserve its market share, while introducing the new product architecture and new extended-ERP functionality in a more controlled, phased manner.

Consequently, SSA has suffered, over the past three years, a tremendous loss of market share, money and customer confidence. The Y2K-induced market slump certainly didn't help. The company's channels, both direct and indirect, were also all but crushed during the same period of time. As a result, the market has witnessed an array of competitors preying on its large, perturbed customer base. There are indications that many of SSA customers are at least considering migration to another provider, while many have already opted for it.

However, the damage has not necessarily been irreparable. We favorably regard the release of version 6.1 of eBPCS, which features long-awaited stability and better performance of eBPCS 6. Also, SSA's established global infrastructure and customer base, strong core-ERP functionality with a sharp industry focus, strong multinational product functionality, and a relative ease of implementing eBPCS are some of the company's bargaining chips in the game of averting its customers from jumping the ship. SSA may have difficulties leveraging its existing client base though. Companies interested in "e-business" may need to move faster than SSA is currently able to do. SSA, plans to offer Web-based, portal-style access to eBPCS during the next 12 months. We believe SSA is at least a year behind its competition regarding e-business capabilities. It will need to provide feature rich and tightly integrated solutions of best-of-breed market movers if it wishes to maintain its existing client base.

We endorse the SSA initiatives announced above, but won't hazard a guess about the outcome of these endeavors.

Curbing MESsy Shop Floor State of Affairs – Part II

2009-08-22T05:27:00.000-07:00

Part I of this blog series expanded on some of TEC’s earlier articles about companies’ need for better links between the plant (”blue collar trenches”) and the enterprise (”white collar ivory tower”). It also pointed out the difficulties in achieving this idea. An obvious solution would be a tightly integrated enterprise resource planning (ERP) and manufacturing execution system (MES) package that would help manufacturers close the gap between the shop floor and the offices by gaining visibility into manufacturing operations, achieving shop floor control, managing product/process traceability, genealogy, and so on.

MES solutions that integrate seamlessly into existing enterprise applications thus connect manufacturing to the enterprise in order to:

* Reduce costs and improve profits by collecting and communicating real-time manufacturing data throughout the product lifecycle; and
* Closely control and continuously improve operations, quality, and visibility across facilities worldwide.

By standardizing the best practices of lean manufacturing, overall equipment effectiveness (OEE), and continuous process improvement (CPI), such solutions should provide a real-time framework that would unite capabilities like finite factory scheduling (constraints-based), operations, quality, safety, performance management (via analytics), and enterprise asset maintenance (EAM).

Plant-level execution systems have thus far largely been adopted by big companies in a big way. The historic condition in this highly fragmented market was that offerings were too niche-oriented and offered by many small software companies. A large enterprise would have to purchase many offerings and stitch them together to get a full solution. Today, however, comprehensive packaged factory solutions that are repeatable, scaleable, and transferable are changing that dynamic.

Some Shining Examples

Some good examples in this regard would be a rare few ERP vendors with native MES capabilities, starting with IQMS and its EnterpriseIQ suite [evaluate this product]. Mid-2008, IQMS launched a new Automation Group to expand the interface capabilities of its EnterpriseIQ ERP system with manufacturing equipment on the shop floor.

Look for a separate article on IQMS down the track. In the meantime, you can find more information about the vendor here and in TEC’s earlier article entitled “Manufacturer’s Nirvana — Real-Time Actionable Information.” Also, there is an informative Enterprise Systems Spectator’s blog post on IQMS here.

Solarsoft (formerly CMS Software [evaluate this product]) would be another good ERP-MES example following the acquisition of Mattec a couple of years ago. The upcoming Epicor 9 product, which represents a complete rewrite and convergence, on the basis of service-oriented architecture (SOA) and Web 2.0, of the selected best-of-breed functional concepts from the respective individual products (like Epicor Vantage [evaluate this product], Epicor Enterprise [evaluate this product], Epicor iScala [evaluate this product], and so on) will feature the native MES module. Of course, some functionality within Epicor 9 will be brand new, while some modules will represent embedded third-party products (unbeknownst to the customer).

Again, Forget Not About Oracle

Last but not least, Oracle delivered its own integrated MES-ERP-Supply Chain Management (SCM) offering within Oracle E-Business Suite (EBS) release 12. This was in great part possible due to the vendor’s existing manufacturing capabilities/modules (e.g, flow manufacturing, work-in-process [WIP], etc.) and many customer deployments in certain manufacturing industries.

More recently though, Oracle has been deeply involved in delivering its own integrated MES-ERP-Supply Chain Management (SCM) offering entitled Oracle Manufacturing Operations Center (OMOC, formerly Oracle Manufacturing Hub). Oracle hails this enterprise manufacturing intelligence (EMI, or operational intelligence, shop-floor integration, and real-time intelligence, for that matter) layer (based on the Oracle Business Intelligence Enterprise Edition [OBIEE] architecture) as the foundation for continuous process improvement (CPI) in manufacturing operations.

While the initial generally available parts of this ambitious undertaking such as contextualization engine, manufacturing operations data model (based on the ISA-95 standard), and role-based dashboards, were recently launched, look for much more to come down the track. In the meantime, Oracle points out that MOC should not be confused with being:

* A substitute for Oracle MES for Discrete Manufacturing or Oracle MES for Process Manufacturing;
* A Substitute for Oracle BI Applications;
* A data historian (like e.g., the OSIsoft PI or Wonderware Historian products); or
* A pure middleware solution (it performs some integration, but is an application suite after all).

A SaaSy ERP + MES Example

Plexus Systems deserves attention for offering broad and deep software as a service (SaaS) offering, with a zero-client footprint (i.e., web browser only) and subscription-based pricing. Contrary to ingrained beliefs that SaaS solutions are only suited for individual departments with limited functional footprints, the Plexus Online product features an impressively deep and broad range of features for industries like automotive or medical devices manufacturing.

In fact the Plexus Online solution map reveals not only a traditional ERP scope, but also SCM modules such as program management, supplier quality, Electronic Data Interchange (EDI), lean replenishment and corrective actions. While Plexus Online (and any other product mentioned here for that matter) deserves a separate blog post, some of its MES capabilities worth mentioning here are: production scheduling, quality management, tooling, statistic process control (SPC), traceability, and costing (labor and material tracking).

Plexus has extensive manufacturing industry experience, since it was developed at an actual manufacturing plant, from 1989-1995. The company has been focused on manufacturing within industries like automotive, aerospace & defense (A&D), and industrial machinery since its founding. Plexus’ initial on-premise offering was on Progress Software’s OpenEdge technology, but the SaaS rewrite in the early 2000s has leveraged the Microsoft .NET Framework technology.

Part III of this blog post will analyze the critical role of plant staff, and will also report on the current approaches and offerings from CDC Software and SAP. Your views, comments, opinions, etc. about any above-mentioned solution and abut the software category per se are welcome in the meantime.

We would also be interested in hearing about your experiences with these software solutions (if you are an existing user) or your general interest to evaluate these solutions as prospective customers.

6 IT Resolutions You Can’t Afford NOT to Make for 2009

2009-08-22T05:26:00.002-07:00

Yes, we know everyone had a great New Years party. We saw the ball drop from Big Apple, watched celebrations all over the globe, and optimistically made the same old New Year resolutions again. But what about the resolution for your industry and the global economy in general? What does the dawn of 2009 have for your industry? Let’s evaluate some of the events which will mold the fortune of many organizations in 2009.

As the sun was setting for 2008, I remembered the highlights of 2008 and wondered what 2009 will bring for our economy, especially for IT. The year 2008 was the year to remember with many things that will mold the economic forecast for 2009:

* the US presidential election and hope for better change
* the financial, housing, and automotive industries’ crises which resulted in historic unemployment in US
* the fluctuation in crude oil prices
* the global economical crisis

As we know, with any challenges or threats there come opportunities, so we should consider the negative economic effect of 2008 as excellent opportunity to make the best out of it. It’s never too late to make a pledge for positive change, especially when it comes to improving your business position. Here are few important ones:

* consider mergers and acquisitions (M&A) to better leverage your long term strategies
* innovate and go beyond your domain of expertise; explore new sectors
* outsource or offshore some of your projects & negotiate existing contracts
* hire new energetic graduates with a “Can Do” attitude
* Initiate continuous quality improvement processes by adopting new development methodologies or introducing new processes
* Go for CMMI, ISO, or any related certification and make your company more marketable so you can stand tall against your competitor

Mergers & Acquisitions
Historically M&A usually increased in uncertain economies and 2009 will not be different. We have already seen some huge mergers in airline industry (Delta – NWA) and technology industry (EDS – HP). M&A bring insecurity for employees and hesitation in consumers. But when these mergers happen, they open doors to many opportunities for the IT industry, because organizations need to synchronize their business models, research and development (R&D), IT infrastructure, networks, hardware, etc. to benefit from the M&A. Technology Evaluation Centers can help organizations with these decisions through its decision support system. TEC’s structured methodology helps organization to narrow down the solutions of a complex selection project to only those that match the organization’s business model, priorities, and objectives.

Out of the Box Approaches
The other positive aspect of the troubled economy is that it allows organizations to do things more creatively. Companies should plan for the long term and strategically direct their investments in exploring new technologies (telecom, mobile technology, open source) or build software applications for different areas (health sciences, energy, marketing, sales, software as a service [SAAS]) where there are huge opportunities for growth.

All R&D projects require investment, but when on-hand working capital is minimal, organizations have to use proper tools to evaluate opportunities and risks based on firm information. Using real options rationally when managing new development projects will assist in determining the value new innovations or services may bring to the organization. A model for real options management and value helps management with the decision-making process of whether to invest in product innovation, continue with it, or to abandon it. This method helps when adapting to new situations and opportunities as they arise.

Re-evaluate outsourcing and strategic hiring
On the other hand a slightly conservative approach can also help you sail through economic hardship. Companies should also consider evaluating their internal processes and downsize for a better outcome. There are many cost cutting strategies, such as outsourcing, offshoring, partnering, etc. With the US dollar growing stronger every day offshoring may be a good option. If you already have a long term outsourcing contract, you may need to re-evaluate your need and renegotiate the contract for short term. Or if you would rather keep your intellectual asset onshore, hiring a new breed of professionals for less pay (compare to experienced professional), is not a bad option.

Quality initiatives
One of the most important areas that IT companies should focus on to stay afloat is to take advantage of low customer demand start or improve quality initiatives. Companies should take advantage of slow periods and improve the quality of their existing IT services or software. When times are good there is hardly enough time to pay attention to improving software development processes or the quality of your software. You might have had a long term goal to implement new development methodology (Agile, ITIL), automate testing (Business Technology Optimization), or acquire CMMI or ISO certification; well, this could be the best time to bring those ideas to reality.

In order to make those ideas reality, companies do not require huge financial investment. As customer demand for new development is decreasing, organizations just need to properly allocate time and resources, which should be readily available internally. Improving the quality of existing software and IT services can easily be achieved by paying attention to details and fulfilling customer’s requirements. Companies need to adopt proactive approaches to quality assurance such as

* Determining the proper development methodology which fits best for your need (Scrum, Agile, ITIL, etc.)
* Implementing performance measuring mechanisms at each phase of software development
* Gathering proper customer requirements, as poor requirements is the key contributor to software issues and bugs
* Performing formal and informal requirement reviews, code reviews, and walkthroughs
* Proper testing (regression, functional, load, etc)
* Most importantly, measuring your improvement and adjusting your processes to make them better

On a final note, organizations require an IT service management road map to stay competitive. Every organization should be looking at the best practices for aligning their IT strategy with the overall organization objectives.

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

2009-08-22T05:26:00.001-07:00

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.

Master Claim Planning and Adept Assembly Scheduling Software: Hard Facts

2009-08-18T00:05:00.000-07:00

Any accomplishment action is riddled with a lot of constraints, and even admitting the alleged "best enterprise" software companies in the apple cannot break them in their entirety, manufacturers can attending for best-of-breed solutions to abate problems. Some accepted problems in accomplishment cover continued and aberrant assembly advance times, aberrant patterns of ordering, top bureaucracy and change over times, action bottlenecks, and balance account forth the action route.
Master claim planning (MRP) is important as it calculates the exact amounts of raw, sourced, and WIP abstracts to accomplish exact amounts of accomplished articles as per orders received. This will ensure that the architect sources alone appropriate quantities of abstracts required, that he will be authoritative alone the appropriate quantities of WIP and accomplished products, and that no inventories are created unnecessarily.
Master Assembly scheduling (MPS) is important because it calculates the time appropriate to accomplish accomplished articles as per orders from raw, sourced, and WIP abstracts and so the supply dates are bent from the advance times in processing abstracts on altered plan centers. In today's accomplishment both authentic supply dates and optimizing assets are appropriately important. For this, acceptable software which has accomplished MRP and MPS capabilities is a must.
# MRP and MPS software: Accomplishment software with any name like avant-garde planning and scheduling (APS), avant-garde planning and optimization, bound accommodation planning, actual claim planning, or adept assembly scheduling (MPS) mostly do the aforementioned thing. They aboriginal account the quantities of raw abstracts and average abstracts (work in action materials) appropriate to aftermath quantities of accomplished articles as per your orders. Again they account the time and amount complex to aftermath these materials. The MRP allotment of the software calculates the quantities of the appropriate WIP materials, and the MPS allotment of the software calculates time appropriate to aftermath these abstracts and optionally the assembly costs involved. So it is accessible that the MPS allotment of the software needs quantities of actual produced forth with the amount at which they are produced (i.e., the assembly amount to account the time appropriate for production). That agency the MRP allotment of the software should be run first.
How appear abounding vendors accept software area the MPS allotment is run aboriginal then! Actually, in such software the accommodation and assembly amount of the plan centermost which makes the accomplished artefact is taken into appliance adjoin the quantities of accomplished articles appropriate as per orders. Since they do not accept advice about the quantities of WIP required, they cannot account the time appropriate for their production. If your assembly action is such that you accomplish accomplished articles anon from processing raw abstracts and that you do not accept any WIP abstracts again it is alright. But in case you accept WIP abstracts in your assembly action again this access will not advice you. Alas! A lot of of the vendors accept software which avalanche in this category.
# Bound accommodation planning software: If you are able to ascertain your assembly facility's accommodation in the software afore you alpha accomplishing any MRP or MPS exercise again a lot of apparently you are in safe hands. Because you are starting to do something that is traveling to be a lot of apparently a bound accommodation planning and scheduling exercise.
# Avant-garde planning and scheduling (APS) software: To differentiate from MPS vendors, some vendors alarm their software an APS appliance and accompaniment that their software takes activating inputs for the planning and scheduling it does. They aswell accompaniment that their software does activating planning and scheduling as compared to the changeless planning and scheduling affection of MPS software. APS software adjusts the planning and scheduling dynamically on changes in the ascribe parameters.
4. Bill of abstracts (BOM): BOM describes the affiliation of a accomplished or WIP artefact with the WIP or raw abstracts which go in authoritative it. It will alarm the arrangement in which alone WIP or raw abstracts go in authoritative one assemblage of accomplished or WIP product.
5. Multilevel BOM: When there is added than one akin of BOM in a accomplishment process. In this case at atomic one WIP ancestor will abide of a WIP child.
6. Routing: Routing is the action of defining the avenue which a accomplished artefact and its WIP and raw abstracts will yield through the plan centers forth the way. There could be abounding routings for the aforementioned accomplished artefact or it could be a altered path.
7. Avant-garde planning and enhancement (APO) software: To differentiate from MPS and APS vendors, some vendors alarm their software an APO appliance and accompaniment that it takes activating inputs for the planning it does. They aswell accompaniment that their software does activating planning as compared to the changeless planning and scheduling affection of MPS software. APO software adjusts the planning and scheduling dynamically on changes in the ascribe parameters. APO software is altered from APS software in that it does not do scheduling.
8. MRP II software: In the backward 1980s a new brand of software came in the bazaar which bigger on absolute MRP software. In MRP, absolute accommodation was affected for any assembly ability and so claim of raw actual adding was never right. In MRP II, bound accommodation was taken for adding of raw actual requirements.
The basal band is that whatever analogue acclimated and claims fabricated by vendors, you should be able to adjudicator the claim of these statements and accept the software which will serve your purpose afterwards accurate evaluation. At the aforementioned time, you should be able to analyze some minimum abilities of the software which will adviser you to accomplish a cut mark which will analyze whether software is absolutely abortive or has some advantageous appearance for you

Interface Software Expands Its CRM Functionality

2009-08-18T00:01:00.000-07:00

Early this year, TEC advised InterAction CRM software from Interface Software for its abstracts superior features, which play an important role in chump retention. While our antecedent analysis adumbrated a abridgement of new CRM features, Interface Software is now arresting aback with added modules to accommodated specific able account automation (PSA) vertical needs.
InterAction 5 was developed to accommodate added functionality to added enhance collaborative activity assurance that links activity pale holders to the plan getting performed. Added collaborative and case administration issues that law firms use to advantage contacts and ability about the case and the customer, and opportunities for administration to adumbrate approaching revenues are aswell notable enhancements. InterAction 5 encompasses the bazaar requirements for broader chump ability administration (CRM) and amusing networking functionality. As such the software fits able-bodied with the all-embracing ability and workflow practices of PSA and law firms. Professionals can accumulate their admired Outlook Interface Software active while demography advantage of added CRM functionality of InterAction 5.
InterAction CRM helps professionals not alone to accumulate their abstracts into a alone abstracts athenaeum to actualize bigger accord building, but it aswell helps to advance the acquirement bearing capabilities of professionals. Interface Software's new add-on modules were appear aboriginal in the additional division of 2004 and are awash separately.
Product Definition and Bazaar Impact
The bigger obstacle appliance CRM in a able casework plan environment, like that of law firms, is to apprehend affecting action change in a professional, animated workflow. The majority of law firms, however, charge to consolidate their client's abstracts and to authorize a bigger ascendancy over approaching incomes. This is absolutely area InterAction CRM has been absorption for added than a decade. InterAction 5 provides professionals a 360-degree appearance of their client's contacts, states of relationship, accompanying matters, and engagements.
InterAction Engagements is advised to advice professionals from banking and consulting administration casework to body a accord about an assurance area people, expertise, companies, and relationships are calm and akin to their requirements. Past adventures can aswell be attainable for approaching advertence through a searchable knowledgebase. Users can either accomplish assurance blazon searches or admission an avant-garde seek arrangement with added seek granularity. The Engagements bore follows the aforementioned aisle as Interface Software's absolute CRM appliance emphasizing accord intelligence. As such, the bore helps administer an assurance activity by capturing all the contacts associated with the assurance and their roles.
InterAction Affairs has been distinctively advised for law firms. Its basal functionality is actual agnate to the one for InterAction Engagements which relates people, expertise, and companies. The arch aberration lays in the terminologies acclimated about matters, witnesses, judges, and opposing counsel.
Both modules accept included an e-mail administration account administrator that streamlines the activity communications assignment and reduces the accident of errors and miscommunications.
InterAction Opportunities provides an accepted affection from any CRM accurately a sales force automation tool. Opportunities capital cold is to advice professionals clue and administer prospects, administer referrals, investment analysts, accretion candidates and competition, as able-bodied as to adumbrate approaching revenues. The bounden able or his assembly may accept admission to alone befalling data and add all-important actions. Like added befalling managers, InterAction 5 offers a graphical representation of the assurance carry accumulated to a multistage sales approach.
Interface Software combines CRM and amusing networking beneath the aforementioned application. The end user may cross amid its acceptable Outlook awning and InterAction web-screen with ease. Integration is a success back all acquaintance advice is synchronized amid both systems.

What Are Accomplishment Beheading Systems?

2009-08-18T00:00:00.001-07:00

What Comprises a Accomplishment Beheading Arrangement AnywayPlant beheading software systems accept abounding altered scopes, forms, and formats and beggarly altered things to altered folks. Although bulb beheading software is acclimated broadly in a amount of industries, they are rarely declared similarly, and their functions are rarely identical. An beheading arrangement acclimated at an electronics detached accomplishment adeptness is agnate abandoned in abstraction to one acclimated at a aliment processing plant, and these alter essentially from that acclimated by a biologic or actinic manufacturer. Time and acquaintance accept led the a lot of acknowledged vendors to accompany a "narrow-and-deep" strategy, and to allot their software development to the industries they apperceive best. Even still, the names accustomed to the assorted apparatus of the beheading systems alter abundantly a allotment of industries and even a allotment of companies aural an industryвЂ”if not amid plants aural a company.
To add added confusion, official definitions of accomplishment beheading systems (MES) alter as well. APICS Dictionary defines it as
[p]rograms and systems that participate in boutique attic control, including artefact lifecycles (PLCs) and activity ascendancy computers for absolute and authoritative ascendancy of accomplishment equipment; activity advice systems that accrue actual achievement information, and again accomplish reports; graphical displays; and alarms that acquaint operations cadre what is traveling on in the bulb currently and a actual abbreviate history into the past. Superior ascendancy advice is aswell aggregate and a class advice administration arrangement (LIMSвЂ”applications acclimated to administer the accumulating of samples, accumulating and formatting of assay results, and the advertisement of after-effects by sample or artefact category, admitting these applications may be environmental-, medical- or research-focused) may be allotment of this agreement to tie activity altitude to the superior abstracts that are generated. Thereby, cause-and-effect relationships can be determined. The superior abstracts at times affect the ascendancy ambit that are acclimated to accommodated artefact blueprint either dynamically or off line. [italics added]
Gartner's IT Glossary defines MES as a
computerized arrangement that formalizes assembly methods and procedures aural the accomplishment environment, accouterment online accoutrement to assassinate plan orders. The appellation is about acclimated to encompasses any accomplishment arrangement not already classified in the activity adeptness planning (ERP) or accessible ascendancy arrangement (OCSвЂ”a accomplishment arrangement that is based on a set of commercially available, standards-based technologies, and that permits the accessible barter of activity abstracts with bulb systems and business systems throughout a accomplishment enterprise, admitting "Control" refers to activity ascendancy for discrete, accumulation and continuous-process manufacturing, as able-bodied as computer after ascendancy [CNC] and added motion controls) categories. In the broadest definition, MESs cover computerized aliment administration systems (CMMSs), LIMSs, boutique attic controls (SFCвЂ”a arrangement of computers and controllers acclimated to schedule, celerity and clue the advance of plan orders through accomplishment based on authentic routings), statistical activity ascendancy (SPC) systems, superior ascendancy (QC) systems, and specialized applications such as accumulation advertisement and control. [italics added]
What these diffuse definitions allegorize is that it can be difficult to calmly analyze or ascertain the abounding ambit of applications acclimated on the bulb floor, let abandoned actuate what avalanche alone beneath MES. Moreover, vendors never alternate to add to the abashing by appliance artistic labeling to advance difference.
To put MES into perspective, it can be authentic both broadly and specifically. Broadly speaking, MES can be admired as a accumulating of business processes that accommodate event-by-event, absolute time beheading of planned assembly requirements. For example, it can account what and how abundant to produce, based on advice from the activity planning level. From cyberbanking assembly administration systems to boutique attic abstracts capture, MES functions administer operations from point of adjustment absolution to manufacturing, to point of artefact accumulation to accomplished goods.
A attenuated analogue of MES is that it serves as a plan order-driven, work-in-process (WIP) tracking arrangement that manages and monitors assembly contest and advertisement activities. It captures "live" advice about setups, run times, throughput, yields, etc., acceptance managers to bigger admeasurement constraints, analyze bottlenecks, and get a bigger compassionate of capacity. It closes the bend for assembly administration and helps ensure assembly is followed as planned.
Seen as a arch from the bulb attic to the blow of the enterprise, MES has become the arch agency of carrying absolute time adjustment cachet to the accumulation chain, for available-to-promise (ATP) processing, and for "closing the loop" with adult activity and accumulation alternation planning systems.
As a result, and admitting the disparities surrounding MES systems, some similarities abide apropos its accepted anatomic scope. The functions and advice calm in these systems can be categorized similarly. Overall, MESes try to accompany accepted computerization to bulb floors in a analytical way by agreement assorted functions on a alone platform, including superior management, certificate management, and plant-floor dispatching. The apparatus of these systems can, in principle, be disconnected into two categories: 1) amount functions, which are anon associated with managing the assembly activity and are included in a lot of bell-ringer packages; and 2) abutment functions, which are somewhat borderline to the axial adjustment administration process, and are abandoned provided as options.
An MES advance WIP through abundant artefact acquisition and tracking, activity reporting, adeptness and rework management, assembly measurement, and automatic abstracts accumulating (ADC). In added words, it acts as a accumulating point, clearinghouse, and translator for abstracts that is bare on or is generated by the bulb floor. See The Why of Abstracts Accumulating for added information. It aswell offers barring management, which provides the adeptness to acknowledge to hasty contest that affect the assembly plan, such as a bill of abstracts (BOM) account curtailment for a plan adjustment in process. A lot of systems cover the adeptness to acknowledge to exceptions afterward rules that are about plant-centric, and barring administration about requires some akin of agreement or customization in adjustment to accommodated bounded requirements.
These amount functions are accomplished through modules like Adjustment Management, which can accrue and administer plan orders that accept been accustomed from the planning system, about through some planning arrangement interface that defines what and how advice is exchanged. It performs accepted tasks such as abundance changes to orders; accumulation or agreeable orders; active concise what-if analyses to actuate best accepted adeptness use; and prioritizing, dispatching, and scheduling.
A Workstation/Work Centers Administration bore can apparatus a plan adjustment assembly plan, and accredit workstation scheduling. It is aswell amenable for the analytic agreement of anniversary workstation. The availability of accepted assets and accepted scheduling requirements, by operation, are commonly maintained here.
Additionally, the Account Tracking and Administration activity develops, stores, and maintains the abstracts of anniversary batch, lot, or assemblage of account of the WIP. The Actual Movement Administration module, again logically, schedules, and manages the movement of material, either manually or automatically. Through such modules, an MES appliance can bear a proven, analytic justified, closed-loop systems for awful circuitous accomplishment environments that accept top artefact mix; real-time, event-driven codicillary workflows; and abundant ADC requirements (such as for lot/serial tracking)..
As explained in The Challenges of Integrating Activity Adeptness Planning and Accomplishment Beheading Systems, MES and ERP do overlap to some degree. However, no ERP bell-ringer has natively congenital absolute time assembly monitoring, barn management, time and appearance capture, and superior administration in its solution. Even Invensys, which already had the corresponding ERP and MES articles of Baan, Marcam, Avantis, and Wonderware, was never able to bear such a solution. See The Name and Ownership Change Roulette Wheel for Marcam Stops at SSA GlobalвЂ”Part Three: Last-Ditch Accomplishment by Invensys and Chip Solutions: Attending Before You Leap.
Nonetheless, admitting the ambiguity of the MES market, companies such as IQMS are still attempting to arch ERP and MES. IQMS is a privately-held, about baby developer of EnterpriseIQ, a well-attuned extended-ERP arrangement for baby and average artificial processors and repetitive manufacturers. The band-aid adeptness actual able-bodied be different in the absolute activity applications arena, because it offers modules with borderline MES functions, some of which accept ancestry of both activity applications and plant-level systems. See the IQMS Prospers by Helping Enterprises Plan Smarter series.
What may be a analytical blemish of the MES bell-ringer association is its abortion to analyze the activity of MES. When a provider declares itself to be an MES vendor, about all it is absolutely adage is that it is not an ERP, activity asset administration (EAM), or accessible ascendancy software (OCS) vendor, which leaves the user to assumption what functionality ambit the bell-ringer absolutely provides. MESes appear in all shapes and sizes and can accept one or added of the apparatus categorical above, depending on the industry and user company. For instance, a aggregation adeptness alarm a alone moduleвЂ”such as a statistical activity ascendancy (SPC) or a concrete basement administration arrangement (PIMS) packageвЂ”an MES system. Others may activity a advanced array of systems and collectively referred to them as an MES, but accept no tie amid the packages. Also, in some instances, amount functions will about be able-bodied integrated, but a lot of of the abutment functions will not. For example, while added avant-garde applications pay added absorption to abstracts affiliation issues, a lot of accepted plant-level beheading systems still abide of disparate components.
In an accomplishment to accord readers accuracy about MES systems, we accept aggregate the afterward account of key MES functionality. These aswell allegorize the overlap that can activity amid activity applications and plant-level systems:
CMMS (computerized aliment administration system) or EAM systems administer assembly accessories aliment and repair-related issues, including predictive and bactericide maintenance; plan adjustment and activity scheduling; accretion and accumulator of the adjustment locations inventory; and equipment-record maintenance. For added information, see EAM Versus CMMS: What's Right for Your Company?
Time and attendance/clock systems usually cover clock-in/clock-out advice and activity and agent abilities data. In the case of IQMS, its alternative IQ Time & Appearance bore is a time alarm arrangement that eliminates the charge for a third-party time alarm system, which would commonly be implemented by partnering with an ERP competitor, such as Kronos or Kaba Benzing. Such systems abbreviate the time adapted for activity abstracts input. The artefact generates amount timecards or an achievement book for alien amount systems (since built-in affiliation with the IQ Amount bore is currently accessible abandoned in the US). It aswell generates added authentic job costing advice by tracking activity to specific tasks. IQ Amount links activity advertisement to assembly advertisement and job costing in the JobShopIQ, IQ Project manager, and IQ Preventive Aliment modules. IQ Time & Appearance aswell supports beheld about-face scheduling and assorted login devices, such as keyboard, "swipe" readers, and biometric scanners.
Barn administration systems (WMS) are primarily acclimated for ecology and managing outbound account activities. Accumulation alternation beheading (SCE) tasks, for example, can aswell cover acumen and added busline administration data, and some systems are aswell able of entering raw or purchased actual management. Artefact area advice and adjustment accomplishment instructions are two of abounding on-line functions. In the case of IQMS, its wireless IQ Barn Administration Arrangement (WMS) bore supports duke captivated scanners, claimed agenda administration (PDA), and radio abundance (RF) technology, and will acceptable advance bulb attic communications and lower the amount of account abstracts collection. At the aforementioned time, allows on-line updates in about real-time. The bore handles a bulk of account affairs such as receiving, chiral adjustments, concrete inventory, assembly entry/materials backflush, aces tickets, packing slips, etc. It can aswell admission advice from the IQ RealTime Assembly Ecology system, including advice on job setup, entered scrap, assembly reporting, printed labels, or blow codes reports. Added systems cover HighJump Software, a 3M company, which alpha as a boutique attic abstracts accumulating band-aid in the aboriginal 1980s and alien its MES offering, Accomplishment Advantage, in aboriginal 20005. For added information, see ERP and WMS Co-Existence: When Arrangement Worlds Collide.
Statistical activity ascendancy (SPC) is a superior ascendancy adjustment that focuses on connected activity ecology rather than the assay of accomplished alone productsвЂ”it has the adeptness to do adequacy calculations based on the abstracts that users abduction from the boutique floor. For example, during the beheading of the batch, the above Lighthammer CMS artefact (now allotment of SAP xApp Accomplishment Affiliation and Intelligence [SAP xMII]) can run a connected assay and accomplish a superior active in the portal, based on an SPC aphorism violation. Beat the active generates a pop-up absolute added details. This allows administration to assignment down one added akin to get advice from the boutique floor. The active can accommodate adapted actions, links to advertence documents, drawings, and added advice that will advice administration accept what acquired the occurrence.
Statistical information, including abundant activity capricious trends and SPC archive with actual data, can aswell be begin by beat a accent SPC chart. One can see what the superior botheration is and its accessible origins based on abstracts from the accomplished about-face or the accomplished week. The SPC archive can again appearance users how the advice is tracked, including accomplished or present ethics from a accurate about-face or from the beheading of the accepted batch. One can attending at the blueprint and ascendancy limits, or attending at the chump blueprint banned and close ascendancy banned that may accept been authentic for this product. In addition, the animadversion adequacy allows users to accomplish addendum for anniversary point in the chart. Users can abduction advice about the affairs that acquired the problem, and can see what antidotal activity was taken. Not abandoned can users actuate that there is a problem, but they can aswell ascertain the adeptness to fix a botheration so its affairs of re-occurring is diminished.
Quality administration systems (QMS), such as EntepriseIQ from IQMS, may or may not be angry calm with SPC or ISO 9000 superior standards, but whether standalone or combined, these bales are common apparatus of the assembly process. The agnate holds for class advice administration systems (LIMS) and ecology affirmation and bloom systems (ES&H), which is a class of software applications that deals with authoritative compliance, such as the US Ecology Protection Agency (EPA) or Occupational Affirmation and Bloom Administration (OSHA) requirements.
Process data/performance assay or activity advice administration systems (PIMS) that absorb activity abstracts accumulating and administration can be a accepted amalgamation developed for specific applications, such as time/cost about-face advice or accomplishment activity records.
Document administration (DM) or artefact abstracts administration (PDM) systems can handle baggy data, which can be acclimated to actualize artefact assets and activity information, and accumulation abstracts for plant-floor use. For added information, see Mainstream Activity Vendors Begin to Grasp Content Management.
There are abounding MES components, and this account is far from conclusive. However, IQMS does accept abounding of these components, which may actual able-bodied accomplish it an adapted admeasurement for MES. Its IQ WebDirect, a Web-based trading accomplice self-service aperture technology, helps accomplish absolute time information. It tends to enhance accumulation alternation communications, advance chump and supplier relations, and abate chump and supplier account costs by acceptance 24x7 admission to data. The aperture allows barter to add, edit, or change orders; analysis the adjustment status; account availability; shipments; invoicing; bell-ringer managed account (VMI) access (based on adjustable rules); and broadcast reports. On the added hand, suppliers can analysis acquirement adjustment information, inventory, receiving, invoicing, superior affirmation (QA), genealogy, banknote payments, and appear reports.

Do Chinese Enterprises Absolutely Charge MES and WMS?

2009-08-17T23:54:00.000-07:00

Manufacturing beheading systems (MES) and barn administration systems (WMS) accept been about aback the 1980s. Today, admitting accelerated advance of the automated area in China as able-bodied as added Asian, Latin American, and Eastern European countries in contempo years, the all-inclusive majority of MES and WMS installations are begin in North America, Western Europe, and Japan. Is this because enterprises in China and added developing countries don't absolutely charge software like this? Or, searching ahead, can we apprehend appeal for MES and WMS software to bang in the developing world?
Through the Past, Briefly
Paradoxically, the origins of MES and WMS accompany with the acceleration of Asian antagonism in the aboriginal 1980s. "Made in Japan," already a delicacy for bargain and base merchandise, became a tagline for above and affordable superior as enterprises such as Toyota, Sony, and Honda took up absolute superior administration (TQM), just-in-time (JIT), and adjustable accomplishment techniques that badly cut inventories, aeon times, and costs while accomplishing near-perfect superior and accumulation performance.
Western manufacturers had to acclimate fast in adjustment to survive, but they ran into obstaclesвЂ”powerful activity unions, plan rules, minimum allowance laws, and workweek restrictionsвЂ”that fabricated it all but absurd to redeploy their activity assets calmly in the Japanese way. Indeed, unionization and activity action were the basis causes of allowance and amount hyperinflation during the 1970s that attenuate Western competitiveness in the aboriginal place. So, to accompany agency costs beneath ascendancy and retool their operations for college abundance and quality, Western manufacturers fabricated bulb and barn automation their top priority. Unlike activity costs, basic spending on automation technology could at atomic be accounting off in crumbling absolute amounts as aggrandizement cut the purchasing ability of the aboriginal investment.
This cardinal about-face paid off by acceleration the acceleration of accomplish over the next twenty years. In the United States, for example, the amount of accomplishment establishments was about the aforementioned in 2001 as it was twenty years earlier, but these establishments allow one-sixth of their accumulation workers and about as abounding authoritative employees. Meanwhile, accomplishment value-add per accumulation artisan grew added than twofold, from $81,000 to $165,000 (USD and in connected 2002 dollars), and absolute accomplishment value-add grew by about 70 percent to $1.9 abundance per year (USD).
Improving the acceleration of accomplish through automation, while accompanying abbreviation the amount of advisers who baby-sit accomplishment and warehousing operations, creates the accident of advice breakdowns amid enterprise-level back-office applications on the one hand, and floor-level accessories controllers on the other. Accepted MES and WMS applications arch these advice gaps that ability contrarily absolute the allowances of automation. They affix to programmable argumentation controllers (PLC) and abstracts administration accessories on the bulb and barn attic to accord admiral actual afterimage and ascendancy of events. Simultaneously, they accept orders from back-office applications and forward transaction data aback as tasks get done. To advance accommodation acceleration and accuracy, addition authoritative productivity, and accumulate operations active smoothly, MES and WMS systems accommodate accoutrement for detail scheduling, activity management, ability allocation, dispatching, navigation, action management, superior control, maintenance, approvals, almanac keeping, and achievement altitude that was aforetime done on cardboard and in people's headsвЂ”or not at all.
Starting from around boilerplate in the aboriginal 1980s, Chinese accomplishment value-add grew phenomenally to $0.7 abundance (USD) per year in 2001 abstinent by purchasing ability parityвЂ”nearly 40 percent of the United States totalвЂ”and continues to aggrandize at a 26 percent admixture anniversary rate. But Chinese industry is far added labor-intensive than in the West. In 2001, the boilerplate Chinese accomplishment action had 331 advisers against 46 per enactment in the United States. Chinese accomplishment and accomplishment value-add per agent were one-tenth of the American levels.
Nonetheless, the acceleration of accomplish is absolutely accelerating in China. Aback 2001, application at Chinese accomplishment enterprises has developed alone 2 percent per year while accomplishment value-add per agent has developed at a 24 percent anniversary rate. In short, although accomplishment application continues to expand, abundance advance now accounts for able-bodied over 90 percent of the advance in China's automated sector.
Why do Chinese manufacturers, with a acutely amaranthine accumulation of bargain activity at hand, see abundance accessory as the key to assisting growth? Accede the afterward trends now affecting Chinese industry:
* Chinese state-owned enterprises and collectives are reforming themselves into automated powerhouses. The canicule of government subsidies and quota-driven accumulation accumulation of inferior appurtenances are over. Inefficient state-owned enterprises and collectives are beneath burden to adapt, or die. In response, a lot of are abandoning accumulation accumulation of accepted (or substandard) products, implementing TQM to advance quality, laying off earlier workers with poor skills, and closing down their least-efficient operations to become profitable.
* Costs of alien actual are rising, and atom shortages are developing. China is now one of the world's better importers of automated commodities, from oil to animate and cement, and its surging appetence is active atom prices up in all-around markets. Western manufacturers criticize China for befitting the Yuan Renminbi's amount artificially low, which protects China's aggressive advantage as an exporter, but the bill peg aswell makes imports almost expensive, putting margins beneath pressure.
* Activity costs are ascent and the activity bazaar is bound in burghal areas. Although still actual low by Western standards, accomplishment of accomplishment workers are ascent faster than gross calm artefact due to a growing curtailment of people. New factories are arising up, in the Chinese autogenous as able-bodied as littoral areas, faster than workers can be found, and active altitude are convalescent in rural China, abbreviation the arrival of casual workers to the cities.
* Amount antagonism is intensifying. Accelerated adopted as able-bodied as clandestine calm investment in new factories is accelerating calm competition. As a result, Chinese manufacturers are clumsy to accession prices fast abundant to awning increases in actual and activity costs.
It's absurd that Chinese manufacturers will yield the Western automation avenue anytime soon, because activity costs in China are still a atom of what they are in the West. Also, clandestine enterprises in China abridgement admission to the coffer acclaim they charge for basic expenditures, because basement projects and state-owned accomplishment enterprises blot the lion's allotment of investment basic and are costs these investments not from government revenues but through borrowings from state-owned banks.
In short, Chinese manufacturers cannot absolutely allow to advance in "autonomation"вЂ”a colonnade of accepted MES and WMS systems that transfers animal intelligence to accouterment and equipment, acceptance one abettor to baby-sit abounding machines after accident of bearing defects. Moreover, autonomation is a lot of acceptable for high-volume, low-mix production, decidedly if artefact activity cycles are long. But it can be acutely cher in low-volume, high-mix situationsвЂ”the added so if artefact activity cycles are shortвЂ”yet these are facts of activity for a lot of industries today, abnormally in the automotive and high-tech sectors area China excels.
More likely, Chinese manufacturers are award means for workers to plan smarterвЂ”in effect, application bodies instead of PLCs to ascendancy machinery, accessories and deliveries. That's why it's harder to acquisition any PLCs or automated accumulator and retrieval systems (ASRS) in Chinese plants and warehouses today.
Case Study 1: Accumulation to Band at a Durable Consumer Appurtenances Manufacturer
Here's an example. Breeze racks augment accelerated accumulation curve in abounding Western factories, befitting deliveries of actual in synch with the clip of accumulation by automatically analysis basic actual burning as it occurs, and adopting accumulation orders in a WMS if bushing becomes necessary. On the barn or accepting side, automatic pick-and-place accessories puts actual in totes and assimilate conveyors to accomplish these orders. The WMS links anniversary accumulation to bar codes on the totes, which the conveyors browse during the adventure and again alter anniversary tote to the appropriate breeze rack. PLC accessories ascendancy the breeze racks, pick-and-place equipment, and the conveyors. A scattering of workers baby-sit these operations, mostly application the WMS to accord with any problems that arise.
Conveyor systems augment accelerated accumulation curve in China, too, but animal workers on anniversary end amount beginning actual assimilate conveyors and yield actual off the conveyors at the accumulation line. But because the archetypal Chinese branch is a multi-story buildingвЂ”receiving and warehousing operations usually absorb altered floors than the accumulation linesвЂ”it's generally absurd for workers at one end of the agent to see what's traveling on at the added end. As a result, barn workers aren't acquainted of accumulation band stoppages and will abide loading actual indefinitely until there is no added amplitude on the conveyor. If assorted accumulation curve allotment the aforementioned agent system, the curtailment of amplitude may advance to analytical actual shortages and blow on some accumulation lines, even as actual bags up for added accumulation lines. Abundance dwindles for accumulation and barn workers alike.
One of China's better apparatus and air conditioning manufacturers begin an bargain yet able band-aid to this botheration that puts touch-screen or wireless accessories in the haands of workers at anniversary end of the conveyor. Accumulation band workers almanac basic actual burning as it occurs, in clip with production, and accession accumulation orders in the WMS if bushing becomes necessary. On the barn or accepting side, bodies amount actual assimilate conveyors according to instructions accustomed by the WMS. This access optimizes the use of accessible agent amplitude and eliminates the achievability of actual shortages on accumulation curve that allotment the aforementioned agent system, while alienated any investments in PLCs, breeze racks, or pick-and-place equipment.Case Study 2: Superior Ascendancy and Accountability at an Electronics Manufacturer
Here's addition example. Chinese manufacturers and their Western counterparts both do superior control, but Western manufacturers aswell use their MES to almanac as-built artefact genealogies that hotlink the consecutive or lot numbers of accumulation units to the consecutive or lot numbers of important components. Usually, placer accouterment or automated robots browse bar codes for the ancestor and its apparatus during final assembly, and the advice is fed anon into a computer database. The ancestry enables manufacturers to bound define and apprehension artefact that may be adulterated due to abnormal apparatus вЂ”as, for example, if suppliers acquaint their barter to anamnesis a specific lot or consignmentвЂ”without accepting to recall, hold, and audit every accumulation unit.
Although they frequently agenda abortion histories on paper, Chinese manufacturers about do not almanac artefact genealogies. If they accept a anamnesis notification from a supplier, they charge to put all artefact inventories on authority and audit every accumulation unit, just to analyze the few adulterated units. Or, even worse, they charge to anamnesis artefact from their barter in adjustment to audit and analyze the scattering of defects. This ultimately drives up the amount of superior and diminishes productivity.
A arch Chinese maker of television sets and adaptable phones will not be advance in automated robots or placer accouterment to body artefact genealogies anytime soon. All they charge are a bar cipher characterization printer and a few touch-screen or wireless accessories for workers at specific accumulation credibility forth the accumulation line. They aswell crave their suppliers or agriculturalist accumulation curve to put bar cipher labels on the apparatus that they wish to track. Accumulation workers browse bar codes for the ancestor and its components, and the advice is fed anon into the computer database as if it came from automated robots or placer machinery.
Case Study 3: Antidotal Aliment at a Columnist Plant
Here's a third example. Machines run by PLC can automatically address faults and analytic advice aback to an MES, acceptance bodies to celerity the appropriate antidotal aliment accomplishments immediately. However, bodies run a lot of machines in China. If a breakdown occurs, the abettor has to arouse a artisan to analyze the botheration and accomplish antidotal maintenance. A ample columnist bulb in southern China gave touch-screen accessories to the columnist operators, acceptance them to anon acquaint accountability codes to mechanics if the presses breach down. This saves the artisan from active out to the apparatus and aback just to analyze the problem, a accumulation that anon reduces columnist downtime. It ability not assume like much, but those blow reductions add up to a 10 percent abundance advance year-over-year, and all-embracing accessories capability (OEE) achievement that exceeds all-around norms.
As the above-mentioned examples illustrate, Chinese manufacturers can absolutely use MES and WMS to addition abundance in their plants and warehouses, but there's a catch. Accepted MES and WMS applications from Western software developers were congenital to acquaint with PLCs, and not accumulation or barn workers. Chinese manufacturers crave a new brand of people-friendly MES and WMS applications to advance abundance in their plants and warehouses.
Take languages, for example. PLCs use apparatus languages, which are border-independent. But Chinese accumulation and barn workers crave Simplified Chinese software on the mainland, and possibly Traditional Chinese aswell in Hong Kong and Taiwan. Ideally, they adopt software that uses cartoon rather than text. Accepted MES and WMS applications crave above reprogramming just to accord with cartoon and advanced Chinese characters, to say annihilation of the adaptation accomplishment into assorted versions of the Chinese language.
Process argumentation requirements are different, too. Processes congenital for PLCs are abundant beneath circuitous than people-friendly processes. With people, you accept to accede the abounding things bodies will doвЂ”unintentionally or notвЂ”to addle a computer. Machines are a lot added anticipated and obedient. And, no amount how circuitous the process, it has to arise simple and automatic for accustomed bodies like branch and barn workers.

The Challenges of Defining and Managing Governance, Risk Management, and Compliance

2009-07-22T03:31:00.000-07:00

While the cost of insubordination is enough reason to justify companies to be more vigilant in their procedures of management, the companies can in makes benefit from the payments that they face. The companies should look at conformity like manner of improving their internal processes of businesses through the organization. To do this, the companies must adopt a holistic approach starting from top downwards, and arm the strategic category of software with the government, of the conformity and risk management, (GRC). However, this can be easier said that made. Thus why a holistic approach with GRC it could be difficult to realize?

As discussed in solutions SAP for the government, the risk, and conformity, most of the creation of value and the innovation within the companies takes place in consequence of the complex relationship between the people, process, and system-all of which are, in general, unequal through various organizations, functions, and geographies. This fragmentation can consider any company back of a certain number of manners:

* The fragmentation of organization caused by disconnected activities and department-controls of GRC usually has like consequence of the contradictory policies, the difficulty in the risk of forecast, a lack of transparency of company, and the duplication of the efforts. As the companies increase collaboration with business partners, the consequences not to have any central organization to coordinate activities of GRC on the level of the company intensify because the majority of legislation the judge persons in charge of good the government and conformity in their own organization, as well as through the prolonged company (chain of provisioning).

* The majority of the companies miss integrity of the information of GRC because their departments employ the different metric one, standards, software, and methodologies to analyze the risk and the information of conformity. This fragmentation of system makes it difficult to incorporate data; gain a complete sight of the risks on the level of the company; supervise indeed these risks and conformity; and adjust the processes of businesses to fill of the conditions changeantes, of, and the mandate market trends of standardization.
* Policies and the risks generally definite and are measured at the local geographical level, without suitable consideration for their impact on the mandates total, multinational, national, or regional with which an organization must also be in conformity. The decision makers are often ignoramuses of the interdependences between the mandates and the risks of insubordination in specific areas and the markets, by which an area 'risk of S could be still 'occasion of S.

* The internal fragmentation of discipline of GRC is also an exit, since on the level of corporation, like departmental or at the regional levels, there is general uncertainty around the significance and of the range of the disciplines of GRC. Most important, the leadership team can not identify that these disciplines are inextricably dependent and interdependent, and consequently, function of need interdependent instead of as an element of an integrated strategy.

To be succeeded, the companies must align their strategies of corporation with a more effective inadvertency and an arrangement of policy, a risk management, and businesses institutionalized with regulation of process. The only manner of achieving this goal is by an comprehensive approach with GRC which unifies the sectors above reduced in fragments. Can only then a hope of company obtain new information on incipient threats and occasions, and exploits them for the competitive advantage.

According to the search for Amr, roughly two-third of cost of conformity is ascribable to people. It is because the efforts reduced in fragments of GRC tend to result in GRC nobody-actuated (or ineffective processes and handbooks which are reproduced through departments). Still of greatter importance could be the lost occasions which result from an approach tactical and reduced in fragments to control GRC. Without complete and cohesive strategy of GRC, companies means are private of directing indeed today the commercial environments 'of S strongly regulated (and always changing), as well as critical driver of income and competitive advantage.

Consequently, a multiplicity of pressure of governmental regulations, breeding of the financial markets, and increasing demands of the agents replaced the hearth on GRC. Some organizations turned towards the future do not see any more GRC as activities discrete and project-based controlled as separate functions. On the other hand, they adopt a strategy overarching GRC which guides people, standardizes processes, and unifies technology to insert GRC on each level of organization. I.e., vis-a-vis the states of industry of shift, the mandates of conformity, and the conditions of government, companies must adopt broader, more structured an approach to manage GRC proactivement to identify and envisage inefficiencies and errors, to adopt an approach risk-based towards including orders in processes of businesses, and supervise without interruption of the operations to optimize and guide the future policy (see the solutions of SAP for the government, the risk, and conformity).

To control the information technology (IT) and the risks of businesses on all the levels of the organization, GRC 'solutions integrated by S must be able of the processes of businesses of monitoring and IT orders automatically. Not only if one integrated approach offers to the senior officers an exigible instrument panel showing a more complete profile and more precis of risk of the company, but he should also detect high-risk events, and gives the priority to answers of risk and the corrective action or, still better, preventive.

It is the final part of a series on the way in which various industries approach exits of conformity. For more information, to please see the preceding parts of this series: The thousand Shalt conform (and more, or): Looking at Sarbanes-Oxley, the important mandates of act of Sarbanes-Oxley and what they means for the management of chain of provisioning, act of Sarbanes-Oxley can be right the end of an iceberg of conformity, a motorized industry and a food, a safety, and, payments of drug tree - the environmental payments for point and electronics, the chemicals, and the oil and industries of gas, and the total trade and the role of the government, risk management, and software of conformity.

Defined GRC, starting with. exchange of deposit

The major excavation in the various components of GRC, government requires the role of inadvertency, with the idea to lay down strategic objectives the company wants to continue, and then controlling the latter. For this purpose, the government is based typically on a deposit centrally to control all the contents of GRC, to guide strategies of government, and to improve the execution of businesses.

Such a deposit should centrally document and store discs to rationalize and control the contents of GRC, including executives of order; policies and procedures of the company; payments; mandates of industry; flows of process of businesses; libraries of risk; order the libraries; plans of test; obviousness for conformity; etc (see the solutions of SAP for the government, the risk, and conformity). In other words, the central deposit should allow the conformed, effective, and decisive insurance of the contents of standardization (i.e., frameworks, laws, internal policies of company, etc) by providing the visibility under relative conditions. The companies can then establish the references of their policies and procedures of organization with conditions of standardization of ensuring conformity.

The key with a central deposit is while centralizing and by controlling the contents of GRC of the multiple sources, and in its capacity to model processes of businesses and to document objectives, risks, and activities associated with order. Also important is the library of the configurable economic principles, controls of the process of cycle of businesses, and IT orders to ensure of the suitable segregation-of-duties (GRASS), controls of the process of cycle of businesses, and environmental and total commercial conformity.

By arming a deposit well-populated with GRC, the companies should draw benefit from the visibility on the level of the company in all the activities of GRC. This visibility should make it possible companies to analyze the risk, to make decisions with the current more, and to adopt an approach risk-based with the multiple initiatives satisfying of company and the mandates of standardization (see the solutions of SAP for the government, the risk, and conformity).

Moreover, the users should be able to bind these risks and orders to the multiple executives of safety and order, such as the Committee of the organizations of silent partner (COSO), HIM it library of infrastructure (ITIL), or the objectives of order for information and relative technologies (COBIT), and to the mandates of the USA like the Law of Sarbanes-Oxley (SOX) and the payments of the �Food and Drug Administration� (FDA). The deposit often also allows adherence the official diagrams of classification of product such as the program of tariff harmonized by the USA (HTS) and the number of classification of control of exports (ECCN), which is published by the office of industry and safety (BIS) for forwardings which require a licence of export.

To illustrate the transformative power of a central deposit of GRC, consider all the needs necessary for GRASS defined in all the suitable solutions of conformity. These grasses let us then include the applications of access and ordering of authorization which are integrated with the application of deposit of GRC. In this way, all the organization 'political of S, initiatives, and payments which require the suitable grasses (or, alternatively, which needs the definition and the attribution suitable of the orders of compensation) would be automatically documented in the deposit of GRC, complete with bonds with the suitable access controls for the automated monitoring. While thus making, the companies should be able to benefit from the occasions which they could not have noted before improving the effectiveness and transparency, to optimize booklets risk-and-turn over, and increase the foreseeability of businesses by rationalizing orders and risk answers through the company.

. What (in the best of the cases) control all it. conceivable of risks

The business applications of the risks provide executives for the identification of the risk; analyzes potential impacts and appropriate responses; and monitoring of the actions of attenuation and report-all inside a structured way. Once applied holistic, of the more effective practices of management of risk should be able to improve decision making and to create the significant value in all the company.

But too often, the real practices of management of risk are reactive and theoretical tasks carried out in the departmental silos, and these practices give on critical interactions between the risks. At the same time, because the risk management is often regarded as a theoretical exercise without practical methodology, with the organizations are not equipped to identify critical risks; to analyze differences in risk-reward; and to answer suitably based on metric quantitative cost and of analysis of advantage. The idea is thus to deploy suitable applications of risk management, and puts pursuant to the processes proactifs and of collaboration in all the whole company. Such applications will make it possible companies to balance new commercial opportunities with financial risks, legal, and operational.

A true application software package of risk management should provide a framework best-practice for the identification of risk of company, the analysis of risk of collaboration, the management of risk-answer, and the monitoring continues and the report of risk. Such an application software package should help of the users indeed to envisage and answer the economic conjunctures changeantes. The applications should also ideally include the director-level, the instrument panels personalized, the charts of score, and the reports/ratios which provide to users the visibility in the metric principal one of risk and the conformity of policy (see the solutions of SAP for the government, the risk, and conformity: Risk management of SAP GRC).

The goal is so that the users can supervise the total booklet of risk, including cohesive and total profiles of the operational risks and of entity-level ( charts of heat ), and then to analyze the risk in terms of severity and the impact on a monetary and qualitative basis (see the solutions of SAP for the government, the risk, and conformity: Risk management of SAP GRC). Moreover, the users should be able to balance the costs of action to avoid of risk against of new commercial opportunities. They should also be able to alert management when the risks with high impression and of high-probability exceed the company-specific thresholds, and to give the priority to the method of recovery using the instrument panels role-based and alarms.

. To ensure conformity at the end of the day

Finally and especially, conformity requires the action in rems and tactical to attenuate the risk. In other words, conformity is the execution of these objectives based on the established tolerance of risk for the company. To knowknowing, as mentioned previously, some payments obligatory, but are not recommended. For example, the payments of FDA for manufacturers of drug are not the fixed targets. Thus, conformity is an objective of key for any regulated manufacturing company of drug, but the conditions of meeting conformity subjective are based on the product, the manufacturing processes, and (perhaps most important) each company the 'tolerance of S for the risk. The risk of standardization is the risk of conclusion out of conformity, and if a company accepts the very limited risk, its cost of conformity will be logically high. Reciprocally, with more left risk, the cost of conformity is reduced, but the potential cost of insubordination increases.

Executive management has, therefore, the responsibility to place the organization 'the tolerance of risk of S and to allocate the resources requested to satisfy this tolerance. Needs for a team of conformity (for example, quality or legal department) to place the strategy of standardization for a company based on an interpretation of the payments relative at its specific situation. At the same time, the team of conformity must carefully balance the cost of conformity and the cost of insubordination.

As a reviewing the cost of conformity, one must think of all the cost of property (operating burnup). Operating burnup should include the disposable cost to launch the system (i.e., execution and formation, acquisition of any equipment or implied software, and validation), the continuation of more operational and the costs of maintenance (i.e., cost of personnel, cost of continuing education, maintenance costs of any material or software used, etc). The continuous cost also includes the effort of continuation to maintain the system of conformity in the synchro with evolving/moving of the usual procedures of operation (concessions). IT composing of the system of conformity will have to also evolve/move with the concessions.

The core of conformity turns around the suitable orders of access and authorization, since such applications aim at reducing the risk of order in applications of company by imposing the suitable grasses. The applications then control roles of company and the provisioning in conformity of the users, and grant the audited access of help for super-users. One should allow favoured super-users but the access ordered thus them can quickly address conditions of help or help to attenuate situations where the grasses cannot make.

As indicated earlier, two critical pieces of the puzzle of GRC are suitable separation of the tasks and access control above the capital of the principal information, against which are the most effective safeguards fraud-and preconditions to the inadvertency of healthy corporation. They are also the hardest orders to spread themselves and support, given the thousands of users, the roles, and the processes who require the evaluation of access and authorization for violations, the test, and the remediation.

The immense task of the access of management of user and role can only make when owners of business-processes (which can determine the suitable access in terms of businesses) and IT them expert (which can define the fundamental technical objects which compose of the functions of businesses) work together in an environment which throws a bridge on processes of businesses, HIM of the possibilities, and the plethora of applications of company used in the organization. I.e., a company needs a bridge this business language of bonds with IT of the possibilities. To carry out this bond, a complete whole of applications of access control is necessary that will allow all the agents of corporation of conformity (business managers including, listeners, and HIM of the directors of safety) to control in collaboration the suitable application of GRASS.

Conclusion and recommendations

It is obvious that the companies have the increase become informed of the need for HIM the solutions which support integrated, the strategy alencompassing of GRC to help them to carry out a greater transparency and a foreseeability, the processes aerodynamic of GRC, and improve finally their total execution of company. With the best support these strategic objectives, companies need the solutions of software which will allow a better transparency in the execution of businesses, will cultivate foreseeable results of businesses, and will ensure the continuity of process of businesses. An integrated booklet of GRC, rather than a package of solutions, stands of point a much better possibility to solve fragmentation through organizations of management, systems TI, and to actuate areas.

Always, each organization must draw up a chart its own course to embrace a framework of GRC. The companies must weigh conditions of businesses and the tolerance criticisms of risk with the maturity of organization of GRC and higher engagement. The companies can choose to start by identifying little selected, priority sectors of risk, and then launch business-specific or initiative-conduit, deployment of proof-of-concept of the applications of GRC. Success with this approach should help to prepare the ground and to lead the value of a complete strategy of GRC. After this, it should provide a reusable and bearable model to order and address future sectors of GRC. Some potential advantages of a complete approach of GRC could include

* improve the protected mark and the reputation;
* optimized risk-and-turn over the booklets (due to transparency and perspicacity to choose and reject projects based on on relative return of potential of impact and probability of risk);
* reduced costs of GRC and resources released for the innovation;
* improved execution and foreseeability of businesses (due to the systematic process improved of visibility-a so that to envisage, supervise, and of the risks of control, and the tools proactivement determine suitable actions and critical tasks);
* continuity of businesses (due to the automation of software, management by exception, the analytics and alarms, visibility to risk interdependences, etc);
* increased agility and competitiveness of businesses (due to the capacity of the decision makers to identify and evaluate the alternative, what-yew and the future scenarios); and
* smarter IT risk management.

Generally the software of company must be examined and specifically validated for each company 'use in conformity of S. Once a company 'of the usual procedures of operation of S are worked out and documented, the validation of system is mainly a function to carry out the tests of documentation of its processes in the software to show that it acts in the way envisaged. It is thus important that the supplier (supplier of software or integrator of system) offers a major arrangement of the payments to which the company must conform. If the supplier can bringing further the pre-built tools for validation which can be directly used or slightly modified for certain processes of company of user of 'validation of S, the saving in the cost and the time of consultation can be significant.

Also crucial is the arrangement of the initial installation and the continuous aspects of management of change to actuate a system of company in a regulated deployment. For example, each version of product requires the new test, and of the specific processes of management of change must be followed to introduce the new version into the production. Packed up with this is a major arrangement of the software, including the manner the database is structured and the manner the source code is conceived of behaving. This major arrangement is required to support the test and the process of validation, and to support decision making on which transactions must be detected on the level of audit.

In short and to the recapitulation, the central deposits of GRC 'of S manage of the conceivable risks to help to ensure conformity. However, to arm this emergence successfully, the strategic software, the GRC and its effective management require broad however structured an approach. Only then can the companies guide the personnel indeed, standardize processes of businesses, and unify technology to insert GRC on all the levels of organization.

Global Trade and the Role of Governance, Risk Management, and Compliance Software

2009-07-22T03:28:00.000-07:00

To lead businesses overall, logically the companies must conform to the local laws, satisfy the commercial security measures, answer requirements of documentation, include/understand complicated tariffs, and coordinate various parts. The management of these tasks manually increases the risk of failure, which can be expensive while trading through borders. In fact, according to the United Nations (UNO) study, the ineffective administration of the habits which the processes explain 7 percent of the cost of international business, or more precisely-$420 billion (USD) annually.

The fast nature of the means of international business there cannot be any delay in the mobile product of point by point. Because of the larger threat of terrorism and other factors, governments tightened rules on the import and the export of certain goods through borders. A certain number of these governments created lists of parts limited to begin in the international business (see that Infor accelerates the import/export of the goods by the international chain of provisioning according to recommendations of government).

Still, a total application software package commercial well-adapted management (engine) is often necessary so that the companies can control the various challenges of the international business. Such an application could make it possible companies to automate and rationalize complex processes of import and export; ensure the conformity of standardization; accelerate the taking out of bond; attenuate the financial risk of total transactions; and benefit fully from the agreements from international business.

In fact, these tools (preferably unicode-licence) should help the user of the companies to control and standardize the commercial processes of conformity in all the whole organization. The software should automatically interview associates against the lists of part sanctioned by civil servant, check the restrictions of embargo, and control licences of export and importation. Moreover, the applications of engine should accelerate processes of customs by facilitating interactions between the company of user and the customs agencies, leading a more effective movement of the goods and information through the international borders. Finally and especially, the software would have also let users connect on the crossing trade agreements available of occasions, such as the agreement of North-American free trade (NAFTA) and those of the European Union (EU). Moreover, the software should automate and rationalize all the aspects of management of restitution to ensure a more effective restitution of export treating, and to decrease the risk to give up values.

The potential advantages to arm with the tools of engine include a better design of the orders of businesses and more effective operations by concentrating the skilful resources on the activities which require the expertise and the judgement. Moreover, the companies could reduce the cost and to increase the insurance by the shift of the moment examining with the monitoring of orders continues, evaluating and giving the priority of this fact to the answer to the highest risk of violation of ordering of impact. Still, as with handling the environment, health, and safety (EH&S), a made up application is in general necessary to help of the companies to establish a simple standard and corporation-broad for the commercial processes through the disparate systems of company. Such would be SAP the total commercial application made up of services of S (SAP 'GTS) (see Solutions-Always engine to observe outside for SAP), which had allowed companies of user

* ensure the commercial conformity of standardization (of this fact avoiding the expensive fines and penalties, and helping to ensure the national security);
* accelerate the taking out of bond and reduce the delays to the national borders (the reduction of the durations of cycle and more quickly to allow them of this fact deliver to the customers);
* automate the procedures of storage of customs (deferring or eliminating from this fact of the payments of having);
* accelerate and optimize the classification of product (of this fact increasing effectiveness and right of importation of minimization);
* attenuate the financial risk of total transactions (by making sure that all the parts concerned meet their contractual engagements); and
* benefit from the agreements of international business (i.e., not simply surviving, but rather thriving on today 'violently disputed global markets of S).

The traditional suppliers of the planning of entrepreneurial resource (ERP) recently granted in the need for engine, as seen in QAD 'recent acquisition of S of software of precision and Oracle 'acquisition of S of G-Notation. Moreover, towards the end of 2006, Infor started to provide to importers, exporters, and manufacturers more blocked chain of provisioning the availability of the sifting of part limited by Infor. This solution allows companies identify with quickly and exactly subject parts with the governmental regulations, accelerating of this fact the delivery of the international goods by borders of the USA. The product is a solution in real-time and based on the WEB of chain of provisioning which automatically updates the daily changes at the lists of part of government; inform the user of the possible exits of supplier; provides one to that and a history complete of the sifting of forwarding; and allows the sifting in batches of the lists of customer, the employees, the suppliers, and the suppliers (see that Infor accelerates the import/export of the goods by the international chain of provisioning according to recommendations of government).

The customers employing the restricted sifting of part can show with the governments which they maintain a chain of provisioning blocked, and are thus entitled to programs such as Habit-Trade association against the terrorism (C-TPAT), which accelerates the release of border. C-TPAT is an initiative of government-businesses of the USA of joint to draw up co-operative reports/ratios in order to reinforce the safety of chain of provisioning and border. Like part of this, the habits of the USA requires that the companies ensure the integrity of their practices as regards safety and communicate their directives of safety to their associates in the chain of provisioning (see that Infor accelerates the import/export of the goods by the international chain of provisioning according to recommendations of government). C-TPAT is based on the idea that the realization of the highest levels of safety requires the co-operation between the government of the USA and the participants of chain of provisioning such as importers, carriers, brokers, operators of warehouse, and manufacturers.

Infor limited the multiple lists of supports of sifting of part published by the USA, Canada, the United Kingdom (RU), and Japan, as well as UNO. The solution is available as autonomous, or it can be included in the management of transport of Infor. The management of transport of Infor is a solution which provides the total visibility in the chains of provisioning of arrival and in departure as an element of the continuation of management of chain of provisioning of Infor (see that Infor accelerates the import/export of the goods by the international chain of provisioning according to recommendations of government), which was recently supported by the acquisition of the total ASS (see the total forms of the ASS a strategic business unit with one Prolonged-ERP intuitive).

It is a continuation of a series discussing how various industries approach exits of conformity. For more information, to please see the preceding parts of this series: The thousand Shalt conform (and more, or): Looking at Sarbanes-Oxley, the important mandates of act of Sarbanes-Oxley and what they means for the management of chain of provisioning, act of Sarbanes-Oxley can be right the end of an iceberg of conformity, a motorized industry and a food, a safety, and payments of drug, and tree - environmental payments for point and electronics, chemicals, and oil and industries of gas.

Trade-to confuse total and alarming! Now what?

Being given the overflow, soup of standardization acronym-charged with alphabet, any businesses, but particularly of the small businesses with averages (SMB), faced today with an alarming task. It is apparently rather more so that one company develops a strong action plan, for has a product of opening or to maintain it which provides an competitive advantage in the market, and strong construction and effective channels of distribution to have all the things necessary for success.

Complexities of today 'of the world of businesses of S created new risks, a heap of the payments, and the complex conditions of report which can control thin and a focused organization, independently of its size. But, as indicated earlier, conformity should be about meeting more than just the letter of the law. On the other hand, it should be about ensuring transparency, the risk of attenuation, the confidence of maintenance of customer, and allowing the advantageous growth. In fact, it should be about betting these duty-rich in becoming a better operation (thinner). It becomes obvious that the effective government, risk management, and conformity total and continuous (GRC) requires a logical ecosystem of the solutions which form a platform which can be increased through multiple initiatives, as with

* give the priority and of the objectives of conformity of core of balance in budgetary businesses and constraints;
* preserve the critical internal orders as the systems of company improve or add new solutions to the landscape running of technology information (IT);
* standardize, communicate, and impose the initiatives of conformity through the whole businesses;
* avoid the separation of the responsibilities for the conflicts (GRASS) (by instituting the principal orders in the fundamental system of company), and to protect from the significant data with the good techniques of safety and authorization;
* without interruption supervise, examine, and document the internal control efficiency, and to validate and reconcile data for the report in conformity;
* tighten the critical processes of businesses and the narrow gaps that which could compromise conformity with the act of the USA Sarbanes-Oxley (SOX), administration (OSHA), the Food and Drug Administration (FDA), and other payments; and
* you conform to the domestic and international payments customs financial and, such as Basle II and international standards of financial informations (IFRS).

See the conference of initiate of SAP for the government, the risk and conformity (GRC) 2007.

Consequently, rather than simply complying with the spreading the legal conditions and standardization in one of fight against the fire, the way of reflex patellar and or disjoined bottom to the top, the companies realize more and more that a holistic approach starting from top is in fall necessary. By arming emergence, the strategic category of software of GRC, companies will be able to better treat the myriad of exits of conformity which are today 'reality of businesses of S.

A unified approach of GRC should allow the commercial companies and the companies of of the same government to establish the integrated executives of the centrally controlled processes and information of GRC. Such an approach should increase companies 'capacities to identify and analyze in collaboration of the risks detected at the multiple levels and the regional places their organizations.

However, when it comes to conformity, the majority of the companies answer always mainly in the banal ways. However, initial alarms and the methods of patellar resumption of reflex yield gradually to the schemes of work thinking and more reasonable logics, and thereafter, the activities of remediation which are based on the acceptable levels of the risk of businesses. For a honourable minority which functions in an atmosphere of conformity (i.e., ordering and conformity of approach in reaction to the external payments, but rather within the framework of a disciplined approach) and of corporative government, these environments start directly with schemes of work thought-out, and they treat such efforts as an element of daily work.

Trouble of standardization betting in the competitive advantage?

This question and its answer are similar to our own lives. While we can survive without eating healthy food or exercise, the chances are us could live much longer, and without health hazards and need for medical remedies, beside embracing of any heart these practices of the life. The same true judge for conformity. Even if a company should not necessarily be in conformity with the tastes of the SOX, the standards of financial accountancy embark (FASB), Anti-Money-Washing (AML) and the act of secrecy of bank (BSA), or the section of Know-Your-Customer of the initiatives of the Patriot Act United States, it is probable that according to the practices which these laws dictate because a thing which goes without saying (rather than concerning them as troubles) will carry out to improve of the intrinsic orders, and consequently smoothing tool and operations more risk-free.

For example, if the pharmaceutical companies see the payments described in motorized industry and food, safety, and the payments of drug simply as needs which must be answered, then putting pursuant to the procedures to answer these requirements is considered nothing other than a task provocante and painful. However, if the pharmaceutical companies see conformity with these payments like manner of improving of the internal processes of businesses, this becomes an occasion then.

Like example, the FDA makes it possible manufacturers to draw benefit from incipient technologies to rationalize the conservation record and conformity. This technology can increase the profitability of information collected by integrating the two processes of businesses and functions of audit without compromising the quality of the conformity of standardization. Thus, the occasion to improve of the procedures of management can be significant. The potential advantages can include what follows: lowered cost of data acquisition; greater exactitude of the data; increased possibilities of analysis of data; reduction of errors of standardization (for example, by eliminating the false classifications); control improved of production, quality, and other processes; a faster research and a recovery of the electronic discs; transfer of information improved between the departments (for example, between the operations and quality); transfer of information improved between the companies (for example, between an organization for external research and its company of silent partner); disc of recalls of products, etc improved (see the act of bio-terrorism of 2002 exits of update and conformity for the small one with the food industry of intermediate size).

Useless to say, the improved procedures of management can also lower a company a 'cost long-term of S of conformity. Specifically, the cost of insubordination can be defined as cost which would be committed if a company proved out of conformity, factorized by the risk of conclusion out of conformity. The cost of insubordination can include additional inspections, the lost production, the not-saleable product, recalls of products, factory shutdowns, fines, or even the imprisonment of the executives (see the conformity of FDA for the life sciences).

As a another example, the implementation and to ensure of conformity the directives of staff safety, the monitoring of the emissions (which are often traced by the laisux of standardization), and even the validation of the origin and the composition of the chemicals are all of the processes mission-critical which contribute to the cost to make deals. In other words, as explained inside thus, which 's the business with chemicals? , a new complexity which comes from some processing industries is the introduction of dangerous materials and the dangerous goods which are narrowly regulated and must be paid, which creates two conditions which can be simplified considerably by the software.

Initially, by creating a new formula or while modifying existing, the formula must be analyzed the presence of dangerous materials. This control requires a list without updated regulated material interruption and current which is considered dangerous. Also required is the percentage of these materials relative to the other ingredients.

In the second place, the report of dangerous materials must be in conformity with a specific format, namely the material data sheets of safety (MSDS). These sheets will accompany usually the customer the 'bill of lading by S (BOWL), and must thus be integrated with the process of invoicing. While copies of MSDS can be kept on the file and be manually matched with the BOWL, the majority of the companies will not want to risk insubordination, and would rather seek an automated remedy.

However, the companies which prefer phase on the edge (chance being less meticulous person in their approaches with conformity) will hope on manual procedures to determine when a formula and a product require an updated MSDS. More careful companies, on the one hand, will seek to have opinions of update incorporated in their software on the level of the company, and to cause production of automatically new MSDS when necessary. The programming of the conformity of dangerous material is not unimportant when it is considered that it comprises the list processing and the set, of the percent of total analysis, programming, and composing.

Probably an extreme example of the companies transforming the payment and the GRC into occasions (heavy growth and benefit) would be the recently announced programs of responsibility (CSR), with companies like Starbucks, Salesforce.com, Google, or Polo Ralph Lauren announcing the enormous growth and benefit while being impressing philanthropic. The programs of CSR of these companies included the farmers of assistance of coffee support their farms and answer standards of quality; environmental initiatives to reduce the loss and to preserve the ground 'natural resources of S; to give the free software to the non-profit organizations; centers of building for the care and the prevention of cancer; voluntarism of support among employees; to remove the fur of its collections of mode; outreach educational; and monitoring of the total base of provisioning for adherence with the practices as regards work of fair (see Sirkisoon, Hagerty, and the Casing 'article 2006 of S businesses of 21st century: Contribute to the company and the benefit).

Certainly, these companies drew benefit from the mark and the reputation of reinforced corporation, commercial opportunities increased (investment including on the markets for the future development of corporation), and the improved strategic risk management. The search for Amr defines the CSR as a company 'obligation of S to make decisions based not only on the financial and economic factors of the businesses, but also on the social consequences and the environment of its activities. In the CSR, the search for goal segments initiatives in five categories:

1. environmental Action-programs to reduce pollution, to save energy, and to re-use it
2. Moral-codes of the practice with regard to diversity and the responsibility to the employees and the associates
3. Philanthropic-charitable contributions to support the medical, artistic, or cultural development
4. Standards of work approvisonnement-right responsible and economic development
5. Outreach, purses, and voluntarism exit-educational social

In next (and finale) the part of this series on the way in which various industries approach exits of conformity, category of software of the government, risk management, and conformity will be looked at more narrowly, with a hearth on the way in which the companies put out of box the best instrument of such applications of company in order to withdraw the majority of the advantages.

"Evergreen"—Environmental Regulations for High-tech and Electronics, Chemical, and Oil and Gas Industries

2009-07-22T03:26:00.000-07:00

Make green directing for the manufacturers of point and electronics

Manufacturers in electric industry and of the electronics of equipment are not saved the choice growing of payments requiring conformity. These last years, of the strict environmental payments were applied to the USA and the European Union (EU), with earlier coming from other countries such as Japan and China. The cost of conformity to the manufacturers in any industry is high, but insubordination to the national and international payments can cost companies much more. Consequently, the leaders of industry must make sure that they have the means of adapting their companies to answer these requirements of standardization, and thus avoid penalties and recalls of expensive products. What 's more, of the companies further can profiting from the systems from application from company which will ensure to always meet to them process of businesses of the conditions of standardization changeantes, in addition to creating marks of confidence and maintaining the value of shareholder.

The principal payments in the advanced technology industry include what follows:
* Restriction of the dangerous directive of substances (RoHS), which applies to the manufacturers of the electrical equipment and the electronics which make deals at the EU. The payment prohibits the sale of the products of electronics which contain more than 0.01 percent of cadmium, mercury, wire, hexavalent chromium, polybrom�s diphenyls (PBBs), and of polybrom� ether diphenylic (PBDE). The violations can have like consequence of the stiff penalties, the significant loss of sales, and an negative impact on the perception of mark on the European market in the conscious environment.

* The directive of reject of the electrical material and electronics (WEEE), which lays down rules for the collection, treatment, re-using, and electronic re-establishment of loss at the EU. The directive declares that the manufacturers and the importers of electronics must control and pay the re-use of the electric loss and electronics. Member States of EU were required to meet WEEE re-using of the targets since the end of 2006. For more detailed informations on WEEE, see unloading some green burdens of conformity: Can the applications of company take up the challenge?

RoHS and WEEE are the pressing of the environmental payments with which the manufacturers of electronics face today. But of other recently announced payments, including the products consuming energy (EUP), integrated the policy of launching of product (PIP), the environmental program leaving (EPP), and recording, evaluation, and the authorization of the chemicals (CARRIED), could still have greater impacts on processes of basic activities. An astute solution for the environmental conformity of point of product must provide the integration tightened with the logistics of core and other processes which will be necessary to conform to these incipient payments.

For more information on questions of conformity in other industries, to please see the preceding parts of this series: The thousand Shalt conform (and more, or): Looking at Sarbanes-Oxley, the important mandates of act of Sarbanes-Oxley and what they means for the management of chain of provisioning, act of Sarbanes-Oxley can be right the end of an iceberg of conformity, and motorized industry and food, safety, and payments of drug.

Chemicals favorable to the environment?

The questions of the environment, health and safety (EH&S) are what make chemical industry one of more exposed of all industries. The chemical companies have, therefore, a need pressing for the solutions which will rationalize and automate processes of conformity, as well as enable them to control their operations more without risk, in fact, and according to national and international payments and recommendations.

Chemical industry faces the particular meticulous examination of a prospect for standardization, and the companies all are too much informed of the impacts of the European inspections of classification and labelling of the preparations, including data sheets of safety (E-CLIPS); RANGE; Science, children, conscience, legislation and evaluation (BALANCE); and total harmonized system of classification and the labelling of chemicals (GHS). For example, the RANGE is the new system to regulate the chemical use at the EU, and it requires organizations to follow the inventory and the use of more than 12.000 chemical substances. For more do information, see thus what 's the business with chemicals?

The recently last legislation of RANGE requires the recording or the sifting of the majority of substances which are already in the market of EU. Of principal importance are the substances of the very high concern (SVHC): the substances considered persistent, bioaccumulative, and poison (PBT); the substances considered very persistent and very bioaccumulative (vPvBs); and cancerogenic substances (CMR), mutagenic, and reprotoxic, in addition to those of the similar concern, such as the switches endocriniens.

The authorization for the use of such high substances of concern will be only given when the good reasons and socio-economic measurements of minimization of risk are in place. The European commission estimates that these measurements will cost industry between .2.8 and 5.2 billion during the eleven years to come. For extra informations on the RANGE, www.reachlegislation.com visits; a site of reference of glossary of the European Agency for environment (the EEE) can be found at http://glossary.eea.europa.eu/EEAGlossary.

Consequently, the astute solutions must embrace the possibilities whose chemical manufacturers have need to handle a broad range of the exits of conformity, as enumerated in SAP for chemicals: Conformity of standardization:

* Safety of the products, in order to make sure that the data of substance are up to date and available to adapt users by integrating possibilities of safety of the products in processes of chain of provisioning. This allows conformity payments such as the Law of protection of quality of the food products, entitle part 11 of 21 CFR; Entitle 29 CFR 1910.1200 and EU 91/155/EEC directing for the material data sheets of safety (MSDS); the act of ordering of toxic substances (TSCA); the clean water act; amendments of Superfund and the Law of reautorisation (SARA); and federal food, drug, and the cosmetic Law (FFDCA).

* Dangerous management of goods, in order to support all the processes related on manufacture and the distribution of the dangerous goods. The companies must conform to payments such as the association of international air transports 's (a.I.T.A 's) and the International Civil Aviation Organization the dangerous payment of goods of 's (ICAO 's), entitles 49 parts of CFR 100-185; the international maritime dangerous code of goods (IMDG); the intergovernmental organization for the international carriage by Rail carriage of 's (OTIF 's) of the dangerous goods (DISENCUMBERED); the European agreement Concerning the international carriage of the dangereous goods because of Road (ADR); the agreement on the transport of the dangerous goods on the Rhine (ADNR); the Canadian transport of the dangerous act of goods; and the International Atomic Energy Agency code of conduct of 's (the IAEA 's) on the protection and safety of the radioactive sources.

* Occupational hygiene and management of safety, in order to support a sure environment of work, by which the companies can identify, to order, and eliminate from the risks of work. Such solutions must allow conformity the payments such as the sure day order 21, chapter 19, the program B. of work of the International organization of work (ILO).

* The occupational medicine, in order to ensure the health of the workmen, protect from the personal data, and meet legal requirements, by which the companies can be in conformity indeed with the payments such as the act of safety and health at the work the directives and the sure day order 21 of the right to know of 's (OSHA 's) (RTK) of work of ILO, chapter 19, the program B.

* The management of waste, in order to rationalize, automate, and supervise processes of evacuation of waste through the company. For this purpose, integration with the multiple systems should make it possible companies of user to affect costs by the adapted centers of cost, all in also allowing conformity payments such as the title 40 CFR; Germany the 'KRW /AbfG of S; the Law of environmental protection of the United Kingdom of 's (RU 's) and collections of instructions; and the convention of Basle on the reduction of dangerous waste.

The disc of MSDS is the second product documented (beside an invoice, logically) with the chemical industrial facilities. The difficulty and the cost to produce of this document on a total scale are significant, since the local legislation related to MSDS exists for roughly sixty countries. Moreover, the document must be in at least forty principal languages, translations of which must be validated by the local experts to make sure that the excellence of mark of the company is maintained. An example of a supplier who provides a system to produce total documents of standardization is International of Atrion.

Utilities and Oil and Gas Corporations share the environmental mandates of standardization of conformity

The chemicals, like their utilities and brothers of oil and gas, must be in conformity with the protocol of Kyoto, the Law of fresh air, the prevention of pollution integrated by EU and order the directive (IPC), and other payments dependent on gases with greenhouse effect and other emissions. Moreover, the process to apply and supervise laisux can be of labour. They is because the companies must supervise and to control operations and emissions lets be in conformity with the payments, retard throttle to greenhouse effect and other emissions, and to ensure the capacity of auditer.

Positive side, the effective management of conformity can have as consequence the competitive advantage. The potential income-producing of the emissions incipient commercial from the companies of means of the markets can transform the conformity of standardization into new currents of incomes. But they initially must collect a certain number of tools to attenuate the risks, confidence of construction with lawful authorities, significantly to reduce the cost of conformity above the long run, and continue new commercial opportunities. the Well-conceived software tools could make it possible companies to withdraw the financial advantages of the emissions trading of the markets because the software can determine and of the appropriations of emission of document, and can communicate appropriations of emissions with the commercial platforms of emission.

This brings us to the category of software of company to handle EH&S. EH&S requires many disparate and environmental solutions of conformity to address payments treating health and environmental protection, restriction of dangerous substances, health and occupational safety, and commercial gas arrangements with greenhouse effect. Among an increasingly significant number of the environmental challenges of conformity, the manufacturers and the suppliers today look at proactivement supervise and improve of the processes of product and of conformity of EH&S. the companies must effectively control their companies while ensuring conformity the complex processes of EH&S and require, like RoHS, WEEE, the international system of data material (IMDS), the directive of the vehicles of End-of-Life (ELV), health and safety with the act of work, the OSHA, the laisux emission-commercial, and the payments around the emissions trading of arrangements.

The advantages of potential of the software tools of the admission of the funds of third EH&S include the capacity to deploy total processes of EH&S all while adapting them to the practices in various circumstances and geographies. To increase such software tools can also ensure a handling and a advance much surer of dangerous substances, goods dangerous, and waste. Moreover important, a company can provide the management of complete health to envisage the health of the personnel and the wellbeing, to ensure the conformity of various products with various payments, and to improve the productivity of manufacture by aligning processes of businesses with the realization of the environmental payments for the management of emissions.

In the part six of this series on the way in which various industries approach exits of conformity, the total trade will be looked in the light of the increasing quantity of legal conditions and standardization. With companies realizing of the importance to have a holistic approach starting from top to the bottom, the government, risk management, and the software of conformity (GRC) emerges as essential solution of company.

The Sarbanes-Oxley Act May Be Just the Tip of a Compliance Iceberg

2009-07-22T03:22:00.000-07:00

Conformity of financial informations

The act of Sarbanes-Oxley (SOX) could be only one end of has iceberg of conformity for much of companies. With knowing, the international standards of financial informations (IFRS) is another whole of directives governing the statements of the financial account of the companies enumerated in Europe and in other areas, who was introduced on January 1, 2005 (see Claudia Delto 'article 2005 of S checking it Two time-Basle II, act of Sarbanes-Oxley, international standards of financial informations). IFRS and international standards of accountancy (IAS) were created by the international standards of accountancy embark (IASB) to support statements of the financial account internationally comparable. Payment 2002/3626 requires that approximately 7.000 companies enumerated in the European Union (EU) prepare their financial statements consolidated according to IFRS and IAS (see finances of ERP of mySAP: Conformity of IFRS).

Somewhat similar to the SOX, the framework of IAS was adopted by the European commission to increase transparency among companies functioning at the EU, with the goal to support the confidence of the savers and to optimize the working capital of exploitation and the risk management (see SAP for bank transactions: Conformity of standardization). Moreover, IFRS requires companies to provide extra informations and contains new standards for the evaluation, as well as of the clearer procedures to determine risks and the execution of company. The most substantial changes affect the fixed immobilization and the financial credits, to which the intangible goods such as the value of the shares or the investments to other companies count towards all the capital. The depreciations which are allowed by tax law but are higher than, for example, the countable rules German currents (GAAP) that the depreciation disappear and do not exert any negative effect on all the responsibilities. In other words, under IFRS, different the life and periods from depreciation of the capital apply that under any national GAAP (see checking it twice).

Moreover, according to old rules of accountancy, a company could evaluate its inventories at the historical cost (original cost per hour of purchase or payment) so that, for example, a supplier of goods of electronics could evaluate unsold DVDs and several-month-old man with the quantity which they could be sold several months ago. But, under IAS-2, when the files of company his financial reporting, it must give an up to date clear ready convertible asset (NRV). NRV is a precise evaluation of the products 'commercial values when the report/ratio is published, with the idea that all the capital of corporation must be evaluated with right value , rather than at the probably problematic historical cost. The companies will have to also explain the cost of all the plans of allowance of the employee, meaning that the cost of plans of options on titles must be reflected in accounts of company, and any deficit of the pension funds of company must be recorded accounts.

Companies in the USA are not directly affected by these payments, because they must conform to the payments of financial informations of the USA GAAP with the place. However, because these only statements of the financial account do not achieve the legal requirements for statements of the financial account local, books of financial accountancy will have to be maintained in the parallel so that they can be evaluated in terms of IFRS and local law (see checking it twice)

This condition has implications of great scale for companies of all the sizes, since the publicly traded companies must adhere to IFRS all while always conforming to the local tax, the dividend, and other payments, and thus need at least two whole of statements of the financial account. Moreover, because the financial markets require comparable numbers for decisions of investment, even of the non-listed companies will be forced to publish statements of the financial account IFRS-in conformity (see finances of ERP of mySAP: Conformity of IFRS). This requires the use of the systems of company which can in general maintain the accountancy parallel of the register of several registers (GL), and carries out parallel evaluations so that the companies can adhere to the complex standards accountancy, answer requirements of capital financial market and, and to ensure the reliability and the transparency of their financial informations.

In this way, the companies should be able to answer the various requirements of IFRS and local GAAP, as approach exits such as combinations of businesses, instruments, and payments share-based. Finally and especially, a well-conceived solution of company should not allow no matter whom modify a course of operation so stages of a certain number of conformity of SOX or IFRS would be neglected. In the same way, an conformity-informed system of company would not make it possible somebody to move (drag-and-drop) a field specific to a different screen if this information is required for another critical treatment.

For extra informations to see the thousand Shalt conforming (and more), or: Looking at Sarbanes-Oxley and important mandates of act of Sarbanes-Oxley and what they for the management of chain of provisioning mean.

Horizontal against vertical conditions of standardization

Apparently, much of human resources (hour) - relative payments, in addition to the directives mentioned above of financial informations, apply through many industries, and the majority of the companies must conform to them. Included in the long list of such payments are the equal occasion of employees (EEO); the portability and the responsibility for medical insurance disease for patient intimacy act ([HIPAA], see HIPAA-Observe for Security. accelerate conformity); Consolidated act of reconciliation of budget of Slow train (COBRA); Administration (OSHA); Act of safety of income of retirement of employees (ERISA); payments of discrimination and harassing; agreements of the trade unions (where applicable); and those of the standards of financial accountancy embark (FASB).

Since we live in a litigation-happy company, where a company is to be continued by an employee that to be audited by the services of receipts of the USA (IRS), it is not any surprise that the conditions of standardization and the exits of corporative government explain the modest increase in the demand of the compromise systems of hour. These systems of hour provide tools to produce the W-2 forms and 1099-R, the maintenance of the data in accordance with the laws of immigration, and the Americans with the information of incapacity of the act of incapacities (ADA). For more information, to see the thousand Shalt better controlling the human capital.

Banks and financial institutions 'resulting from liquidity

However, to complicate more far from the things, much of industries their own inherent conditions of standardization have. For example, the banks and the financial institutions must be in conformity with an increasing choice of legislation and national and international recommendations. For example, Gramm-Lixiviate-Bliley act (GLBA), signed in the law by former President Clinton of the USA, rigorously changed the financial businesses of conduit of institutions in manner. With this law, much of responsibilities were placed on banks and financial institutions to protect nonpublic customers the �, the personal informations. The GLBA governs the collection and the revelation of the financial customers � the personal financial information of the institutions. It also applies to the companies which receive such an information, if they are the financial institutions. With knowing, the rule of safeguards of GLBA requires of all the financial institutions to conceive, apply, and to maintain safeguards to protect information customer, and the rule applies not only to the financial institutions which collect information of their own customers, but also to the financial institutions who receive information customer of other financial institutions, such as agencies of report of credit.

Recently and frequently announced was the new capital Agreement of Basle, or Basle II, which establishes conditions so that the banks control the risks to issue loans. As discussed in test twice, the payment, whose execution was accomplished at the end of 2006, increases the level of the risk management and the level required of the revelation, and requires consequently the crucial changes of the institutions financial of the 'policies, the processes, and the systems. A recommendation published by the committee of Basle of banking control, Basle II is a recommendation to help the credit of the establishments to protect themselves from the risk from loss from credit and to increase total transparency their businesses in their daily work with the general market, liquidity, and risks. For this purpose, the banks must identify possible hazards and put side the capital to compensate for potential losses. Moreover, to make them call of Basle II with the banking controlling authorities to lead regular inspections of the finance companies to jointly supervise and analyze risks. In conclusion, the banks are made to publish their structure of capital in clean actions and their own situation of risk.

Consequently, like remarkable in test twice, before granting the credit in the future, the banks will have to evaluate the recipient 'the credit risk of S using an internal or external estimate. Consequently, the conditions under which the credit is granted will be attached more narrowly to the liquidity of the company of loan, which will assign to their tower the duration, interest rate, and the guarantee of the agreement of credit. To receive good evaluating Basle II, the reliable financial figures and well documented planning it is essential. A healthy financial management system must provide the compromise data necessary to this end, as well as the range of the functions to support Basle II as an element of the prolonged booklet of the analytical applications which must be particularly developed to carry out the financial analyses and of profitability and the risk management.

If one thinks of this a little more, Basle II does not affect simply banks, but all the organizations. In particular, it requires indeed organizations to show their capacity to meet their process of engagements-a of payment called estimate-which comprises typically a comparison of envisaged against real financial values covering one multiannual period. Strategic strategic planning, risk management, and the internal order treats all have an impact on results of estimate, which is a principal concern particularly for the small ones and of intermediate size undertaken, much of which complete processes of planning and control of lack. One expects that Basle II has a total impact, because the members of the Committee of Basle include the group of Ten countries (the Group of ten), more of which envisage to transform payments of Basle II into local law. Thus, some well-adapted applications of software will be necessary to help these conditions of Basle II of gathering of companies for the exposure of risk and the adequacy of equities, and put pursuant to the processes of monitoring of review and revelation of risk-attenuation. See finances of ERP of mySAP: Support of Basle II of more than information.

Exits of solvency of sector of the insurances

The single European market of EU the �Web site of S devotes a whole section to solvency. When it comes to the banks � cousins - the solvency margin of companies it of insurance is the quantity of capital of standardization which a company of insurance is obliged to be held against unforeseen events. The requirements of solvency margin took place in place since the Seventies and were modified by the directives of solvency I in 2002. However, solvency II is a fundamental examination of the mode of adequacy of equities for the European sector of the insurances which aims at establishing a revised whole of needs for capital in all the EU. These conditions should help of the supervisors to protect from the policy-holders of the 'interests indeed by making the failure of prudence less probable-reducing the probability of the loss of the consumer or the market disruption. With knowing, whereas to revise aimed by Directives of solvency I and to update the mode running of solvency of EU, the project of solvency II has a range much broader, since it includes an examination of the total financial position of an insurance undertaking-not just limited to the requirement of solvency margin.

Its goal is to ensure proportioned protection of policy-holder in all the Member States of EU, and it will take into account current developments in the insurance, the risk management, the techniques of finances, the international financial informations and the standards of prudence, etc a main aim is that the better conditions reflect the true risks of a company of insurance, because there is widespread identification that it is not the case in the current system. Another important device of the new system will be the hearth increased on the process of monitoring of review, with the idea to increase the level of the harmonization generally including/understanding that of the methods of monitoring, the tools, and the powers. As explained of solvency 2 on the authority of finance departments the Web site of 's (FSA 's), the framework under development is composed of, three pillars by which pillar 1 aimed at the minimum needs for capital that companies will be required to satisfy for the insurance, the credit, the market and the operational risk. Pillar 2 will be the process of monitoring $ for this reason, supervisors of review can decide that a company should not hold the additional capital against risks - covers in pillar 1. The goal of the revelations of pillar 3 is to arm the discipline with the market by requiring companies to publish certain coordinates of their risks, capital and risk management.

The European insurance and the professional Committee of pensions (EIOPC) approved the new mode of the solvency II 'architecture basic of S. It is based on the same approach of three pillars as it is for the insurance (quantitative conditions; activities of monitoring; and report and revelation) and the banking environment. If it is of any consolation, solvency II is always with a part. As discussed of solvency 2 of FSA 'of S, before it develops the framework directive of level 1, the European commission consolidates the existing payments of solvency and obtains the technical council. The Commission intends to publish its formal proposal for a framework directive for July 2007, and based on this, one should expect that solvency II is applied by 2009/10.

Promote on payments of bank transactions and institutions financial, and returning to the framework of IAS, IAS 32 and IAS 39 lay down in particular rules for the evaluation of the instruments. Still, in agreement with the spirit of IFRS and IAS, the plans of accountant for the instruments should allow banks to draw up financial reportings IAS-in conformity and to create statements of the financial account parallel based on a central database supplied with the current system arrange in park.

Thus, the suitable planning of entrepreneurial resource (ERP) and the management systems financial must provide a complete whole of finances and possibilities of analytics to fulfill the requirements of the process of estimate. Knowknowing, the compromise possibilities of finances should make it possible banks to accelerate the preparation and the treatment of financial information, more quickly to capture and organize suitable financial data, and to carry out a corporative government and an order tighter. The possibilities of Analytics should make it possible banks (and related institutions financial) to automate and optimize social planning, to analyze internal and external risk factors, to integrate the risk management of sales strategy and, and to improve transparency and confidence. With such systems of sound in place, the institutions financial should have the tools which they must rationalize the planning of company and the processes of budgeting; increase transparency (and avoid of this fact the envisage-against-real deviations, and attenuate the changes of the dubious events); obtain the majority out of capital attributions (i.e., make smarter decisions of investment and improve the results by management risk-based); you conform to the laws and the payments; and measurements of instrument for the prevention of damage.

Just as with bank transactions, the insurance, and other financial institutions, of and the food motor vehicles and industry of drug are two sectors of the businesses where an increasingly significant number of the legislations of government and the initiatives of safety require organizations to apply the systems directed towards the industry of ERP in order to ensure conformity. Details on the way in which these exits of conformity of address of industries will be looked in the next installment of this series.

Important Sarbanes-Oxley Act Mandates and What They Mean for Supply Chain Management

2009-07-22T03:16:00.000-07:00

SCM-related mandates: Sections 404 and 401

More and more, the companies realize of the importance to downwards adopt a holistic approach with their companies starting from top, and start to arm a category-government with software, a risk management, and a conformity strategic being born (GRC). For this purpose, their attention up to now was concentrated considerably on ensuring conformity the act of the USA Sarbanes-Oxley (SOX). The Finance managers (CFOs) and the senior officers (Presidents) of the publicly traded companies realize now much of the SOX of impact has on their companies, like misses conforming to the law to the 'standards strict and political of S, even unknowingly, can primarily finish the career of any director, and often in a ashamed way. For a discussion on the relation of the SOX to other laws of standardization, to see the thousand Shalt conforming (and more, or).

Although the law included a certain number of new mandates, two sections had clear implications for information systems of corporation, whereas some are particularly appropriate to the management of chain of provisioning (SCM). With knowknowing, section 404 (evaluation of management of the internal orders) requires management to evaluate the effectiveness of its own internal orders and procedures for financial informations every year. Section 409 (revelation in real-time) requires companies to reveal the physical changes their financial conditions or the operations on a fast and current basis. The section 404, which requires the audit of the internal orders, encouraged executives to re-examine and replace sometimes the operational systems which good are not integrated with their financial systems.

The section 401a (revelation except assessment of engagements) is an addition with the Law of values of 1934. The section 401a requires the revelation of material transactions except assessment, arrangements, engagements (contingent engagements including), and other reports/ratios of the transmitter [i.e., the company itself, a transmitter of the values] with other entities or people if these arrangements can exert a current or future material effect on the company the 'financial statement of S, operations, and so on.

This affects in particular contracts of service, like those typically written with carriers of ocean and the arrangements of inventory controlled by supplier (VMI) undertaken to protect the risk and to draw aside from the capital the assessment. More and more, the companies which adopt practices VMI to write-off the current capital of inventory can include a certain form of penalty clause in their contracts so that the lack employs materials or cancellation early agreements, and a section 401a clearly requires the lists time-settings in phase of these potential engagements. Moreover, the conditions of market could change and to make countermand companies of the agreements of long-term purchase with suppliers, penalties of cancellation or restocking charges consequently. The SOX requires companies to describe the precise details of these potential expenses and penalties. Along the similar lines, the companies must bring back and document all the stop or expenses of cancellation early in any agreements of lease or letters of intent (which are sometimes employed to facilitate with programs of delivery and completion periods of manufacture for the critical articles).

While the section 401a limited the applicability to some contracts of chain of provisioning, section 404 is largely appropriate to much process of SCM, including arrangements of provisioning outside. The provisioning outside the processes and of the transactions concerns the two sections 401 and 404, by which agreements except assessment with suppliers must be paid (401) and be subjected to the effective internal orders (404). The SOX be more to require in this respect that traditional standards auditantes. For example, section 404 directs the Securities and Exchange Commission of the USA (dryness) to prescribe the rules which require annual reports to include an internal report/ratio of order. This report/ratio of internal order must contain two elements: 1) it must state management the 'responsibility for S to establish and maintain orders (political including, procedures, and process) for financial informations, and 2) it must contain an evaluation of the effectiveness of these orders and procedures.

If the chain of provisioning must be really ordered at the level required by the SOX, then there must is a well structured process which functions through multiple functions, and not simply of the series of transactions pretending to be a process. The Presidents will look at thus with all the chiefs corporation-broad, including the directors of SCM, to take proactif and the role of collaboration in the corporative government, since each one must carry out that which passes from the audits is only one stage with the improvement of the corporative government, and which the listeners will never include/understand of the sectors of the chain of provisioning the same professionals in the manner SCM make (and vice versa).

The companies which aggressively move the direction required by Section 404 could even be likely to improve management of their chains of provisioning (i.e., carry out the excellence of chain of provisioning), and to gain a competitive advantage on their rivals. It is in particular true since other requirements of publicity (those instituted in the European Union [EU], for example) can also support condition of a more effective and more believable competition, for companies and their chains of provisioning.

The order requires the visibility through the process (components of order required the goods of completion and the customer services), and the information technology (IT) can be an required assistance to carry out this total visibility. However IT only is not sufficient to constitute the ordering of SOX-level. Meaning, the only advance of the inventory cannot replace the effectiveness and the effectiveness in all the activities of SCM. For example, as for the inventory control and with radiations of inventory, the majority of the companies have always the responsibility to order the inventory and the fixed immobilization. However, the implications of SOX would now instill the condition that stocktaking values are correctly stated, by which CFOs can more defer depreciations of inventory to avoid losses of radiation on reports/ratios of the incomes of quarterly results. In other words, the SOX requires more precise and convenient accountancy to make sure that the material is physically present, its state is correctly stated, and of the stocktaking values are recorded exactly in the plan of accountant.

As for the material transfers and the poor exactitude of inventory, the majority of the companies always have the responsibility for the activities of material order. In the past and too often, transfers of material and the transactions of inventory would not be treated in good time, creating of this fact a true inventory which is out of good state of walk with envisage-on-records the situation. The SOX, however, declares that all the movements of inventory or fixed immobilization must be now recorded in good time. In other words, all the movements will have a final financial impact on the company, and the recording of precise financial information is the base of the SOX.

Moreover, one system of accounts payable (AP) which systematically does not match the buying orders (position) and receipts to the supplier who the invoices before the payment could be vulnerable to the fraud, or even with a situation where somebody creates then factitious employees or suppliers wages them, and empochent the money itself. Traditionally, the departments of SCM within the companies (for example, departments of technology) adapted internal customers supposedly asepticize after the buying order in fact engagements. Under the payments of SOX, however, if the policies and the procedures specifically describe authorities of request and supply, and if those clearly declare that departments of SCM are not authorized to publish engagements of confirmation, then such actions by departments of SCM would be an apparent violation of SOX. Charge be defective to adhere to the internal orders as for the engagement of the funds of company and in accordance with the policies and with the procedures of company.

All this accentuates the importance to institute the so-called segregation-of-duties (GRASS) for possible practices conflict-of-interest in obtain-with-pay the processes, which include the reception, placement of order, invoices treating, and establishing the data and the principal installations of supplier (supplier). Section 404 is all about making sure that the companies have with process and procedures of approval proportioned in place to acquire the fraud or the flight, as well as to take care which orders and test are carried out to guarantee that these safeguards function.

Other examples of good practices as regards GRASS are not to allow a director of technology choose and pay suppliers, because some of these suppliers could, for example, being of the family members or better buddies of the director. The programmers of software should not carry out the test of quality on their own applications. Moreover, a system of invoicing which is not integrated with forwarding could make it possible a director to incorrectly identify the income which was not still gained. Many companies now also use many contemporary tools, such as charts of supply, applications of E-supply, and releases of total order, with the assistance or the execution of monitor of the expenditure of company. The goal of the SOX is to make sure that the companies institute with orders proportioned to supervise expenditure and engagements to make sure that social goods are safeguarded and of the policies are satisfied with.

The documentation of the activities has affected

The SOX also exerted an effect on the obligation of the public limit companies to document their activities. Since the changes of their activities could affect companies 'the results, the companies must provide all important information about all the changes to their shareholders within hour ninety-six (see Claudia Delto 'article 2005 of S checking them twice -- Basle II, act of Sarbanes-Oxley, international standards of financial informations). Consequently, the condition of appropriateness of section 409 seems to claim a system much more transparent and more integrated financial informations than much of companies have today. For example, the companies which are accustomed to work over one period of ten days financial closing would seem to be in danger to insubordination to the requirement of publicity in real-time, which is currently interpreted as a demanding revelation of the material events within four Day Business.

Logically, when the provisioning or the services principal or critical is late, they inevitably have an impact on a company the 'income of S. And if the late deliveries have like consequence a material financial impact, this must be paid in good time. Moreover, given the tendency towards more provisioning outside, companies are considered to be responsible for economic good decisions and the execution of the agreements and the reports/ratios of supplier. Section 409 is to make sure that in the event of rupture of provisioning, there is a process places from there to bring back the financial impact of the rupture on a convenient basis, so of material nature.

A report/ratio type of SAS 70 of II can also have to be included in the request for proposal for a provisioning outside. For these not with the current of the report/ratio, SAS 70 is a standard auditante conceived by the American institute of certified public accountants (AICPA) to make it possible an independent listener to evaluate and to give an opinion on a organization of maltreatment of the 'orders of S. the listener of service the 'report/ratio of S contains the listener 'the opinion of S, a description of the orders placed in function, and a description of the listener of the 'tests of S of the effectiveness of operation (if the report/ratio is a type II).

The report/ratio of control can be divided with the organization of maltreatment of the 'customers of S (organizations of user) and their respective listeners. The organization of maltreatment is responsible to describe its objectives of order and activities of order which would be of interest at the organizations of user and their respective listeners. In other words, the report/ratio allows each one externalisent the supplier to have a simple account of evaluation, and excludes the need for them to make review to each customer their processes on an individual basis. It is a mechanism for externalisent suppliers to show the sufficiency of their design of orders and to check that their orders function indeed.

The problem of the report of SOX is particularly acute for companies with the multiple units of operation and the decentralized systems. It is because these last years, much of companies developed organically and by acquisitions, and thus, to give an account exactly of these units of company requires the significant one for manual number process and adjustments of accountancy. Such companies or will have to adopt a common system of financial informations, to perhaps integrate the multiple systems with a layer of financial informations into the level of corporation, or apply a management solution of the output to provide close to the analytics of real-time (see that the financial informations, planning, and budgeting according to the needs rapi�cent of EPM).

Moreover, whereas the years first since the establishment of SOX were devoted most of the time to the financial exits, in 2007 and beyond, the law the 'mandates of S will excavate probably deeper in the structures of organization and significantly the contact SCM, human resources (hour), and HIM of the departments. Even now, the SOX requires revelation of the risks and strategies which will enter the effect after disruptive events such as hurricanes, accidents, and examples of threat or realities of terror, to mitigate their effects.

The challenge of the conformity of SOX

Of all the laws and payments, the SOX presents some of the more technical big challenges for companies, since the additional conditions of the law increase the quantity of manual treatment required. This, alternatively, increases the cost of conformity significantly. The continuous cost to examine manual financial controls to conform to the conditions of SOX, as well as the continuous risks of conformity related to these orders, forces companies to move towards the plans of financial management and accountant which not only the transactions record, but which also control the whole process of conformity of SOX 404.

The first adopteurs of the conformity of SOX supposedly learned some hard lessons. The programs of SOX accentuated manual processes and on paper as being very expensive with the audit compared with the automated processes. It is completely long to reconcile and correct errors in manual processes. They run a larger risk for the cheap human error and (probably) omissions, have high continuous costs of audit (because conformity in a place does not imply necessarily conformity in another place), and require revealing orders to seek and identify errors after they occurred. However, if a company proves to have neglected or violated its functions of report, its department head of information (CIO) could also be condemned (see checking it twice). Even companies into private behaviours which are not legally dependent to conform can be indirectly carried out by the SOX. The examples of such companies are customers who manufacture or provide goods at great public agencies, such as the automatic companies; these organizations often require their suppliers to be SOX-in conformity.

Is the logical question being-how any organization with the resources limited (in particular smaller) supposed to face all this? Much more important, how such organizations remain do with the height of the additional changes which are sure to be on the way? An answer sensitive to these questions is HIM, since many software tools were developed which can simplify the process considerably. It all goes down to control and to supervise an organization 'internal processes of S. These preventive, revealing, or conformity of attenuation ideally orders users, roles, and processes of scale, that all require the evaluation of access and authorization, the test, and the remediation.

For example, some of these solutions compare a company 'orders current of S with, of conformity practical and solutions of offer on the way in which to support weaknesses and to better isolate from the functions. In other words, the software governs which has the release to carry out tasks such as writing a cheque with a supplier, paying an employee, or adding the income in a given quarter. This software could not only install which can do what, but to him would also impose the rules (i.e., alert the watchdogs of conformity unauthorized of attempt at anybody monkey with anything, and to thus prevent the fraud before it occurs). The other software can help of the directors to document policies and procedures, creating the electronic files of these policies along the manner, whereas several packages could mark the internal transactions which seem suspicious.

Consequently, the users should be able to carry out the optimal order of the exits of GRASS, and a system to identify gaps of order and risks of remediate. Generally, such tools like the director recently launched of ordering of conformity (CCM) by Lawson, the internal unit controls by Oracle, the authority of internal orders of company by PeopleSoft, director of event thereafter exact, or CODA-Order, to only call some, could provide the reasonably profitable solutions, making it possible business managers to concentrate their time more on operational improvements, and less on questions of conformity. Moreover, these systems could make it possible companies of user to rationalize the integration of new divisions in their systems and financial processes, making sure of this fact that the processes of businesses of the acquired units are SOX 404 in conformity. For more information, see joining the movement of Sarbanes-Oxley; Meeting the needs for small and medium-size companies and to employ the infrastructure of business intelligence to ensure conformity the act of Sarbanes-Oxley.

With much of suppliers, it seems reasonable perfect to launch modules of conformity as offers packed for the products and architectures which limited only data, the process, the report, and other possibilities of change of the delivery, particularly of sales or department of financially solid sale 'perspective of S. Of other suppliers, such as Agresso, has a different approach completely. The company affirms that it does not have no need to create the special modules of conformity and to launch them on the market as new products all, due to the supplier with the 's inherent, with, reconfigurable architecture of Lego-brick model, and the practically infinite couplings of the data, process, and so on, independently to change the needs for standardization.

In other words, the possibilities to answer new conditions of standardization concern basically the solution (see the approach of modeling to the agility of Post-execution in systems of company and how a supplier provides the agility to the systems of company of Post-execution). Any new payment can be, in the theory, met light interns HIM has personal, or even with a just smart and quite informed user well-versed in the payment. On the side tilted of this is that the companies should then be based on their own knowledge of the payments, and on the users plowing by the legislation and creating characteristics for their system of company. However, quite informed being seems reasonable good businesses.

The SOX can be right the beginning of a wave of the financial regulations, directives, and laws which the companies must be in conformity, with directly or indirectly. For this purpose, the companies must make sure that their planning of entrepreneurial resource (ERP) and the management systems financial provide to proportioned whole of finances and possibilities of analytics to fulfill the requirements.

Enterprises May Be Overlooking Profits from After-sales Service

2009-06-19T16:08:00.000-07:00

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

2009-06-19T16:07:00.000-07:00

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.