InformationWeek

June 15, 1998

Extending ERP

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Supply Chain Vs. Supply Chain
Marshall Industries' Rodin says the only way his company will succeed is to make information available at any time, at any place, and by any method to its business partners. "Today, business is not about me vs. my competitor. It is about my supply chain vs. your supply chain," he says.

To that end, Marshall has custom-built direct links between its Manugistics supply-chain system and the ERP systems--whether they be from Baan, SAP, or any other vendor--of its customers and suppliers. For instance, suppliers can automatically pass lead times and product development data into Marshall's system, while customers can do the same thing with their forecasts and schedules. Marshall's system, which sits in the middle, can then analyze all the information to determine the most efficient flow of inventory, which ultimately boils down to getting the right product to the right person at the right price.

To date, only a handful of companies are feeding the data in their systems to the systems of their business partners, but Rodin says Marshall is reaping the rewards of sharing information. He says he's eliminated much of the guesswork in his dealings with supply-chain partners. Where forecast accuracy was once 40%, it's now approaching 65%.

Automatic E-Mail
Marshall is also quick to share its information with business partners. If a major consumer of a semiconductor part, for instance, announces a new product, Marshall's Manugistics system can automatically kick out E-mail notifications to business partners alerting them to anticipated increases in demand. "Collaboration is the key to better pricing, increased value, and more perfect service," says Rodin.

And just as businesses are now reaching out to customers like never before, so are ERP systems. Baan, along with its sales-force automation subsidiary, Aurum Software Inc., is talking about a world in which customers can go online to configure for themselves everything from PCs to networking equipment, as well as get complex pricing information. Now, business customers who want to buy complex products that consist of many parts have to wait for a salesperson armed with a conventional "product configurator" to tell them, say, whether the red part works with the blue one, whether the blue part is available, and, if so, how much it costs.

In a much more perfect world, this technology will be available on the manufacturer's Web site, letting customers configure what they please, when they please. Because the configurator will be linked to the manufacturer's ERP system, the customer will know immediately whether the final products are in stock, and if not, when they will be. When the customer zaps off the order, it goes directly to the plant. There's no handoff, no intervention, and no room for error--and the order is filled faster than ever before.

Baan isn't quite there yet with its product configurator, but a "best-of-breed" sales-force automation vendor called Trilogy is. One of the first customers to embrace this Web-based technology is Bay Networks Inc., which in July will let its major customers configure and order routers, switches, and, eventually, entire networks. online. Bay will then integrate Trilogy's online configurator with its SAP ERP system.

"Right now, to configure our stuff you may have to call one of our sales-support people directly," says John Zoglin, director of electronic commerce at Bay. "There may be a time difference or difficulties in getting the right person, which can make the process complicated and expensive." Zoglin expects the bottom-line benefits of the Trilogy implementation to be considerable: Customer satisfaction will rise as a major pain point in the selling process is eliminated; the sales cycle will be compressed as customers buy products when they want; and Bay's sales and support people will be freed to focus on value-added work. Bay will complete the first phase of the project in July and refine it over the next year.

Customers of enterprise software packages are pushing the boundaries of business in bold new directions. To be more competitive, more responsive, and more profitable, they want to harness the power of technology to collaborate with their business partners and customers like never before. "Organizations that don't evolve will find themselves dead," says Byron Miller, an analyst with Giga Information Group. "If you can't share information outside your own four walls, you won't have any business at all."