On-Demand Developments by Supply Chain Software Category

The pace at which the on-demand model has taken hold in different supply chain software areas varies, for a number of reasons. Below, we take a look at the state of on-demand in different sectors of the software industry.

ERP: This is clearly a work in progress, in part due to the sheer scale of a full ERP system from one of the top providers and the effort to fully transition that software – and business model. Oracle and SAP are clearly hard at work in the effort to do so, but the transition will take years. SAP is doing some interesting on-demand work in applications outside of its traditional functionality, such as web-based collaboration.

The on-demand model could be a threat to existing players in any application area, and “big ERP” is one of them. Some on-demand ERP start ups have emerged, such as Peoplesoft founder Dave Duffield’s Workay offering, which began as an on-demand solution.

Global Trade Management and Supply Chain Visibility: Probably the furthest along of any supply chain software category, with several players having been on-demand from the start. Global visibility naturally lends itself to an on-demand model, and the trade compliance aspects benefit from the providers being able to more easily manage the many content changes that occur to the regulations and quickly get them into their solutions in one place, rather than at each customer.

Transportation Management Systems (TMS): The TMS area is also very far along, with several companies having started on-demand from the beginning, though usually with lower levels of functionality than the traditional leaders. Those traditional market leaders now all offer on-demand TMS in addition to traditional deployments – but the products may not be the same.

TMS lends itself to on-demand deployment for several reasons, such as the “network effect” of potential collaboration between shippers, and the distributed nature of the places where managers may need to access the system (plants, distribution centers, carriers, etc.).

Warehouse Management Systems (WMS): Although there have been several recent on-demand market entrants in the past few years, actual deployments of on-demand WMS outside of smaller DCs have been relatively few – though it makes great sense for those smaller facilities or inventory storage locations.

The challenge with on-demand WMS is that it isn’t “clean” in larger operations – you still need radio frequency and/or voice terminals, perhaps materials handing automation, RFID readers, etc. that must all work with the WMS – meaning you still must have local “systems” regardless of what you do for the WMS. The need for sub-second response times also plays a role. On-demand WMS is coming, but slowly in terms of actual adoption - though recently there has been much activity be WMS vendors.

The related category of Labor Management Systems makes a lot of sense for on-demand, however, and is also seeing a series of new offerings.

Supply Chain Planning: Modest progress to date, though again with a few newer start-ups offering pure on-demand solutions. The relatively small number of planning software companies left are all working on on-demand delivery, and have succeeded in some areas, but there is still some work to do, though there are a couple of exceptions of companies that have made a full transition (e.g. Kinaxis). JDA Software has also recently made several announcements about Cloud-based planning solutions.

The challenge is really in enabling different customers to build supply chain models needed for optimization in the same SaaS type environment.

Procurement Systems: Also very far advanced, with most of the leading players actively selling and deploying on-demand solutions, in some cases exclusively so. “Buying networks” connected to these systems almost have to be an on-demand offering.

Manufacturing Execution Systems (MES): Also a work in progress in what remains a very fragmented market, there have been a few newer entrants that started with the on-demand model  (e.g., Plexus). The traditional players are of course offering some on-demand solutions, but customer uptake has been slow. MES can have some of the same “physical connections” issues that inhibit on-demand WMS.

With virtualization of manufacturing, however, an on-demand solution that can connect multiple trading partners in the process makes perfect sense, and a few newer start ups have moved in that direction.

Developments in on-demand offerings continue to move very rapidly, however, as on-demand starts to become the dominant model for supply chain software over the next few years.

We will keep tabs on the developments for you of course here at Supply Chain Digest.

Source: http://www.scdigest.com/