Executive Briefings

Supply Chain Execution Convergence: Exploiting a SCE Platform For Competitive Advantage

Analyst Insight: Most supply chain management organizations struggle with functional and application silos that make orchestrating and synchronizing business processes across their organization near impossible. Supply chain execution convergence is an emerging Gartner concept where SCE functional silos are broken down and business processes span, optimize and synchronize across traditional functional domains. - Dwight Klappich, vice president, Gartner Inc.

Supply chain execution convergence refers to the growing need for supply chain organizations to do a better job orchestrating and synchronizing processes, sub-processes and activities across functional domains like warehousing or transportation. More precisely, leading-edge supply chain organizations increasingly want to support end-to-end processes, such as order-to-cash, where the end-to-end process spans traditional functional and application boundaries and activities can be orchestrated without regard for functional domain or application silo.

The problem today is that the end-to-end fulfillment process spans the customer service, warehouse and transportation areas and as functional silos it is impracticable to coordinate activities across all domains given the current application landscape in most SCM operations. Today, processes functionally reside in separate applications: typically ERP or CRM for customer service/order management, warehousing for fulfillment management and transportation for delivery management. While warehousing and transportation are the most obvious points of convergence, they are by no means the only ones. It is important that SCM organizations recognize that the next level of business value will come from breaking down silos by assembling composite processes that bring together sub-processes and activities from specific domains, then allowing the user to assemble these into a larger (converged) end-to-end process. To date, data and transaction integration is doable but "process" integration is elusive, given current environments.

While originally touted as doing so, ERP didn't solve the E-to-E process orchestration problem. Some specialist vendors are beginning to support rudimentary supply chain execution convergence. Leading vendors' SCE platform initiatives, while nascent, provide some simple cross-functional data and process integrations but currently minimal cross-functional process orchestration and synchronization. Early adopter users are beginning the process of transitioning to supply chain execution convergence, by defining consistent business objectives across supply chain execution functions. As the early adopters demand solutions to support their efforts we expect vendors to pursue SCE convergence more aggressively, delivering more robust capabilities over the next three to five years.

Recommendations:

• SCM organizations should begin mapping end-to-end processes across their application portfolio to identify opportunities to exploit SCE convergence.

• SCM organizations that have gaps in their SCM application portfolios should address these gaps, but now with an eye towards how new applications fit a SCE convergence paradigm.

• Users should place more emphasis on vendor/s technical architecture and platform strategies with these equal to or just below functional requirements.

• Look beyond data integration and focus on E-to-E process orchestration, synchronization and eventually optimization.

                                          The Outlook

Most supply chain management organizations struggle with functional and application silos that make orchestrating and synchronizing business processes across their organization near impossible. The high cost to maintain these fragmented and disconnected application portfolios keeps them from investing in transformational innovation that will drive greater levels of business value. Consequently Gartner believes that by 2016, 20 percent of best-in-class SCM organizations will adopt a supply chain execution convergence application strategy.

Supply chain execution convergence refers to the growing need for supply chain organizations to do a better job orchestrating and synchronizing processes, sub-processes and activities across functional domains like warehousing or transportation. More precisely, leading-edge supply chain organizations increasingly want to support end-to-end processes, such as order-to-cash, where the end-to-end process spans traditional functional and application boundaries and activities can be orchestrated without regard for functional domain or application silo.

The problem today is that the end-to-end fulfillment process spans the customer service, warehouse and transportation areas and as functional silos it is impracticable to coordinate activities across all domains given the current application landscape in most SCM operations. Today, processes functionally reside in separate applications: typically ERP or CRM for customer service/order management, warehousing for fulfillment management and transportation for delivery management. While warehousing and transportation are the most obvious points of convergence, they are by no means the only ones. It is important that SCM organizations recognize that the next level of business value will come from breaking down silos by assembling composite processes that bring together sub-processes and activities from specific domains, then allowing the user to assemble these into a larger (converged) end-to-end process. To date, data and transaction integration is doable but "process" integration is elusive, given current environments.

While originally touted as doing so, ERP didn't solve the E-to-E process orchestration problem. Some specialist vendors are beginning to support rudimentary supply chain execution convergence. Leading vendors' SCE platform initiatives, while nascent, provide some simple cross-functional data and process integrations but currently minimal cross-functional process orchestration and synchronization. Early adopter users are beginning the process of transitioning to supply chain execution convergence, by defining consistent business objectives across supply chain execution functions. As the early adopters demand solutions to support their efforts we expect vendors to pursue SCE convergence more aggressively, delivering more robust capabilities over the next three to five years.

Recommendations:

• SCM organizations should begin mapping end-to-end processes across their application portfolio to identify opportunities to exploit SCE convergence.

• SCM organizations that have gaps in their SCM application portfolios should address these gaps, but now with an eye towards how new applications fit a SCE convergence paradigm.

• Users should place more emphasis on vendor/s technical architecture and platform strategies with these equal to or just below functional requirements.

• Look beyond data integration and focus on E-to-E process orchestration, synchronization and eventually optimization.

                                          The Outlook

Most supply chain management organizations struggle with functional and application silos that make orchestrating and synchronizing business processes across their organization near impossible. The high cost to maintain these fragmented and disconnected application portfolios keeps them from investing in transformational innovation that will drive greater levels of business value. Consequently Gartner believes that by 2016, 20 percent of best-in-class SCM organizations will adopt a supply chain execution convergence application strategy.