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Supply chain applications cover a wide range of requirements. At the front end of the supply chain are systems that perform demand planning and order management. The middle of the supply chain includes trading partner management and manufacturing execution. The back end is concerned with efficiently warehousing, picking and transporting products to the end user.
No single provider covers all functions efficiently. The ERP space is a broad definition that covers many of the front-end and in-house production tools. ERP providers such as SAP and Oracle do provide warehousing and transportation management modules, but many companies still rely upon dedicated supply chain software vendors such as Manhattan Associates and RedPrairie for these functions.
ERP providers have been at the forefront of the architectural changes known as service-oriented architecture. These changes are designed to allow companies to connect applications together in flexible ways to answer ever-changing business processes and requirements. SOA features complex applications that can interact with each other not through hard-coded function calls but by data standards that can be specified by business analysts. Examples of such data standards are the .NET applications framework, XML, SOAP and WebSphere. In practice, the bulk of SOA software implementation revolves around connecting applications via one or more of the above-mentioned web-services communications models. This also has the benefit of removing a great deal of OS-specific function-calls between software modules, so that SOA applications work very well in cost-saving virtualization initiatives.
While SOA brings great benefits to the enterprise, it has drawbacks when applied to applications that require real-time or near-real-time responsiveness. The data-messaging technologies that provide abstraction come at the cost of extra CPU load and, frequently, data access among diffuse or parallel databases. Applications that are tightly coupled to material-handling hardware (such as warehouse control systems or some WMS systems) rely upon real-time response to events on the warehouse floor. Recent experience with Fortune 500 companies shows that these applications have remained largely custom-tailored, monolithic software installations.
In 2008, however, the SOA philosophies of standards-based integration began entering the order-execution part of the supply chain software market in the form of several certified XML-based interfaces between WMS and/or ERP vendors and some pick-to-light or voice-pick partners. WMS vendors, for their part, are aggressively marketing upgraded versions of their products built around SOA-often in conjunction with a specific web-services vendor such as WebSphere or .NET.
Data from the Supply Chain Consortium can be used to form an outlook for where IT groups will allocate priorities for the future. A survey of over 200 large retail and consumer-products companies was performed in early to mid-2008, prior to the economic downturn. The data shows that 70 percent of respondents had a supply chain performance monitoring system to capture significant delivery metrics among vendors, transportation elements and the client. Forty-five percent of respondents were planning to acquire best-of-breed solutions in this area or develop solutions internally. WMS improvements ranked only in the middle of priorities for respondents.
With the economic downturn expected to persist well into 2009, IT departments will continue to face extreme pressure to cut costs. Applications built around SOA provide great opportunities for reducing cost at the enterprise level, but they usually come with the expense of a license upgrade and associated roll-out and testing costs. Since these applications show the greatest maturity at the enterprise level, expect to see only modest growth in SOA for supply chain applications in 2009. The installed base of non-SOA supply chain applications is aging, however, so great opportunity exists once the economic downturn is resolved.
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