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Supply chain ignorance a concern

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WHILE the majority of Australian manufacturers recognise the many benefits of supply chain management, there appears to be an unexpectedly high number who don’t know where to get started. Plus, according to Ray Kloss, PeopleSoft’s director, products and industry marketing for JAPAC, many manufacturers still have efficiencies to obtain within their own four walls, before they start talking to their suppliers and customers.

In a recent PeopleSoft survey, Kloss said one third of the companies interviewed are across their supply chains, or are piloting different supply chain approaches. “Another third recognise how important the supply chain is, but don’t know where to get started, while the bottom third don’t understand the ROI on supply chain management, and can’t see the reason to do it,” he told Manufacturers Monthly

“We consistently find companies that don’t know what to do, who need help to benchmark on what they should be doing at the process level. They seem to understand the software, but not the processes they should use. It’s as if they are all creating their own wheel.

“In contrast, the top third of companies in the US, some 1800 companies, have implemented strategic sourcing and SRM (Supplier Relationship Management) while in Australia we probably only have five,” Kloss said.

“Companies here (Australia) are definitely behind. A lot of that is because they have smaller ROIs. However we are seeing a lot of our customers with ‘parked’ projects that they started in 1999/2000, who are now reviving them.”

Kloss also says Australian companies still tend to differentiate on product. “We build a better mousetrap is our approach at the moment. We try to compete locally on features, functions and product capability. We do work price, but we do tend to go with the new equipment or a new assembly line first,” he said.

Recent announcements

Since taking JD Edwards over last year, PeopleSoft has made several major upgrades to the products it inherited, with more to come says Kloss. The latest products, released at the recent NMW in Chicago, include support for demand-driven practices for manufacturers in SRM, SCM and RFID.

PeopleSoft has also entered a partnership with JCIT International, where its Demand Flow Technology will be incorporated into PeopleSoft’s supply chain management solutions. Together, they plan to “deliver technology, consulting and education services enabling manufacturers to transform into true demand-driven organisations”.

After the JDE merger, Kloss says they found a “wonderful absence of overlap”.

“We found a lot of synergy around what each company had developed, and we are now in the process of intellectual property transfer.

“A good example was our Enterprise One release in December, a big piece of that was CRM capability. We lifted the content of our Enterprise CRM product and re-executed it in the toolset of Enterprise One. There is no physical way JDE could have written that much functionality.

“JDE specialised in the mid-market, but were missing some of the functionality. Now, through the merger we are building it out. We are delivering through the releases,” Kloss said.

He also alluded to other major advances at PeopleSoft, “We are actually changing the economics of enterprise software, and it’s not marketing hype”.

One of his presentations talks of installation in days, not weeks; implementation in weeks, not months; out of the box business integration; and software that changes on a daily basis without programming.

“That’s our target. For example, we have developed PeopleSoft Express, a PC-style installed tool, and PeopleSoft Set-up Manager, an automated configurator where using our business process modeller users can go in and drop graphically what they want. The software configures itself. And process integration packs, we are now shipping out of the box integration to SAP, Oracle, Siebel etc,” he said.

Regarding the implementation of RFID, and its impact on the supply chain, Kloss believes the issues aren’t at the technical level, but the standards. While industry seems to be stabilising on UCCNet, Kloss is not convinced. “The thing with any new technology, such as RFID, is the catalyst application.

“There will be one catalyst application that will eventually take hold, then all the standards will formulate behind that. That’s the challenge of RFID at present.

While Kloss expects Coles or Woolies to announce a RFID project, similar to Wal-Mart’s, in the near future, he says the real trick for local manufacturers is to get them both to agree on the same system. “It would be a nightmare if they develop two different requirements.

“The question is which vendor or which network of vendors will drive through a standard. The danger at the moment is that everyone is doing it differently, which defeats the purpose.”

Kloss also says the variation of industry terms is still an issue, and is compounded by vendors who say they do supply chain when they only do a piece of it.

“We need a Macquarie IT dictionary. There are still too many different terminologies out there,” he said.

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