Demand Chains of the 21st Century

Blog /Demand-Chains-of-the-21st-Century

Just over ten years ago, supply chains and the expensive systems that ran them epitomized inefficiency, expense and risk.

Operational centers and warehouses were geographically dispersed and technologically disconnected; software “bugs” were commonplace; vendors and suppliers exploited gaps; and disjointed legacy applications made certain that nothing along a company’s supply chain could ever be known with 100% certainty.

SCM suites of yesteryear performed core administrative and operational activities that enabled business to hum along, until something went wrong -- often disastrously so.

The list of epic SCM failures that occurred during the 90s brings into painfully clear relief the high costs of taking a shoddy, piecemeal, undisciplined approach to selecting and implementing the supply chain management system right for your business.

SCM spending grows

According to Gartner, revenue from supply chain management (SCM) software is on track to reach $10.0 billion in 2014, a 12.2 percent increase from 2013, according to Gartner, Inc. This would be the highest annual growth rate since 2011.

Looking forward, Gartner is predicting a compound annual growth rate (CAGR) for SCM software excluding procurement of 9.9% for the next 5 years, reaching $9.8 billion in 2018.

Gartner ranks SAP number one in its report: Procurement Software Vendors by Total Software Revenue, 2013. (> $2.1 billion.)

SAP ushers in demand-driven supply chains of the 21st Century

Not only have supply chains become longer, more complex and more global, the businesses depending on them are facing fiercer global competition, an increasingly tumultuous global economy, stringent regulatory oversight; customers who expect genuine personalization; and mountains of big data for predictive analysis.

Another big change is the convergence into the SCM mix of myriad processes, such as procurement, that once operated in their own silos, wreaking havoc on accurate, real-time reporting and short-circuiting any meaningful attempt at predictive analytics.

According to the recent IDC Manufacturing and Retail Insights 2014 Supply Chain Survey, cost reduction is the top-rated supply chain priority; becoming more customer-centric is the second-highest supply chain priority; and improving product compliance and quality ranks third.

With the help of SAP and SAP partners, businesses that grappled with the shortcomings of past SCM systems are now intensely focused on becoming best-in-class supply chain companies that truly embrace the notion of demand-driven or demand-aware supply.

They are investing heavily in proven SCM systems that enable dynamic operations, seamless connectivity between supply and demand, greater insight into their growing business networks, and predictive analytics that make them more agile, streamlined, competitive, and responsive.

Building on its SCM success, and further demonstrating its commitment to helping customers transform from linear to demand-driven supply chains, SAP announced in July the SAP Integrated Business Planning Solution, which comprises SAP Integrated Business Planning for sales and operations, SAP Integrated Business Planning for inventory, SAP Integrated Business Planning for supply and SAP Supply Chain Control Tower.

The applications were developed to deliver analysis and share alerts of real-time information across the end-to-end supply and demand network, with the speed of the SAP HANA platform and fast adoption through the HANA Enterprise Cloud.

They also offer a collaborative environment for sales and operations planning across global functions, new optimization algorithms and supply chain monitoring capabilities.

Just last month, SAP announced SAP Supply Chain Orchestration application, cloud edition. The core technologies and software involved include the Supply Network Collaboration (SNC) application combined with Ariba’s Collaborative Supply Chain, all hosted in the HANA Enterprise Cloud.

Leveraging the connectivity, community and insights of the Ariba Network helps companies build and orchestrate more agile, intelligent and collaborative supply chains to succeed in today’s increasingly global and networked economy.

One platform to rule them all

According to a recent Gartner survey, 43% of the supply chain professionals surveyed indicated that, to deal with rising levels of integration complexity, they were strongly committed to a single underlying technology platform that would improve the visibility of internal processes and enable more effective communication and collaboration with suppliers and buyers.

Putting a finer point on the survey findings, Chad Eschinger, research vice president at Gartner, said, "This trend toward a unifying application platform is growing and will further drive sales of supply chain solutions as more companies adhere to a platform strategy."

SAP’s SCM strategy centers on leveraging the SAP HANA platform to support more global, complex and volatile supply chains, merge cloud, in-memory computing, mobile, scale, speed, business networks, and integrated planning, analytics and execution paradigms.

Through 2018, Gartner estimates that nearly 70% of businesses will pursue a single-platform (underlying architecture) strategy to integrate disparate systems and improve supply chain visibility.

Making now an opportune time to contact NTT DATA SCM experts.


Post Date: 2014-10-24