SUPPLY CHAIN MANAGEMENT SOFTWARE DEVELOPMENT:

AN EMPIRICAL EXAMINATION

Jiaqin Yang

Georgia College & State University, Milledgeville, GA 31061, Phone: (478) 445-2572, Fax: (478) 445-0602

E-mail: <jiaqin.yang@gcsu.edu>

Mike Whitfield

Georgia College & State University, Milledgeville, GA 31061 Phone: (478) 445-4324, Fax: (478) 445-0602

E-mail: <mike.whitfield@gcsu.edu>

ABSTRACT

Businesses of all sizes - from giant international corporations to small specialty manufacturers – have been trying, recently, to redefine their relationships with their suppliers, distributors and customers to lower costs, raise quality, increase speed, and reduce risk – through the adoption of Supply Chain Management (SCM). As a result, the demand for both efficient and effective SCM software has stimulated an intensive competition in the SCM software market. This paper describes an empirical study to evaluate the SCM software currently available on the marketplace. An Internet search and a questionnaire survey are used to collect the information. Based on the collected data, a comparative analysis is conducted focusing on several key evaluation criteria in the areas of the features and functions of the software application, along with important managerial discussions.

Key Words: Supply Chain Management (SCM), SCM Software Market, Empirical Study.

INTRODUCTION

The term of “supply chain” has been used and defined well recently in both literature and practice for a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. Though a supply chain may vary for different industries and various firms, the application has been applied for both service and manufacturing operations. While the marketing, distribution, planning, production, and purchasing units within an organization are traditionally operated independently and have different unique objectives. More than often, these objectives are conflicting with each other – and as a result, there is no integrated supply plan for the entire business organization. That is, there is a demand for a system by which these different functions can be integrated both effectively and efficiently. Supply Chain Management (SCM) is such a system through which such integration can be achieved [ ].

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SCM is typically viewed to range between a fully vertically integrated firm and one where each channel member operates independently. Therefore coordination between the various players in the chain is key in its effective management. Cooper and Ellram (1993) compare supply chain management to a well-balanced and well-practiced relay team. Such a team is more competitive when each player knows how to be positioned for the hand-off. The relationships are the strongest between players who directly pass the baton, but the entire team needs to make a coordinated effort to win the race. That is, a business needs to move beyond the traditional supply chain. Handing information from partner to partner in a sequential, linear fashion is no longer good enough, as it is too slow, inaccurate and costly, and it makes the company vulnerable to competitors that do have responsive supply chains. Instead, a business needs to create adaptive supply chain networks in which suppliers, manufacturers, distributors, and customers share information dynamically across the network. Information Technology (IT) systems play a significant role in the success of a supply chain because they enable management to make decisions over a broad scope. The IT systems monitor materials, orders, schedules, finished goods inventory, and other information throughout the entire organization. SCM systems are a combination of many of the preceding applications and are used to span the stages in the supply chain and to allow for a more global scope because they can span many supply chain stages with their different modules. SCM systems have the analytical capabilities to produce planning solutions and strategic level decisions. As supply chains become more global and complex and as customers and competition become more demanding, companies will need the supply chain capabilities that only sophisticated IT systems can provide. With a limited pool of resources, some software providers are tailoring their SCM software products to address specific issues such as inventory visibility, supplier management, or product development collaboration. This is particular true for companies like Agile, i2 Technologies, and Manugistics. These software providers are trying to supplement large-scale projects completed by enterprise resources planning (ERP) vendors in the past few years by offering slimmer, more modular tool suites. Customers, however, are not only more focused when it comes to the problems they’re addressing, they are insisting on tools that are affordable and allow them to check on progress at various stages of implementation. One effective way to improve supply chain efficiency is through collaboration – involving as many suppliers as early as possible in planning and development. The automotive sector has made great headway in this area. Suppliers are not only involved in the development of the product, but are also kept in the loop at each stage of the scheduling and production process. By having a greater understanding of the production schedule, suppliers to automotive companies have a better grasp of their role in the process and can plan accordingly. As the demand for SCM software focused more on easy to install, easy to manage, and render a quick return on investment, it has been predicted that the competitive criteria for a successful SCM software will be more on the following: (1) Return on

investment – how quickly a software solution can affect the bottom line and produce cost savings. (2) Total cost of ownership – the total cost of the solution, the implementation, the training, and additional consulting fees. (3) Viability – does the software vendor have the financial wherewithal to survive the downturn and stay in business for years to come? And (4) Proven solution for a specific supply chain problem – references from customers who can speak to the efficacy of the software solution (Balko, 2002). However, there are so many supply chain

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management software vendors in the current marketplace. For a potential customer - who is the best or whose product performs best? As such, an empirical comparative study and observation of current SCM software market is need3e to provide important managerial insights and certain benchmarks. That is the primary motivation for this research. A Top 100 of Supply Chain e-Business in 2002 which is characterized by those that can offer fast pay back, quick implementation and financial stability is published by Schneider Logistics (www.schneiderlogistics.com). According to Schneider Logistics, however, this list is not a ranking or even a rating system. Such a task would be almost impossible since the range of supply-chain applications is so broad, the needs of users so diverse and the basis for evaluation so subjective. The list is a consensus of opinions from many industry experts whose job is to know what is happening in the world of supply-chain application. Based on its research, Schneider Logistics presented top 100 SCM software vendors in six supply chain technologies: planning; sourcing; manufacturing; execution; managing; and selling solution. Among these top 100 vendors, most of popular vendors such as: Aspen Technology, Baan, i2, J.D. Edwards, Lilly

Software, Manugistics, Oracle, PeopleSoft and SAP have their application software covered all these six technologies (Table-1).

Insert Table 1 about here.

In addition, the Boston-based AMR Research has compiled a listing of leading management applications software vendors across vertical industries, including those for ERP, supply chain management (SCM), and plant operation software. Specifically, its listing also identifies key players by market segment, i.e., systems for large, medium, and small manufacturing enterprises. According to those popular vendors, such as: AMR, SAP, PeopleSoft, Oracle, i2, J.D. Edwards,

Baan, Manugistics, etc. all had their shares in almost all these industries like high technology, food and beverage, process industries, automotive, order-driven manufacturing, and volume-driven manufacturing. For purposes of this discussion, market segments are defined by manufacturers’ revenue as follows: large enterprises have greater than $1 billion per annum in total revenue; medium-sized have between $100 million and $1 billion per annum in total revenue; and small enterprises having less than $100 million per annum in total revenue.

INDUSTRY BACKGROUND

Based on SCM software vendors’ market share, size and company reputation, the following six SCM software vendors are selected in this study: Baan, i2 Technologies, J.D. Edwards, Oracle,

PeopleSoft and SAP. The general information and their main products/services of those six companies are displayed in Tables 2 and 3. The detailed background information about those firms can be viewed in their websites.

Insert Tables 2 & 3 about here.

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It is recognized within the software industry that today’s SCM needs to provide specific functionality for both vertical industries and emerging business processes. The vertical industries involved in the SCM software market include the following:

High tech/electronics: The key to success in the electronics industry is agility, especially in time-to-market with new products. SCM application vendors have begun to address those key industry issues. SAP and i2 Technologies have a commanding presence in high tech industries, especially for computers and related products. Straddling the large enterprises market, and the mid-market, Oracle, Baan, J.D. Edwards also have a significant high-tech presence. Food & Beverage/Consumer Packaged Goods (CPG): CPG manufacturers ship products comprised of only a few materials made by automated or highly repetitive processes. The key to success in CPG is accurate forecasting, timely response to demand, and disciplined control of supply-chain costs. As in high tech industry, the top two players in CPG for large enterprises are ERP and SCM vendors. SAP supports for global financials and process manufacturing, and expanding support for SCM has made it the number one vendors among CPG manufacturers. Process industries: The process industries, which include chemicals, pharmaceuticals, steel, paper and petroleum, are characterized by large, multinational corporations that run everything from highly automated process plants in developing nations to worldwide distribution operations in major industrial centers. As a result, the key to success for SCM vendors in process industries is support for multiple languages, currencies, and localized financial and tax accounting. For large enterprises, SAP is once again at the top with its commitment to global financial management. Oracle is also leader in process industry SCP, while in the middle-sized market, J.D. Edwards is quickly becoming the vendor of choice. Automotive: After years of cost reductions through lean manufacturing techniques such as JIT movement, automotive suppliers have driven a lot of complexity and over-head cost out of their operations. They share three business strategies: supply chain efficiency, product lifecycle management, and customer intimacy. These strategies will lead to profound change in each tier of the supplier network. The top vendors such as SAP, Oracle and Baan offer scalable solutions that support optimized performance as well as global accounting. Order-driven manufacturing: order-driven manufacturers build products based on the specifics of a customer’s order, from large scale, highly engineered, and complex products made per order, to those embodying more basic feature choices and option configurations. At both ends of the spectrum manufacturers are using technology and applications provided by ERP vendors to provide customers with real-time available-to-promise (ATP) of a configured order. With ATP as the benchmark, the challenge is to reduce lead times in order to meet customer’s time frames. Baan’s financial woes and its decision to focus more on the middle market put SAP safely atop the high end of the market. The other top players for the large enterprises include both Oracle and PeopleSoft. Volume-driven manufacturing: Due to the competitive nature of most volume-driven markets, the application vendors must furnish tools that increase capacity utilization, reduce inventory, cut time-to-market, and support improved customer intimacy. With the combination of its Flow Manufacturing module and customer relationship management (CRM) suite, Oracle has the most

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to offer large enterprises in the volume-driven markets. With the importance of supply chain issues and the power of Advanced Planning & Scheduling (APS) systems, i2 Technologies has become an extremely important partner to help drive cost out the supply chain and increase overall throughput. As always, SAP has a substantial offering that can’t be overlooked. With vastly improved repetitive manufacturing functionality, J.D. Edwards is a growing force among large enterprises.

RESEARCH METHODOLOGY

There are over 100 SCM software vendors in the marketplace – though only limited few can be selected in an empirical study. To ensure the validity of the study and the representation of the selected firms to the industry, several criteria were used in the selection process, including software vendors’ market share, its size of operation, the current standing in the industry ranking, customers’ feedback, the product/services provided, and company’s reputation in the marketplace. After a careful reviewing and consulting with the industry insiders, the following six SCM vendors were selected for this study: Baan, i2 Technologies, J.D. Edwards, Oracle,

PeopleSoft, and SAP. The information in this research was collected through a two-step procedure: first, an information observation sheet was designed for each selected company. Then a comprehensive Internet search was conducted on the website of each selected vendor and other related industry websites. The information and related data were then summarized into several category-specified tables. As expected, certain data and information which were of interest to this research were either missing or unavailable on the selected website. For those unavailable data and information, a survey questionnaire was emailed to each vendor’s customer service office. Follow-up phone calls were made two weeks after the initial email to ensure all survey answers were returned promptly.

EXPERIMENTAL RESULTS

Based on the data and information collected in this research, a comparative empirical study was conducted in this research in terms of: model of delivery, solution suite, distinguished product

features, business size and pricing, operating system and database support, network support,

program language and Internet protocol, implementation and training, technical support, source

code, and product variety and industry segment. The experimental results from the analysis are described below along with managerial implication discussions. Model of Delivery: The Application Service Provider (ASP) industry is a rapidly emerging segment of the software industry. Many different kinds of companies are involved in the ASP industry to provide a contractual service to deploy, host, manage, and rent access to an application from a centrally managed facility. ASPs are responsible for either directly or indirectly providing all the specific activities and expertise aimed at managing a software application. As delivery performance is one of important competitive criteria in the marketplace, the question about the model of delivery is one of key questions in the survey. Specifically, J.D.

Edwards responded that the model of delivery of its SCM products was packaged application.

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However, according to its Website, J.D. Edwards SCM products can be either a packaged application or a hosted application. That inconsistency could be interpreted that J.D. Edwards did have two models of delivery in the past but now only provides a packaged application for its SCM products, and its Internet site was not updated. In contrast, the hosted application - as the model of delivery - was used by all other respondents in the survey (see Table 4). That is, most SCM vendors’ products are available as hosted application – offering a compelling delivery model to complement the product’s e-business platform, allowing customers to enhance a current supplier’s environment or roll out new business applications with ease and speed. It provides companies with complete hosted packages of any and all solutions, including infrastructure, implementation, operation, and ongoing support of selected applications. It is designed for companies that need fully customized solutions but do not want to invest in an extensive technical infrastructure. A vendor acting as an ASP installs and maintains its user’s business-critical applications at one or more of its professionally managed data centers. Today ASPs are creating a major transformation of the software industry—shifting the delivery of software from offline (via CD-ROM) to online (via the internet).

Solution Suite: An SCM product usually consists of several related solution suites. Each vendor’s SCM solution is built in different suites. For example, in Baan’s SCM product, there are three solution suites: (1) CAPS Transportation and Logistics offers a complete transportation management solution with modules for strategic network design, carrier bid optimization, fleet sizing, freight order management, shipment rating and consolidation, track and trace, and financial settlement. (2) Advanced Planning and Scheduling (APS) offers solutions that can help organizations improve their production and delivery performance, from order intake to planning, scheduling, and production. (3) Supplier Relation Management (SRM) applications can help automate and simplify procurement and sourcing activities that relate to the acquisition of raw material components, MRO goods, services, and capital goods.

In comparison, i2 SCM is the only program available in the market that enables an organization to strategize, plan and execute a company's business functions of purchasing, producing, moving, storing, fulfilling, and service business processes across multiple enterprises. Five different suites are included in its solutions: (1) Collaboration and Inventory Visibility, (2) Demand

Fulfillment, (3) Demand Management, (4) Factory Planning and Scheduling (FPS), and (5) Supply Management (this suite helps enterprises to meet demand by optimizing supply-inventory, production, distribution and transportation concurrently across multiple enterprises, while meeting business objectives). To provide differentiation from its competitors, J.D. Edwards marketed its SCM products focusing on its Effective Supply Chain Management approach – which demands comprehensive information systems that allow companies to synchronize plans with their customers and suppliers, collaborate in real time both inside and outside their enterprises, execute plans, adapt to a dynamic environment, and measure performance relative to objectives. There are six solution suites: (1) Supply Plan Management, in which planning is integrated with execution, making it possible to adjust to unforeseen events in real-time. (2) Logistics Management, which shifts the balance of power in business relationships to customers, whether they are manufacturers or end users. (3) Order Management, to manage high volumes of personalized, complex customer order requirements while maintaining profitability. This solution enables

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customer to streamline order processing and maintain visibility and control of order tracking throughout the order life cycle. (4) Manufacturing Management, provides a fully integrated solution allowing companies to use efficient processes that optimize resources while satisfying customer expectations about quality, price, and delivery performance. (5) Inventory

Management: This solution offers immediate access to current item information at the inventory locations worldwide - whether in-house or at customer and supplier sites. (6) Procurement &

Subcontract Management: This solution can help firms control the tasks associated with the selection of a subcontractor to obtain reliable, quality goods and services, while minimizing costs and risks. Oracle, as the worldwide leader in database products during the last 25 years and has provided outstanding performance in the development of SCM software solutions, as summarized below: (1) Product Development: This solution brings together engineers, manufacturers, customer and suppliers, allowing them to leverage their collective expertise and knowledge to minimize costs, maximize product quality, and streamline the entire concept to release process. (2) Advanced

Planning: This suite can improve predictability of demand by involving customers, manufacturing, and marketing to reduce user’s inventory costs and increases delivery performance. (3) Procurement: This solution can identify savings with spending and source analysis and lower the cost of each transaction with online payment to suppliers. (4) Manufacturing: With this suite, users can improve tracking of materials on their shop floor and optimize finite scheduling to get the most from their production lines. (5) Order Fulfillment: This suite has been credited by Aberdeen Group as the most complete Order Management e-business solution that effectively integrates front-end and back-end applications across virtual and traditional channels. As a major SCM software vendor, PeopleSoft has greatly improved the performance of its products over the years. The company promoted its SCM product as a cohesive, yet flexible solution for the synchronized supply chain over customers’ entire supply chain flows. There are five similar suites in its SCM solutions: (1) Supplier Relation Management (SRM): This suite controls all categories of flow and improves overall suppliers’ performance. (2) Manufacturing: This solution follows JIT principle to eliminate waste and maximizes operational efficiency. (3) Supply Chain Planning (SCP) is designed to align customers, suppliers and employees with core planning processes to ensure accurate and demand-driven inventorys that reduce costs and improve customer service. (4) Customer Fulfillment Management connects users’ customers with their supply chain and supports the complete order-to-cash business process. (5) Supply

Chain Analytics: This suite provide the real-time information which users may need to know in order to make critical, timely business decisions.

Finally, SAP, the world's largest inter-enterprise software company, is the recognized leader in providing collaborative business solutions for all types of industries and for every major market. Its SCM products encompass the full range of end-to-end supply chain activities, including: (1) Supply Chain Planning: This suite allows user to create an overall supply plan that takes into account materials management, production, distribution, and transportation requirements. (2) Supply Chain Execution can perform plan-driven procurement, inventory management, and invoicing, and can create a complete feedback loop between demand and supply to increase responsiveness across all areas of supply chain planning. (3) Supply Chain Coordination: This

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suite can handle problems automatically using standard operating procedures. (4) Supply Chain

Networking uses role-based technology to deliver information to users based on their individual responsibilities and allow users to plan, execute, and monitor activity using mobile and remote devices. The major features of the solution packages of the six SCM software vendors selected for this study are described in detail above and summarized in Table 4. From the discussion above, it can be seen clearly that each of these six companies has been attempting to gain certain competitive advantages in the marketplace by differentiating itself from others with unique functions, extended support, more practical in implementation, and high ability to create flexible responses to customized needs. A more detailed and more specific comparative analysis is under development and the results of that analysis will be added in a later version of this paper.

Language Version: From the perspective of international market competition, a choice of different language versions has become an important means for software vendors to gain an edge on the competition. All six SCM software vendors selected in this study have opened offices overseas. Their products have at least two or more different language versions (see Table 4). In fact, J.D. Edwards SCM solution has 21 different language versions. In comparison, there are 6 different language versions of SCM products from PeopleSoft. At one end, SAP has most available languages (65 different languages) of the software in the world. On the other end of the continuum, i2 Technologies has only two language versions- English and Japanese. It is confirmed, again from this research, that for the software industry, it will become increasingly important to develop a variety of language versions in order to compete in the global marketplace.

Insert Table 4 about here.

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Distinguishing Features: The survey results show that each SCM vendor has its unique features for its products, as shown in Table 5. Interestingly, most of them used the word “ONLY” to emphasize their SCM solutions’ distinguishing features in their survey responses. For instance, Baan claimed that its SCM products can place businesses in a better position to attain operational excellence. The company believes that its SCM products were built based on its in-depth understanding of all the important business functions and relationships in an enterprise and its supply chain. Operational excellence rests on a foundation of efficient, reliable, and timely information exchange throughout the extended enterprise. To help achieve this, its SCM leverages core capabilities in the areas of integration, information, and collaboration, and addresses a comprehensive range of business processes that can help achieve the goals of cost reduction and increased efficiency within the enterprise and throughout the supply chain. Similarly, i2 Technologies insists that its SCM product is the only solution available today that enables an organization to strategize, plan, and execute a company's business functions of buying, producing, moving, storing, fulfilling, and doing service processes across multiple enterprises for total profitability. J.D. Edwards showed its features with a unique approach to reach its potential customers, asking three questions: (1) How quickly firms answer a service call and promise a delivery? (2) How quickly firms’ employees discern and react to important events, and, have the renewed focus on core competencies and outsourcing made firms’ supply chains tough to manage? And (3) how much more effective would these processes be with the right tools in place? The answer from J.D. Edwards – is its integrated supply chain management solution - which is credited for helping thousands of customers create value for their businesses, promote revenue growth, inventory reduction, better asset utilization, and cost-of-goods improvements. Relatively quiet in this regard, Oracle declared that it is the only company to offer a fully integrated group of SCM products for global, enterprise-wide SCM software – which will enable companies to leverage leading new e-business practices to automate internal processes and to collaboratively extend automation across the supply chain. Interestingly, PeopleSoft also stated in its answer to the survey that it is the only SCM software vendor whose products can extend customer’s supply chain in real time by connecting suppliers and customers with company business processes, provides integrated spending management for all categories of goods and services and delivers embedded analytics to monitor supply chain performance and adjust as conditions and business goals shift. And finally, the unique strength of SAP’s SCM solutions can be characterized by their capacity to deliver power capabilities to enable departments, business units, and companies to gain greater visibility into inventory, planning and scheduling, allowing them to anticipate problems sooner, adjust schedules and transactions quickly, and manage the extended supply chain more proactively.

Target Business Size (Market Segment) and Pricing Policy: Supply Chain Management is about breaking down barriers at all levels of the supply chain – between partners, suppliers and end-users. As such, SCM solutions should be implemented in all different levels and sizes of companies. The survey results of this research showed that the selected six SCM vendors do have different targeted market segments in their operations strategies (Table 5). For example, SAP services all sizes of companies from only 10 users to over 30,000 users, but its targeted businesses are companies with more than 500 users and about $50 - $200 millions in annual

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revenues. Similarly, both Baan and J.D. Edwards indicated that their SCM solutions are designed for companies that have more than 500 users. As to PeopleSoft, the targeted business size for its SCM products is between 300 to 400 users. i2 Technologies and Oracle didn’t answer this question in the survey, and according to the industry sources, the primary market segments for those two companies are also those with more than 500 users. An apparent managerial implication here is the need for SCM solutions for smaller sized companies with fewer users in its chain. The time will come when the majority of smaller companies (less than 100 employees), that account for over 70% of all businesses, reach the point of demanding an appropriate SCM solution for their businesses. Any SCM vendor who is willing to invest in the development of SCM solutions specifically for those smaller companies now – will gain an competitive edge in providing products for this huge potential market.

The pricing policies of the six selected SCM vendors are different, primarily depending on the specific needs of customers, the degree of customization provided, and the size of the business, as revealed in the survey results and summarized in Table 5. For small to medium size businesses, the price range of the SCM products usually is between $100,000 and $300,000, where for large users, most SCM solutions cost over $300,000. There is no indication in the survey that pricing policy has been used by any one of those SCM vendors as a major competitive weapon. Given the huge potential market demand, however, it is expected that the price differentiation will be used in the future SCM software market very soon.

Insert Table 5 about here.

Operating System/Database/Network/Programming Language Support: Reducing inventories, sharing information with partners, and meeting customer demands require a complete supply chain solution and an open, scalable technology foundation including supporting operating system, database, network, and programming language. The survey revealed a significant gap between these six SCM vendors in terms of those technical elements. For instance, the operating systems supported by Baan’s SCM products are limited to Windows 95/98/ME and Windows XP/2000/NT. While the solutions from other SCM vendors can support Windows 95/98/XP/2000/NT, HP-UX, IBM AIX, Sun Solaris, Compaq Tru64 and Unix. For this technical element, Baan is a step behind the other competitors. In terms of database support, the survey result showed that all of the six SCM vendors’ products support most industry-leading database management systems. Additionally, Baan SCM products also support Microsoft Access, J.D. Edwards’ SCM solutions support Sybase database, while PeopleSoft SCM products support Sybase and Informix, and SAP developed its own SAP DB server to host its solutions. Network support is another important technical requirement for SCM solutions from users’ perspective. Many users believe that it will be much more convenient for them to access their applications anytime and anywhere, download refreshed data, and upload new or updated data. Users can continue to work with their applications on a laptop or personal digital assistant (PDA) while disconnected from the Internet or local network. At the current stage, J.D. Edwards’ SCM products support Token Ring, TCP/IP, NT Server and Ethernet. SAP solutions support TCP/IP, NT Server and Ethernet, but not Token Ring. In contrast, other SCM vendors’ products only support TCP/IP. In terms of program languages and Internet protocol supported by a SCM

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solution, no significant difference was discovered from this research among these six SCM vendors. SAP products are built on an open technology framework that takes advantage of industry standards to ensure flexibility and interoperability. All the above discussions are summarized in Table 6 below. From the discussions above, it can be seen that those technical elements of SCM solutions might become the core area for SCM software vendors to a gain competitive edge in future marketplace.

Insert Table 6 about here.

Implementation/Training/Support Description: A successful implementation of an SCM solution depends on the available IT support and time constraints of potential users. Generally, there are three options for the users to choose from: (1) Software provider installation and configuration, (2) Software provider assistance in configuration and (3) Customer installation and configuration. The SCM vendors selected in this study provide different options to their customers. For example, both SAP and Baan will help their customers to install and configure (or assist them to do it) – if users request. In comparison, among the three options, J. D. Edwards will highly recommend Option-1 above to its customers in order to ensure the installation quality. Similarly, PeopleSoft also indicated that to all its customers, the IT provider installation and configuration is recommended for the implementation of its SCM solutions. Finally, both i2

Technologies and Oracle didn’t respond to the survey on this item, but an industry reference revealed that both can help or assist users to install their SCM products - the same as Baan, J.D.

Edwards and SAP.

Insert Table 7 about here.

Adequate training for users is another critical step for a successful SCM solution. In this regard, all the vendors surveyed have some training available to their customers to improve the capabilities of users before, during and after the implementation stage. As an appropriate understanding about the SCM solution will impact business performance, all of the vendors provide educational services to their users about how their SCM solutions can make their work easier, their roles more productive, and their contribution more valuable. Specifically, Baan offers diverse courses, innovative educational products, and comprehensive training materials to their users, with a broad range of technology-based training services. Currently, several primary learning platforms are offered by Baan to accelerate the learning curve for its customers. These include: (a) traditional Instructor-Led Classroom Training, (2) Internet-Based Baan Virtual Campus, and (3) Online BaanLIVE. All have been well received by customers in the ongoing market competition. With a different approach, i2 Technologies built a global learning resource providing education and training services to its customers on business concepts. i2 solutions. learning options range from instructor-led training at users’ locations, to web-based training through the Internet with two key offerings: Project Readiness Education, which is designed for key members of user’s project team, addressed through various workshops, and Business

Readiness Training, designed for end users and suppliers.

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For J. D. Edwards, educational offerings are designed to meet users’ just-in-time requirements - whether they visit J.D. Edwards’ state-of-the-art education centers, being trained at users’ locations, or use the latest Web Conferencing and Web-based training systems. Implementation training will ensure users have the skills they need to help their organizations meet initial SCM objectives. Ongoing training will ensure users maximize the full potential of the SCM solution by increasing their knowledge and understanding. To better help its customers, J. D. Edwards offers refresher training, advanced classes, and training to support software upgrades. These training services have played a key role in sustaining its customer base, as in 2002 alone, J. D.

Edwards scheduled approximately 10,000 training classes for customers, business partners, and employees around the world. Oracle didn’t respond the survey on this item. From its homepage, it revealed that its training service, named Oracle University, offers a full range of organizational learning services and training products including: (a) personalized training plans; (b) private training events; (c) group subscriptions to online training; (d) customized self-study library configurations; (e) specialized training for e-business suite end users with Oracle Tutor, and (f) Oracle iLearning - Learning Management System. In addition, Oracle training representatives will work with customers to customize solutions to help them achieve the results they envision.

PeopleSoft claims that its training gives customers more confident employees, faster and smoother IT projects, and information they won't get from anyone else - insights from the PeopleSoft experts. Similarly, PeopleSoft offers four training options for its customers to choose from: (a) e-Learning: The PeopleSoft e-learning knowledge center is a web-based environment that gives customers access to information needed. (b) Classroom training: Customers can enroll in the training programs PeopleSoft has arranged. (c) On-site training: Training at customers’ locations may be the most pragmatic approach for their organizations if their project team training must focus on a specific environment. (d) Computer-based training: This PeopleSoft education program offers a full range of learning options including CD-ROM and computer-based training courses. As with its competitors, SAP also offers extensive training programs to all of its customers and business partners with more than 250 courses. SAP designs customer specific training programs that cover all application, functional, and technical areas related to its solutions. SAP can also modify existing courses to suit a customer’s specific project. In addition, SAP hosts the training at any one of its training facilities, or, if customers have the required infrastructure, SAP can deliver the training at their sites. It is noteworthy that almost every SCM vendor in this study takes its training resources to the Internet and offers some web-based training. Oracle calls it iLearning, PeopleSoft names it eLearning, and in SAP it is called E-learning. Designed by experts, these courses bridge the gap between the classroom and the fast-paced workplace. With e-learning courses, user’s employees can make the most of their time and work at their own pace, while avoiding travel costs, lost work time, and scheduling conflicts. In the software industry, after-sales support is a key to the success of a company. That is, customer service and support are required to provide customers with access to the appropriate level of expertise - when they need it and wherever in the world the need may arise. SCM vendors must work closely with customers throughout the lifecycle of their SCM solutions to help resolve technical support questions quickly and thoroughly and to optimize the performance

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of their products. From the survey feedback and information on the Internet, it can be seen that all six SCM vendors provide their customers with similar following types of supports: (a) Website support - product support questions and knowledgebase are available at the website; (b) Email support - questions can be sent directly to a support staff for review; (c) Telephone support - calls can be placed directly to a support staff, and (d) On-site support - a representative from SCM vendor can come to the site of customers. In summary, there appeared to be no significant differences among the six SCM vendors in terms of customer service and support. Or, put another way, customer support has not been a differentiation factor in the current market competition. The summarized comparison of Implementation, Training, and Customer Support is displayed in Table 7. Source Code: The trade-offs for an open source code is one of important developments in the software industry, and an important choice for an SCM solution. The basic idea behind open source is simple: when programmers can read, redistribute, and modify the source code for a piece of software, the software evolves. People improve it, people adapt it, and people fix bugs. And this can happen at a speed that, if one is used to the slow pace of conventional software development, seems astonishing. In particular, the service and help that are needed by customers can be done most effectively with an entirely open-source system. From top to bottom, companies that sell open source software programs can deliver a system that works, and that can continue to change and adapt to customer’s business needs. For example, IBM, HP, Sun, Apple and Linux are some of the open source companies. The information collected in this study, however, revealed surprisingly slow movement to open source systems for SCM software vendors in this important area. That is, most current SCM suppliers will not open the source codes of their products to their customers. Specifically, Baan responded in the survey that its iBaan source code is closed. Both J.D. Edwards and SAP responded in the survey that their SCM products’ source codes are open. However, in an Internet research, J. D. Edwards’ source code for its SCM products is closed. PeopleSoft, i2 Technologes and Oracle all left this question unanswered in the survey. An industry reference confirmed that their SCM products’ source codes are also closed to users. It can be expected that this issue will become more important in the future for SCM software market competition. Further, research strongly suggests on this issue a need to empirically investigate its possible impact and potential trend in the SCM software industry. Under GSA Contract List: The General Services Administration (GSA) is one of the three central management agencies in the federal government. SCM vendors whose solution products and services are under GSA contracts are those firms that have been approved for federal work as a GSA contractor, and as such, have an established market reputation in the potential competition. If a federal client decides to use GSA contracts, then only GSA approved SCM vendors will be eligible to compete for their orders. However, if federal customers decide to meet their needs through an open market process, then the government SCM solution buyers must publicize their business opportunities by posting information directly via the Internet. This procedure opens the door to all SCM vendors, to a certain degree. It is obvious that GSA contractors will have an edge in winning government SCM solution orders over non-GSA vendors. The key is that the federal customers decide their own procurement method – which makes a GSA contractor a clear favorite in the competition. Among the six SCM vendors studied in this research, three, Baan, J.D. Edwards and SAP - all indicated that their SCM

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products are under listing for GSA contracts, while the three are not. It was revealed, however, in this study that from the information on the Internet, that J. D. Edwards’ SCM products were not listed under GSA contract. It was later explained that J. D. Edwards didn’t join the GSA earlier, but later realized that being under GSA list would make the firm much more competitive in winning those high value government contracts, J. D. Edwards thus changed its policy and has participated GSA services thereafter. Industry In Which The SCM Products Are Implemented: Though all six SCM vendors selected in this research declared that their SCM solutions would be a better choice to customers given their unique features, there are different levels of performance and success in the marketplace - due to different market promotion efforts and customer relationships. Based on the information collected in this research (both from survey results and Internet searches), the top winner is SAP – its SAM solutions are implemented in more industries than all other competitors. In comparison, Baan’s SAM solutions are introduced only in four limited industries. For J. D. Edwards, i2 Technologies, PeopleSoft and Oracle, the numbers of industries in which their SCM suites are installed are either similar or less. There are certainly more explanations behind those success SCM solution stories. Further research is suggested in this area for more managerial explanations.

SUMMARY AND FUTURE RESEARCH

In summary, companies of all sizes need to extract improvements in supply chain performance. Although most organizations realize that SCM initiatives can directly improve their bottom line, there is uncertainty about what kinds of investments in technology and resources are most likely to result in benefits. Given the recent development of the SCM software industry and the competition of SCM software market, as described in this research, there are a wealth of opportunities for firms to make low-cost and low-risk investments to improve their supply chain performance. Businesses can gain significant benefits with appropriate SCM initiatives. But in order for those productivity gains to materialize, requires the willingness to take incremental steps towards a global vision, the use of flexible architectures, and the ability to target specific performance improvements. Based on the primary analysis of this research, the following items are recommended to potential SCM solution buyers to look for when searching for a successful SCM solution: (1) a description of the computing environment, tools, and applications (current and planned); (2) a list of current project phases (i.e., middle of release cycle, between release); (3) a description of the current structure of the team, and its culture; (4) a description of how the software development and change process is performed (tools and process); (5) a description of what policies and procedures which are needed to put in place that will ensure to meet the objectives of the organization, and (6) a prioritized list of required features and capabilities. This would include a handful of must-haves (the things users can’t live without), and a smaller list of highly desirable items. It is important to notice that the rush by SCM vendors and consultants to capitalize on increased interest in SCM has meant that many inexperienced consultants were thrown into practice

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(Shobrys, 2003). While most of them might be computer literate, they are at a double disadvantage: they are trying to learn new technology and understand their customers’ businesses at the same time. Therefore, sole dependence on a vendor, especially one with proprietary products, makes a business vulnerable to abuse. This is the first part of an ongoing research project to empirically investigate the current stage of development of the SCM software industry. For this first part, only limited SCM vendors were selected in the questionnaire survey and Internet search - while there are many outstanding SCM solution suppliers in the marketplace. More SCM vendors will be added in the future research to enhance the meaningfulness of any research’s outcoms. Another suggestion is to look at all SCM venders for their future marketing planning in relation to the currency of the homepages of the selected SCM vendors. It seemed that most companies selected in this first part of the research were lacking in an understanding of the importance of updating their websites to the most current stage for their potential customers, especially those purchasing-oriented and customer-important data and information. In fact, it was one of the key frustrations in this early part of research that many websites of the selected companies didn’t update their homepages in a regular and timely fashion, and thus were often lacking in much important data and information. Finally, this paper presents only some preliminary results of an ongoing research project. The more completed results will be reported in a later paper.

REFERENCE

Balko, J. (2002). “Today’s supply chain software tools had better be easy to install, easy to manage, and render a quick return on investment – no room for error”.

Beck, William. (2002). “Just another Link?” Works Management; Horton Kirby. Chopra, S. and Meindl, P. (2001). Supply Chain Management: Strategy, Planning, and

Operation, Upper Saddle River, NJ: Prentice Hall. Foster, T (2002). The Supply Chain e-Business Top 100. Retrieved June 4, 2003, from

<www.schneiderlogistics.com/company_info/sli_in_the_news/ebiztop100_0802b.html>. Johnson, R. (1999). “It takes all types.” Manufacturing Systems; Wheaton, October, 1999. Krajewski, L.J. and Ritzman, L. P. (2002). Operations Management: Strategy and Analysis, 6th

edition, Prentice Hall, Upper Saddle River, NJ. Shobrys, D. E. (2003). “Investing in the chain”; APICS, January, 2003. Stang, D. and Arcuri, G. (2002). “PeopleSoft Supply Chain Management (SCM) Applications”.

Product Report. Retrieved May 4, 2003, from <http://silmaril.smeal.psu.edu/misc/supply chain_intro.html>

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Table 1: Six SCM Technologies Among Top 100 Vendors

Supply Chain e-Business Top 100

Plan

Source

Make

Execute

Manage

Sell

SAP www.sap.com X X X X X X

i2 Technologies www.i2.com X X X X X X

Baan www.baan.com X X X X X X

Oracle www.oracle.com X X X X X X

J.D. Edwards www.jdedwards.com X X X X X X

PeopleSoft www.peoplesoft.com X X X X X X

Table 2: General Information about Selected SCM Vendors

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Table 3: Major Products/Service from Selected SCM Vendors

Vendor

Founded

Header Quarter

Employees

Customers

Baan 1978 Barneveld, Netherlands N/A 15000 +

J.D. Edwards 1977 Denver, UT 5000 + 6000 +

i2 Technologies 1988 Dallas, TX 6000 + 1000 +

Oracle 1977 Redwood Shores, CA N/A N/A

PeopleSoft 1987 Pleasanton, CA 8000 1000 +

SAP 1972 Walldorf, Germany 28900 + N/A

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Table 4: Model of Delivery, Solution Package, and Language Versions

Vendor Model of Delivery SCM Solution Suite Language

Versions

Baan Available as either a Packaged application or Hosted Application (ASP)

CAPS Transportation and Logistics -Network design and optimization/-Carrier bid optimization -Transportation planning and route optimization - Advanced Planning and Scheduling/Demand planning

N/A

Vendor

Main Products & Solutions

Industries/Services

Total Revenue

Baan Customer Relationship Management Enterprise Resource Planning Supply Chain Management Product Lifecycle Management

*Aerospace and Defense/Automotive * Machinery equipment/ Electronics/Logistics * Chemicals/Food & Beverage/ Pharmaceutical * Metal, etc.

N/A

J.D. Edwards Customer Relationship Management Enterprise Resource Planning Supply Chain Management Supplier Relationship Management

* Automotive/Chemicals/ Construction * Consumer Products/ Energy /Field Service * Financial Services/High Tech / Electronics * Homebuilders/Industrial Manufacturing/Life Sciences * Mining/Professional Services/Public Services/ Paper * Real Estate/Telecomm/Utilities/Wholesale Distribution

$904 million (2002)

i2 Technologies Demand Chain Management Service & Parts Management Supply Chain Management Supplier Relationship Management Transportation & Distribution

* Aerospace & Defense/Automotive & Industrial * Consumer Packaged Goods (CPG) * Energy & Chemicals/High Tech: Consumer Electronics * High Tech: Electronics/ Manufacturing Services (EMS) * High Tech: OEM/High Tech: Semiconductor/Metals * Pharmaceutical/Retail/Softgoods/Utilities * Telecommunications, etc.

$986 million (2001)

Oracle Database Application Server Collaboration Suite Developer Suite E-Business Suite

- Asset Management - Customer Relationship MGMT - Enterprise Resource Planning - Financial Management - Human Resource Management - Order Management - Supply Chain Management - Project Management

* Aerospace & Defense/Automotive/Banking * Chemicals/Communications * Consumer Packaged Goods/Consumer Products * Education/ Energy/Engineering &Construction * Financial Services/Government/Healthcare * Higher Education/High Technology Industrial * Manufacturing/Insurance/Life Sciences * Professional Services/Real Estate * Retail /Travel and Transportation/Utilities, etc.

$10 billion + (2002)

PeopleSoft Customer Relationship Management Enterprise Performance Management Enterprise Resource Planning Enterprise Service Automation Financial Management Solutions Human Capital Management Human Resources Management Supplier Relationship Management Supply Chain Management

* Communications/Consumer Products * Energy /Federal Government/Financial Services * Healthcare/High Technology * Higher Education/Industrial Products * Professional Services Organizations * Public Sector * Staffing * Utilities/ Wholesale Distribution

$1.9 billion (2002)

SAP Customer Relationship Management Business Intelligence Enterprise Resource Planning Financial Management Human Resource Management Mobil Business Supply Chain Management Supplier Relationship Management

*Aerospace & Defense/Automotive/ Banking/Chemicals * Consumer Products * Engineering, Construction & Operations * Financial Service Provider/Healthcare * Higher Education & Research/High Tech * Industrial Machinery & Components/Insurance /Media * Mill Products/Mining /Oil & Gas/ Pharmaceuticals * Public Sector/Retail/Service Providers/Utilities

€7.4 billion (2002)

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-Tactical supply chain planning/Customer order promising - Supplier Relationship Management/Sourcing/-Procurement

i2 Technologies Available as either a Packaged application or Hosted Application (ASP)

Factory Planning and Scheduling/Collaborative Supply Management Demand Fulfillment/Demand Management Supply Management

N/A

J.D. Edwards Available as packaged application Note: according to the information on the Internet, the model of delivery from J. D. Edwards can be as either a Packaged application or Hosted Application (ASP)

Supply Chain Planning -Tactical and operational planning/Demand Management -Production and Distribution Planning/Order Promising -Production Scheduling/Logistics Management

-Warehouse and Transportation Management

Order Management -Sales Order Management/Advanced Pricing/Base Configuration -Agreement Management/Manufacturing Management -Manufacturing Accounting/-Product Data Management -Quality Management/Requirements Planning/Shop Floor Management - Inventory Management/Advanced Stock Evaluation -Bulk Stock Management/Procurement and Subcontract Mgmt

21 languages (English Chinese French, etc)

Oracle Available as either a Packaged application or Hosted Application (ASP)

Product Development -CADView-3D/Project Resource Management/Project Contracts -Project Accounts/Product Development Intelligence Advanced Planning -Collaborative Planning/Demand Planning -Supply Chain and Manufacturing Planning -Inventory Optimization/Global Order Promising Procurement -Purchasing/iProcurement/Payables/Sourcing -iSupplier Portal/Exchanging Marketplace Manufacturing -Discrete Manufacturing/Process and flow Manufacturing -Shop Floor Management/Manufacturing Scheduling -Cost Management/Bills of Materials Order Fulfillment -Order Management/Advanced Pricing/Configurator -Release Management/Warehouse Management -Global Order Promising/Mobile Supply Chain/Transportation

N/A

PeopleSoft Available as either a Packaged application or Hosted Application (ASP)

Supplier Relationship Management -Catalog Management/Collaborative Supply Management/Engineering -Payables/Purchasing/Supply Chain Warehouse -eSupplier Connection/eProcurement Manufacturing -Bills and Routines/Cost Management/Engineering/Product management -Flow Production/Inventory/Quality/SCM Portal Pack Customer Fulfillment Management -Billing/eBill Payment/Inventory/Order Management/Order Promising -Product Configurator/Promotions Management/Receivables Supply Chain Analytics -Active-based Management/Enterprise Warehouse/EPM Portal Pack Supply Chain Planning -Demand Planning/Enterprise Planning/Inventory Planning -Order Promising/Production Planning

6-8 languages (English Germany, French, etc)

SAP Available as either a Packaged application or Hosted Application (ASP)

Supply Chain Planning - Supply Chain Design/Collaborative Demand/Supply Planning

Supply Chain Execution - Materials Management/Collaborative Manufacturing - Collaborative Procurement/Collaborative Fulfillment

Supply Chain Coordination - Supply Chain Event Mgmt/Performance Management

Supply Chain Networking - Private Exchange/Enterprise Portal

65 languages (English, French, Chinese, Germany, etc.)

Table 5: Distinguishing Features, Target Business Size, and Pricing Policies

Vendor Distinguishing Features Target Business

Size

Pricing Details

Baan - Link business processes across the extended supply chain by Greater than 500 Customize

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sharing detailed, real-time information - Provide critical business intelligence at all levels in an organization, including strategic, tactical and operational

- Achieve the best combination of price, product quality, lead-time, and service

users, 100-500 users

solutions to the specific needs of customer

i2 Technologies -Design and validate a supply chain strategy before deployment

- Understand, predict and manage their customer demand collaboratively with channels and customers

- Profitably optimize supply (production, inventory, distribution and transportation) to meet demand, across multiple organizations and trading partners

- Promise orders accurately to customers and deliver them at the lowest cost of fulfillment

N/A N/A

J.D. Edwards - Help customers synchronize demand and supply - Improve the visibility and velocity of the flow of materials - Enables customer to streamline order processing and maintain visibility and control of order tracking throughout the order life cycle.

- Immediate access to current item information at the inventory locations worldwide

Greater than 500 users, 100-500 users

$100,000 to indefinite

Oracle - Lower customer’s costs by reducing inventory - Increase your velocity by enabling real-time collaboration - Drive your revenue by meeting customer quality and delivery commitments

N/A N/A

PeopleSoft -Extends your supply chain in real time by connecting suppliers and customers with company business processes.

-Provides integrated spend management for all categories of goods and services.

-Delivers embedded analytics to monitor supply chain performance and adjust as conditions and business goals shift.

300 – 400 users More than $300,000

SAP -Deliver powerful coordination capabilities that track financial, informational, and materials processes and identify processing exceptions.

-Help to transform linear, sequential supply chains into adaptive supply chain networks that promote a distributed, dynamic environment.

-Departments, business units, and companies gain greater visibility into inventory, planning, and scheduling, allowing them to anticipate problems sooner, adjust schedules and transactions quickly, and manage the extended supply chain more proactively.

Greater than 500 users, 100-500 users

$100,000 to indefinite

Table 6: Operating System, Database, Network, and Programming Language Supported

Operating Systems Database Network Program

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Supported Supported Supported Language/

Internet Protocol

Supported

Baan WindowsXP/2000/NT Windows95/98/ME

IBM DB2 Microsoft Access Oracle Microsoft SQL Server

N/A N/A

i2 Technologies Windows2000, Microsoft NT/Intel, Sun Solaris, HP-UX, IBM AIX, Dell Server

IBM DB2 Oracle Microsoft SQL Server

N/A N/A

J.D. Edwards Windows XP/2000/NT HP/UX, IBM AIX Solaris/Sun OS, UNIX, Compaq Tru64

IBM DB2 Oracle, Sybase, Microsoft SQL Server, Access

Token Ring MS-NT Server Ethernet

Java, JavaScript, HTML, C/C++, XML. VBScript

Oracle IBM AIX, Compaq Tru64, Unix, HP-UX, Linux Intel, Windows NT, Sun Solaris Intel, Sun SPARC Solaris

IBM DB2, Oracle, Microsoft SQL Server

N/A Java, JavaScript, HTML, DHTML, XML, XHTML

PeopleSoft WindowsNT4/2000 Solaris 7 and 8 HP-UX 11 IBM AIX, Unix, Compaq Tru64 Red Hat Linux

Microsoft SQL Server IBM DB2 Oracle Sybase Informix

N/A HTML, C/C++, Java, JavaScript, XML

SAP Windows2000, Microsoft NT/Intel, Sun Solaris, HP-UX, IBM AIX, Compaq Tru64, Unix, etc.

Microsoft SQL Server, IBM DB2 Oracle, SAP DB Informix, Access

TCP/IP, NT Server, Ethernet

C/C++, JSP, Java, JavaScript, VBScript, XML, HTML, WAP

Table 7: Implementation, Training and Support Description Implementation

Description

Training Description Support Description

Baan - IT Provider installation and Some training recommended- - Website support-product support

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configuration; - IT Provider assistance in configuration; - Customer installation and configuration

some training from the IT Provider/reseller

questions, knowledgebase, are available at the website; - Email support-questions can be sent directly to a support staff for review; - Telephone support-calls can be placed directly to a support staff; - On-site support-a representative from IT Provider/reseller can come to the site

i2 Technologies

N/A Some training recommended-some training from the IT Provider/reseller ; Public class training and Web Based Training are offered.

- Website support-product support questions, knowledgebase, are available at the website; - Email support-questions can be sent directly to a support staff for review; - Telephone support-calls can be placed directly to a support staff; - On-site support-a representative from IT Provider/reseller can come to the site

J.D. Edwards - IT Provider installation and configuration;

Some training recommended; Educational offerings are designed to meet just-in-time requirement, include web conferencing, and web-based training.

- Website support-product support questions, knowledgebase, are available at the website; - Email support-questions can be sent directly to a support staff for review; - Telephone support-calls can be placed directly to a support staff; - On-site support-a representative from IT Provider/reseller can come to the site

Oracle N/A -Online learning - iLearning -Training partners - On-site training

-Website support-product support questions, knowledgebase, are available at the website; - Telephone support-calls can be placed directly to a support staff; - On-site support-a representative from IT Provider/reseller can come to the site

PeopleSoft - IT Provider installation and configuration;

-Training Center Worldwide is provided; -On-site training -Training online (eLearning) -Computer-based Training

-Website support-product support questions, knowledgebase, are available at the website; - Email support-questions can be sent directly to a support staff for review; - Telephone support-calls can be placed directly to a support staff; - On-site support-a representative

SAP - IT Provider installation and configuration; - IT Provider assistance in configuration; - Customer installation and configuration

-Training Center Worldwide is provided -On-site training also available -E-learning

-Website support-product support questions, knowledgebase, are available at the website; - Email support-questions can be sent directly to a support staff for review; - Telephone support-calls can be placed directly to a support staff; - On-site support-a representative