The economy's humming, and there's money in your it budget for the first time in years. But if you're tempted to go out and blow a bundle on software, hold that thought. Chances are, you already have all the apps you need. What you might not have—and what you will most assuredly need—is an information technology platform that ties together all the programs, big and small, running in different sections of your supply chain. That way, you have more hope of getting data to flow from suppliers, distributors, wholesalers and retailers and back again without constant human prompting.
But where do you start? How do you go about weaving together the tangled strands of your information sources? For many companies, the answer lies with their existing software vendors. As unlikely a proposition as it may seem, these vendors often prove willing to help integrate their own systems with those from other vendors.
Consider, for example, the experience of Family Dollar Stores Inc., the second largest dollar store chain in the United States, which turned to one of its software vendors, G-Log, when it needed help with integration. Family Dollar Stores wanted to feed information from its order management and transportation appointment systems into G-Log's GC3 logistics planning and management system. Even though the first was from another vendor, Retek Logistics Solutions, and the second a homegrown mainframe affair, G-Log was more than happy to oblige.
G-Log's director of product marketing, John Murphy, says this is just a reflection of a general market trend—part of G-Log's job these days is dealing with other people's software. "There's more strategic integration. It's an overall market indicator," says Murphy. "There's more IT money, and organizations are looking at their overall IT infrastructure and design and asking for systems integration help."
With data about the movement of goods pouring in faster and in greater detail than ever before, companies will scurry to build and maintain infrastructures that support the smooth exchange of information between software systems not only inside a company but outside as well. All players in the supply chain game will need greater integration of systems to make the most of all that real-time data.
"If you take the average IT budget and look at the proportion spent on applications versus infrastructure, in the next few years, the portion spent on infrastructure will go up in inverse proportion to that spent on applications," says Eric Austvold, research director focused on enterprise applications and technology strategies at AMR Research Inc. in Boston. "The applications people have are probably enough for now. But in order to coordinate the relationships between all the trading partners, you need a level of technology that sits on top of that that helps [create] a symbiotic working together of all the technologies."
Family Dollar's transportation project manager, Helen Crotty, certainly sees benefits from weaving together the different supply chain software systems her company uses. The company generates appointments for warehouse delivery in the mainframe, which—thanks to integration—are now sent back over into the G-Log system, where the software automatically sends out a tender to a selected carrier. "That has really streamlined our process nicely," Crotty says.
The G-Log system now also corrals cargo receiving information from the mainframe, making for accurate estimates of when an empty trailer needs to be picked up and again sending notice to the carrier. On the imports side, Crotty has overseen a tie-in between one of the company's freight forwarders, Globe Express, and the GC3 system, enabling her to track how vendors are delivering against purchase orders and deadlines. The freight forwarder generates information about milestones—departure from a foreign port, Customs clearance and so on—which give the GC3 system more data to crunch in planning and managing the logistics network.
Is it difficult to get systems to talk? "It can be," says Crotty, explaining that it's tough to get the right data flowing from the right sources into the right places in order to mimic the actual flow of goods. "The main thing I find is that you've got to be able to do a lot of testing. You've got to think through every scenario and even replicate those scenarios. It can be difficult to go in and manipulate data to get it to represent the scenario we want."
Crotty believes using an outsider to help with integration was the right short-term solution for Family Dollar, but for deeper integration, she plans to use her in-house IT capabilities. "We couldn't have gone this far in this timeframe without G-Log. They've written 90 percent of our integration," Crotty says. "But our plans going forward are to build the skill set internally. We think it's important to be able to support that internally. Especially in transportation, the environment is ever-evolving. You want to be flexible, upgrade systems and make changes. In the long term we feel it's better to own that skill set."
Ins and outs
Gough Grubbs, head of logistics at Stage Stores Inc., a Houston-based department store owner, has also taken the hybrid approach, tackling much of his systems integration work in-house but also outsourcing where expedient. For example, Grubbs relied solely on in-house resources when it came to tying his RedPrairie transportation management system (TMS) to his warehouse management system (WMS) in order to generate an appointment schedule for pickups from the warehouse dock. "You're just making sure that the data can be handed off from one process to the next, making sure you match all the fields," he says. Grubbs said he felt confident about tying those systems together because he'd built schedules manually for years, so he understood the business processes involved and how information should flow from one system into another. "Now you let systems talk to systems, and they do the same thing, where before a person had to take data from separate sources and compile it all manually," Grubbs says.
Grubbs says he was helped by knowing the processes controlled by warehouse and sorter management software from when they were tracked with Excel spreadsheets and Access databases. It also helps that computer programs simply talk to one another more easily these days, because of common languages like XML (eXtensible Markup Language). "Interfacing is becoming so common that everybody does it now and it's minimizing the differences in platforms," Grubbs says. "There was a time when you could only look at a product if it was on the same platform [as others in use]. That's no longer a critical factor."
His successes notwithstanding, Grubbs didn't hesitate to call in an outsider when it came to a knottier integration problem. Grubbs used an outside software vendor—Real Time Integration Inc. (RTI), based in Melbourne, Fla.—to weave together information from Stage Stores' merchandising system, which handles pricing and orders from suppliers, with a new warehouse management system. Both these systems are from Retek, but RTI provides the control for the automated sorters in the warehouse, a process that sits between the two. Stage Stores had been working with RTI sorters since 2000, so it was a natural step for Grubbs to ask RTI to help make everything fit together when he decided to install the new WMS earlier this year.
Grubbs says he went with RTI after seeing the company improve the sorter system over the preceding two years. "When we introduced the WMS system, we had to maintain the sorters but tell the WMS what we were doing, in order to gain many of the advantages of a WMS. This meant huge complexity for RTI," Grubbs says. "Now, we can do in-house audits, cycle counts—we can carve out designated stores and stop the flow of goods and dollars and do inventory for that one store without compromising the flow of inventory to anyone else. That's worth a lot."
The increased communication between Stage Stores and its upstream suppliers and downstream customers has helped Grubbs fine-tune some business processes, he says. "This is a very key point to the success that we've had with the WMS. We learned as we found out how it works that the buyers needed to know more about how the product was packaged and shipped than they had needed to know before. If you continue to process in the old way," Grubbs says, "you don't reap all the benefits."
Grubbs adds that the TMS system has opened up opportunities to collaborate with vendors, too. "These new [truck driver] hours of service rules make things like pickup a lot tighter. Now they're being forced to anticipate not only schedules, but the cube [volume] of a trailer. We're surprised how many vendors don't know how to calculate cube," Grubbs says.
Integrating WMS and TMS to give a full picture of the cargo—how much there is, when it's going to be ready for pickup and so on—makes working with suppliers and buyers much easier. "I know collaboration has been a buzzword for a while, but now it's being forced as an issue because of the cost implications of not having it," says Grubbs. "So those who don't have systems in-house for doing that are probably being driven to consider it if they want to compete in the big world."
That notion is seconded by Austvold, who sees integration as a necessity for anyone who hopes to keep up with the sea changes taking place in supply chain management and logistics. "We're seeing a shift where manufacturers are looking to move away from an algorithm-based planning system into which you feed data and it comes up with a forecast," says Austvold. "They're looking to augment that with real-time data feeds—such as RFID tags that capture the selling of a product as it goes through, giving feedback to the manufacturer in real time. This will have a huge impact on manufacturing strategy, especially the international ones who have to decide whether to have goods finished in China or postpone final assembly to somewhere closer to where the end customers are," he says. "This is going to have a profound impact on logistics scenarios."