Skip to content
Search AI Powered

Latest Stories

basic training

on-demand supply chain management

For the last couple of years now, a concept called on-demand supply chain management has been rattling around the business. But what does it mean?

For the last couple of years now, a concept called on-demand supply chain management has been rattling around the business. But what does it mean? Is it about physical supply chain management? Is it about information systems? Or is on-demand an invented term to superficially differentiate service offerings in the marketplace?

Two principal schools claim the on-demand domain, and they are radically different. One, led by IBM, stakes out its territory in the realm of supply chain operations and the development of ondemand businesses. The other promotes "on-demand" supply chain management software, with GSX, Mitrix, and Kinaxis among the leading early providers. More new entrants in the on-demand derby pop up every day, it seems. The software is typically accessed through the Internet, with costs based on usage, rather than on the traditional license-and-maintain model.


Aberdeen Group, the respected research organization, has chosen the software path and has reported positive developments in the use of what it calls software-as-a-service (SaaS). Its position is that early adopters of on-demand supply chain software are also early beneficiaries of lower costs, faster implementations, and quicker returns on investment (ROI).

In fact, Aberdeen reports that over half of its survey population is considering on-demand applications for at least a part of their total supply chain management suite. It also says that companies can be up and running with on-demand software in as little as three months and realize an ROI in less than a year—all at a significantly lower total cost when compared to the traditional model.

Current on-demand solutions are not expected to replace traditional applications, but they may be finding favor with small and mid-sized businesses by bringing them into a milieu in which only larger companies could previously afford to play. According to Aberdeen, functions currently available include forecasting, customer inventory management, supply chain visibility, and transportation management in customer- and supplier-facing applications.

But what does it do?
The software developers appear to have a somewhat grander view of their landscape than the consulting community does. Each seems to define on-demand supply chain management to fit the limitations of its particular product sets. And it takes a close reading of the developers' materials to work through the extravagant language and ferret out what the software really does.

One firm promotes its product as "revolutionary" and a "first-ever," with "critical functionality." The core premise is the creation of trading communities and the provision of information about inventory availability, inbound shipments and open purchase orders, outbound sales orders, forecasts, and target inventory quantities.

Another software and services provider focuses its on-demand supply chain management solutions on business-to-business cross-enterprise process coordination and simplification. Apparently aimed at somewhat larger companies, its products typically support demand planning, product development, and marketing and sales.

A third provider takes another tack, concentrating on support for supply chain agility, with a manufacturing focus. The high spots include real-time visibility into systems throughout the supply chain, alert and event management capability, change-impact analysis, what-if analysis, and collaborative scorecarding. The vendor is clearly positioning this product for decision support in a rapid-response world.

The point is that even when dealing solely with software, we do not have uniform definitions of ondemand supply chain management. Then, there's the operational perspective.

Big Blue speaks
If IBM were just another small consultancy, it would be easy to dismiss its position and concentrate on the software aspects of on-demand supply chain management. But it's not. With an army of thousands of consultants and an enormous marketing budget, IBM cannot be ignored.

IBM has been promoting the concept and language of ondemand business for some time now. Even if it is merely marketing hyperbole, it is powerful: IBM contends that the process of energizing the supply chain is the key to enabling the on-demand business—transforming the base model for sustained, and sustainable, competitive advantage.

Its 2006 CEO survey showed responsiveness to be the number two issue, after growth. Eighty percent of the respondents rated their companies as "less than capable" in responding to changing conditions and supply chain events. That assessment is interesting in light of the attention given to the subject of agility in recent years (to say nothing of Yossi Sheffi's wake-up call of a book, The Resilient Enterprise.)

IBM has focused on responsiveness and the on-demand concept after recognizing the impacts of major business trends, including increasingly demanding customers; shrinking product life cycles, with innovation and speed to market as make-or-break factors; supply chain complexity, including globalization; physically extended supply chains involving more players; prevalence of e-business techniques and transactions; and unrelenting pressure for cost cutting.

Its vision for on-demand supply chains embraces four key capabilities:

  1. Dynamic—and fast—response to events and changing conditions
  2. Open architecture systems infrastructure, with realtime visibility throughout the supply chain
  3. Adaptability to seize market opportunities quickly
  4. Variable cost sensitivity, moving up or down, based on revenue.
  5. A fifth element may be the development of sense-andrespond capability to monitor and manage exceptions as well as to respond to—or even influence—demand shifts.

    Other features of the on-demand supply chain from this operational perspective include online and real-time order configuration, updates, and status; scalable infrastructure; dynamic product/service bundling; and tight integration with supply chain partners in the areas of technology, communications, information, and planning.

    Of course, IBM's process for determining where a company is, relative to on-demand status, and what it has to do to move up the scale is designed to generate any number of consulting projects. That is to be expected.

    In IBM's view, the on-demand supply chain and the ondemand business are the next steps in the evolution of enterprises, taking the flexible and collaborative business to another level of technology-enabled integration. It argues—emphatically—that, ultimately, on-demand is not an option, but a necessity.

    How we see it
    On-demand supply chain management is here to stay, no matter how it is defined or what it is called. On the software side, we appreciate the continuing development of better and better tools made available to broader markets.

    On the physical side, the concepts IBM espouses are both solid and indicative of the direction that our supply chain world needs to travel. No matter that the concepts are being used to provide gainful occupation for all those consultants; that doesn't mean that they're wrong.

    Whether all of us will include on-demand supply chain management in our professional vocabularies remains to be seen. We're reasonably sure that we'll be using the concepts and the tools in some form or another.

The Latest

Artificial Intelligence

AI: Is it the real deal?

More Stories

Logistics economy picked up speed in January

Logistics Managers' Index

Logistics economy picked up speed in January

Economic activity in the logistics industry expanded in January, growing at its fastest clip in more than two years, according to the latest Logistics Managers’ Index (LMI) report, released this week.

The LMI jumped nearly five points from December to a reading of 62, reflecting continued steady growth in the U.S. economy along with faster-than-expected inventory growth across the sector as retailers, wholesalers, and manufacturers attempted to manage the uncertainty of tariffs and a changing regulatory environment. The January reading represented the fastest rate of expansion since June 2022, the LMI researchers said.

Keep ReadingShow less

Featured

Disrupting the furniture supply chain: An interview with Jay Rogers

Disrupting the furniture supply chain: An interview with Jay Rogers

As commodities go, furniture presents its share of manufacturing and distribution challenges. For one thing, it's bulky. Second, its main components—wood and cloth—are easily damaged in transit. Third, much of it is manufactured overseas, making for some very long supply chains with all the associated risks. And finally, completed pieces can sit on the showroom floor for weeks or months, tying up inventory dollars and valuable retail space.

In other words, the furniture market is ripe for disruption. And John "Jay" Rogers wants to be the catalyst. In 2022, he cofounded a company that takes a whole new approach to furniture manufacturing—one that leverages the power of 3D printing and robotics. Rogers serves as CEO of that company, Haddy, which essentially aims to transform how furniture—and all elements of the "built environment"—are designed, manufactured, distributed, and, ultimately, recycled.

Keep ReadingShow less
chart of GenAI effect on workforce

Gartner: GenAI tools create anxiety among employees

Generative AI (GenAI) is being deployed by 72% of supply chain organizations, but most are experiencing just middling results for productivity and ROI, according to a survey by Gartner, Inc.

That’s because productivity gains from the use of GenAI for individual, desk-based workers are not translating to greater team-level productivity. Additionally, the deployment of GenAI tools is increasing anxiety among many employees, providing a dampening effect on their productivity, Gartner found.

Keep ReadingShow less
warehouse worker driving forklift between racks

German 3PL Arvato acquires two U.S. logistics firms

The German third party logistics provider (3PL) Arvato this week acquired the U.S.-headquartered companies Carbel LLC and United Customs Services, saying the move would grow its client base, particularly in the fashion, beauty, and lifestyle segments.

According to Arvato, it made the move in order to better serve the U.S. e-commerce sector, which has experienced high growth rates in recent years and is expected to grow year-on-year by 5% within the next five years.

Keep ReadingShow less
photo collage of warehouse tech

Supply chain pros are wary of inflation and labor woes

The top worries that supply chain leaders hope to address with new innovations this year include inflationary concerns (68%) and labor shortages (50%), according to a survey on innovation from the third-party logistics provider (3PL) Kenco.

And many of them will have a budget to do it, since 51% of supply chain professionals with existing innovation budgets saw an increase earmarked for 2025, suggesting an even greater emphasis on investing in new technologies to meet rising demand, Kenco said in its “2025 Supply Chain Innovation” survey.

Keep ReadingShow less