A Simple Plan

Trimming costs was a priority for supply chain operators in 2003, with consumer products companies seeking to squeeze dollars out of processes at a time when the competitive market offers few alternatives for generating big revenue gains. With their proven return on investment, supply chain execution projects were a focus, but supply chain planning investment also continued where it could be shown to play a role in cutting costs.

Though many call the 1990s focus on supply chain planning over-hyped and over-promised, consumer products companies are now building on that infrastructure and adding functionality. This era's supply chain planning projects, though, are undertaken in a more measured way, with return on investment and rapid rollout assured from the outset.

Advanced Planning Emerges

"Supply chain vendors are putting distance between the old concepts of planning and optimization, as optimization engines and Advanced Planning and Scheduling (APS) functionality become a platform," says Vinay Asgekar of AMR Research in a Sept. 12, 2003 Alert. "Vendors are now positioning their new products to use the base investments in supply chains to gain quick returns," with more focus on continuous planning.

Developer-Delivered Implementations Increase

Developers have ratcheted up their array of services to aid companies in re-engineering business processes, managing change and implementing their software, a function performed more often by third-party consultants in the past. ERP vendors in particular beefed up supply chain planning suites and services in the wake of declining software license revenue, according to ARC Advisory Group.

ERPs Making Inroads

ERPs have managed to capture some market with their holistic approach to supply chain planning, says Steve Banker, service director, supply chain management at ARC Advisory Group. While users think of best of breed vendors for point solutions, ERPs such as SAP, "talk about order to case cycle or procurement to pay cycles. That resonates pretty well" with users.

Promotion Planning Rises

After years of haphazard management, vendors and users alike began to apply technology to new product, promotion and price planning and to trade management, to more effectively plan, analyze and direct precious dollars.

Vendor-Managed Inventory Growing: Retailers are increasingly demanding that CPGs engage in VMI for replenishment of basic items, and their partners are complying by building up their VMI capabilities, according to AMR Research. Manufacturers aren't yet convinced they get a true return on the investment in Collaborative Planning, Forecasting and Replenishment (CPFR), says ARC's Banker.

2003 Key Highlights

Agilysis completed its first year in business in June. The company also unveiled two new product additions, Web Viewer for ERP and Web Viewer for Advanced Scheduling, offered free to its customers. Customer wins included Foster, King & Prince Seafood, Twin City Foods and Gold'n Plump Poultry.

Demand Solutions introduced its first non-Wintel, Java-based solution, Demand Solutions enterprise, first unveiling forecasting capability, with others to follow. Demand also debuted a new integration tool and version 9 of its Demand Solutions with major overhauls of several key modules. Major customer wins include La-Z-Boy, Stanley Home Products and Thermo King.

i2 Technologies released i2 Six, offering revenue and profit optimization, spend optimization, production optimization, fulfillment optimization and logistics optimization. Optimization, says i2, can only be accomplished by tying planning to real-time plan execution.

In October, i2 and Transora, a provider of data synchronization and collaborative commerce technologies, announced the completion of Trabsora's certification of i2 solutions on the Transora Data Synchronization Network. The certification verifies that the Transora Adapter, co-developed by i2 and Transora, can enable manufacturers of consumer packaged goods, hardliness and consumer electronics to gather and prepare item information required for data synchronization behind the firewall and then upload it to the Transora Data Synchronization Network for forwarding on to individual customers.

Engaging Purchase

In 2003, JDA Software acquired the enterprise advertising, marketing and promotion software of Engage Inc. and the collaborative commerce solution assets of Vista Software Solutions, as well as releasing new functionality and enhancements to Collaborative Solutions suite. New customer wins included Pharmavite LLC, Swedish Match North America and Miller Brewing Company.

Manugistics released a trade funds optimization solution to enhance forecasting and analytic reporting through a partnership with CAS. Customer wins for Manugistics included McCormick, H.J. Heinz, and BEL Group.

Mid-year, Oracle announced its intention to acquire Peoplesoft. While acquisition squabbles were underway, the company reached the 550 milemark in the number of users for its Advanced Planning application, with users including Canon Virginia Inc. (CVI).

Peoplesoft released its Supply Chain Planning 8.8, comprising demand planning, inventory policy planning and supply planning applications, with the supply chain planning solution built on the same data warehouse as transactional systems. Peoplesoft says its acquisition of J.D. Edwards bolstered its advance planning, asset management and process manufacturing functionality.

Prescient's Plan

Prescient released version 5 of its supply chain planning suite, adding functionality for new product introductions, promotion management and performance measurement, as well as new capabilities in data synchronization and SQL support to ease collaboration. Customer wins included Duane Pet Care and distributors Maurice Sporting Goods and TSN Incorporated.

SAP released the latest version of its supply chain management suite in June, attracting customers including Kimberly-Clark Corp. and Brown-Forman with features such as 20 new processes and more than 30 process enhancements, vendor-managed inventory, supplier-managed inventory and trade promotion management.

Future Adoption

Supply chain planning appears poised to continue its slower pace of adoption. ARC Advisory Group predicts the $1.9 billion worldwide supply chain planning and collaboration market will grow at a 2.8 percent compound annual rate, reaching $2.19 billion by 2008. Additionally, AMR Research forecasted a 5 percent annual growth rate for supply chain planning applications.