Fatal Flaws in ERP Software Create Opportunity for Niche Software in CPG Companies

After companies purchase an enterprise resource planning (ERP) system they may discover that the ERP software fails to provide all of the functionality their business requires. These shortfalls have been characterized as "fatal flaws". If a company uncovers a fatal flaw in their ERP software they have three choices: keep their paper-based and labor intensive system, develop in-house software or, look for niche software to "bolt on" to their ERP software. Some consumer goods product (CPG) manufacturers find themselves looking for niche software when they look to improve the operation of their back office functions relating to pricing, trade promotion, and trade receivables after discovering that their ERP system does not provide the depth of functionality needed to completely manage their business issues.

*In Memoriam

An Example Business Problem

If we take a CPG example from the food industry, the pricing methods have evolved into a complex set of business processes that often go beyond the scope of normal ERP functionality. Generally, food manufacturers have a national invoice price for each SKU they produce. The net they ultimately receive for their product is reduced from the national invoice price three factors: "invoice deviations" which are list price concessions that appear on the invoice, "after invoice deviations" which are rebates set up as invoices from distributors, retailers, or foodservice end users for promotional programs tied to product sales; and "trade promotion payments" tied to direct marketing expenses like retail slotting allowances to get shelf space for a product or entrance fees to trade shows.

In the back office operation, all reductions in the net price have to be planned, approved, and tracked to determine their impact on sales. After invoice deviations and trade promotion commitments must also be accrued as liabilities to ensure that they are reflected in financial reporting. The issue of "deduction management" comes up because the back office process actually involves two payment streams—one from the customer to the manufacturer for product sales and the other from the manufacturer to the customer for promotional activities. Often, the customer deducts their claim for promotional activities directly from the manufacturers product sales invoice.

When the complexity of the pricing programs is combined with the complication of deductions the back office operations of food companies can become a quagmire.

For Harold Rosemann, the CFO at Salt Lake City, Utah (US) at Cookietree Bakeries, managing the process of tracking promotion planning to sales results is a critical area. Rosemann wants, "to know how our promotional spending is impacting our sales results, but we also need to keep ahead of our short paid invoices." For requirements like Rosemann's software vendors need to have both promotional planning and deduction management functionality. It is this combination of functional depth that is often difficult to find outside of niche vendors.

Software Vendor Solutions

Software vendors are attacking back office CPG issues in different fashions. As expected, niche software solutions are more focused on industry and segment specific issues.

General ERP vendors all provide pricing management functionality but may not address industry specific issues. Process industry ERP vendors have more experience with the specific industry issues and may include more detailed functionality by industry but may have specific strengths in particular market segments where they have existing clients. Traditional customer relationship management (CRM) vendors are expanding into trade promotion from their traditional account management or call center applications. Like the general ERP vendors, their solutions tend to be broad-based. The following chart illustrates the relationship between the depth of functionality and the breadth of offering of software vendors relating to food industry pricing and trade promotion management:

Niche vendors utilize industry-specific functionality to compete with global vendors. Alex Ring, president of the Synectics Group in Orefield Pennsylvania (US), which is a provider of trade promotion management (TPM) software observes that, "Generic software does not meet the unique needs of CPG. Food is different than hardware, and within food, retail and foodservice are different. As a result there are significant differences in the functional requirements for CPG/TPM software".

Companies that have identified a "fatal flaw" in their ERP usually have very specific requirements for the functionality they need. Dean Abrams, the Senior Vice President Sales and Marketing for Carrollton Texas (US) which is a sales information vendor information retrieval methods (IRM), which provides sales promotion software to the CPG and foodservice industries, finds that in a specialized software niche, "there is a fine line between a packaged solution and one-off custom development". "We understand the foodservice segment but not everyone in foodservice has identical functional requirements." Abrams' point is that niche vendors have to walk that fine line giving companies depth of functionality they need without moving into creating custom software.



SOURCE:
http://www.technologyevaluation.com/research/articles/fatal-flaws-in-erp-software-create-opportunity-for-niche-software-in-cpg-companies-17253/

Dealing with Global Trade Management Complexity

The moves of JP Morgan Chase and TradeBeam, and their respective acquisitions, as discussed in Market Leaders of Global Trade Management of this note, indicate that the global trade management (GTM) space is consolidating and that point solution providers are disappearing. Leaders like JP Morgan Chase and TradeBeam understand that to truly improve global trade, one must be able to manage both the physical and the financial supply chain across the entire trade transaction. The physical supply chain consists of export/import compliance, document management, shipment tracking, supply chain electronic management (SCEM), inventory management, global parts management, security management, and contract management. The financial supply chain refers to tasks such as purchase order processing, letter of credit (LC) management, open account management, pre- and post-shipment financing, reconciliation, invoice presentment, dispute management, foreign exchange, and insurance management (See figure 1).

As for the acquisition of Open Harbor by TradeBeam, product integration should be complete by the second half of 2005, and TradeBeam pledges to maintain uninterrupted service and support for a key group of Open Harbor clients during the immediate transition phase and post contract execution. TradeBeam has also been engaged in discussions with Open Harbor's customers to understand their specific circumstances, the scope of their projects, and to jointly agree on terms to work together to ensure alignment of business goals. GTM is a new and potentially very large enterprise applications space that has been compared by some to be the next corporate paradigm after enterprise resource planning (ERP). TradeBeam is considered a thought-leader because of its significant "first mover" advantage. It has had a few years head start compared to most competitors, and began with an "end-to-end" GTM portfolio, and did not retrofit its solution onto other "cousin" enterprise applications. So far, TradeBeam has an impressive functional scope, and it promises much more in the future.


Figure 1: Physical and financial solutions value chart (Source: TradeBeam)

Some enterprise applications, such as international trade logistics (ITL) and GTM simply seem to lend themselves well to a hosted model. Because of their widespread nature, they can not efficiently work the other way. Namely, global import/export "procure-to-pay" or "order-to-cash" processes entail a number of activities, such as source suppliers and customers; process purchase and sales order; insure goods; issue and receive LC; finance trade; arrange shipping; create trade documents; customs compliance export/import; send and receive goods; send and receive invoice; reconcile; and initiate and receive payment (see figure 2).

On a more granular level, these activities belong to the following sub-processes:

* order—includes plan demand needs, manage bills of materials (BOM), manage product catalogs, check inventory status, create purchase orders, check compliances, manage inventory, manage purchase orders, assess supply chain management (SCM) risk, acknowledge order, classify goods, calculate landed costs, manage contract, insure goods, and obtain credit insurance

* finance—apply and manage LC, manage documents collection, manage open account, request financing pre- and post-shipment, check compliance, assess SCM risk, and arrange foreign exchange

* ship—request booking, ship book, create ship notification, create shipping documents, manage shipping notification, manage shipping guarantee, track shipments, manage events, assess SCM risk, manage customs, clear customs, receive goods, and manage returns

* settle— create invoice, present invoice, reconcile documents, manage disputes, prepare documents, present documents, manage insurance claims, and receive remittance

In any case, many of these could only be efficiently fulfilled through a Web-based hosted solution, priced per transaction. To optimally complete the global trade cycle, a business must automate, track, and provide visibility to the entire GTM process to optimize its supply or distribution chains.

The average global trade cycle of order through settlement is 120 days, whereas a comprehensive hosted GTM solution like the one from TradeBeam can reduce this cycle by an average of 12 days, which can improve users' cash flow by 10 percent or so.


Figure 2. Global order-to-cash and procure-to-pay cycle

This is Part Five of a six-part note.

Part One defined GTM.

Part Two discussed the tradeoffs.

Part Three addressed managing global trade flows.

Part Four presented the GTM leaders.

Part Six will present challenges and make user recommendations.

Web-Based Tools

The number of users wanting solutions delivered over the Internet with monthly subscriptions or transaction-based fees has noticeably increased. Most new customers want a transaction-based model rather than a straight purchase with a big, upfront, payment (see Trends in Delivery and Pricing Models for Enterprise Applications). Moreover, an enterprise-wide, on-premise approach to global trade and logistics might not be the best approach because of high costs and implementation difficulties. In fact, products with the broadest appeal for global trade today appear to be hosted, web-based solutions that allow companies to go outside their firewall to deliver supply chain visibility, event management, multimode logistics execution, import and export management, and trade security to enterprise shippers.

Such a web-based tool is not just the choice for connecting to far-flung carriers, forwarders, and other service providers, but is often a better approach than ERP-oriented solutions for trade compliance and documentation. This is largely because ERP systems usually only have product marketing descriptions in their item master data, not technical descriptions needed for regulatory compliance. So, for example, if Apple Computer is importing PowerBooks, its name and associated marketing description would not be adequate for US Customs. Trade compliance applications should be able to take the marketing description off of the purchase order and associate it with a commercially acceptable description and the correct Harmonized Tariff Schedule (HTS) classification. For example, the system should list the PowerBook as a laptop computer with certain features and specifications, and the right HTS code number.

Further, complying with the 24 Hour Rule, and based on the importer's purchase order, and the information about the customers' products, the application should be able to create the shipping instructions for the forwarder and send it to the carriers for their manifest. Thus given all the information that needs to be complied, a web-based system, connected to trading partners around the world, should be faster, easier, and better than taking an enterprise-based system and trying to turn it into a global logistics system. Enterprise-based systems are notoriously difficult to integrate with a large network of users. Also, hardly any company would want its ERP master data going directly to vendors. It is far more secure to have a system that takes only the absolute necessary data from the ERP or back-office system to share with the supplier.

In the case of TradeBeam, the company has been striving to distinguish itself from peers and competitors by offering more than the mere ability to track orders and shipments, by aiming to improve all three groups of activities that make up a global trade—the order, the shipment, and the financial settlement. It has designed several so-called "solution blueprints" for solving specific global trade issues, ranging from providing import shipment visibility and trade compliance to eliminating financial discrepancies while managing LC. TradeBeam's Solution Blueprints begin with the key pain points of global trade and identify tools and strategies available to corporations seeking the advantages of the value of optimized GTM. They include an on-demand set of GTM applications that individually might contribute significant value to a corporation while solving specific event management problems. This supply chain monitoring system enables businesses to proactively monitor their supply chain performance by automatically alerting users to exceptions in the order fulfillment process. TradeBeam harnesses data to provide integrated decision support to give managers their best response to out-of-tolerance situations pertaining to order execution and fulfillment. TradeBeam provides near real-time monitoring, measuring and visibility of order and shipment tracking across the entire global supply chain.

Competitive Landscape

Although the TradeBeam's solution has been (and will be) indisputably competitive, especially in light of Vastera's logistics product gaps, the GTM market is characterized by early adopters and is rapidly evolving. Even a company of TradeBeam's current stature—one with several years of existence, less than $20 million (estimated) in annual revenues, an immaculate financial position, and a slew of marquee customers—might not be able to maintain its competitive position against current and potential competitors in the long term, especially against international brokers, freight forwarders, logistics companies, and other companies with greater financial resources, name recognition, and other resources. Competition might also come from in-house development efforts, consulting companies, other software companies, and third-party development efforts. The market is competitive, rapidly evolving, and highly fragmented, and one should only expect the intensity of competition to increase in the future.

Just as banks, such as JP Morgan Chase, are changing their roles, so will the roles of third-party logistics (3PL) providers, which are focused predominantly on the management of the shipment bookings through proof of delivery process and logistics costs management. As user companies continue to embrace the value of broader GTM solutions, logistics providers will be looked upon to provide leadership and to add more value to the entire order life cycle, including purchase order management, total landed cost modeling, insurance and claims, import/export compliance, security regulations, and more seamlessly integrate invoice reconciliation and trade financing systems.

Like other parties in global trade, 3PL providers must still mitigate their risks of providing correct and timely documentation relative to documents for transportation, customs, and settlement, such as LC. They will also be liable for trade compliance issues such as denied parties and anti-boycott and will need a corporate wide solution to protect them from liability. TradeBeam will likely prefer to partner with banks, 3PL providers, or even some logistics management vendors like G-Log or Xporta, given the currently complementary nature of their offerings. These entities, however, might likely decide to grab a bigger slice of the GTM pie through acquisitions such as that by JP Morgan Chase of Vastera or through in-house developments and competency building.


SOURCE:
http://www.technologyevaluation.com/research/articles/dealing-with-global-trade-management-complexity-18010/

Comparing On Demand Customer Relationship Management Service Alternatives

In a recent Forrester Research report, it was noted that while functions and features are important in selecting customer relationship management (CRM) software, they are not the "be-all and end-all" deciding factor.

It was also noted that when organizations looked back in terms of the criteria they used, or would use, to select CRM software, product capabilities were not nearly as important as most users initially thought they were.

Two of the top three criteria listed by companies focused on a CRM system's flexibility (i.e. configuration and customization) and the ease with which the application can be integrated with other systems.

Interestingly, a few features that some vendors have worked hard to incorporate into their products fell near the bottom of the evaluation-criteria lists. Vertical market specialization, for example, did not rank high among potential CRM buyers.

CRM Functions and Features

So, what exactly is core CRM functionality?

To come up with our answer, we researched hundreds of CRM products, and as a result of this process, we defined twelve functional areas that we believe cover the functionality that should be core components of any (and every) CRM solution.

The following is a list of these "core" CRM areas.
Area
1 CRM interface
2 Account management
3 Campaign, lead, and opportunity management
4 Customer service
5 Document management
6 Workflow automation
7 Desktop tools
8 Reporting, analytics, and dashboards
9 Administration and setup
10 Internationalization
11 Customization
12 Integration

Core CRM Area Definitions

1. CRM interface. This is the overall user interface, including home, pages, tabs, menus, dashboards, etc., as well as all the factors that affect the usability of the system.

2. Account management. The area of a CRM solution where all of the information about the companies (and the contacts or people at those companies) that the user enterprise has relationships with, is centrally maintained and managed. In addition, this area includes all calendar and activity management functionality.

3. Campaign, lead, and opportunity management. These areas of a CRM solution are where all of the selling opportunities are centrally maintained and managed.

4. Customer service. This area of a CRM solution is where customer service questions, requests, problems, and issues are input, tracked, and escalated (if need be), so that customers are able to get what they need handled in the most efficient and effective manner.

5. Document management. This functionality typically includes a document library where users can store files that other people can access via the web.

6. Workflow automation. This functionality can keep a business running smoothly by automatically assigning tasks (or sending e-mail alerts) based on a business's pre-defined processes. Workflow rules put workflow alerts and workflow tasks into action whenever the designated criterion is met.

7. Desktop tools. This functionality provides integration with desktop office tools like Microsoft Excel, Word, and Outlook, as well as wireless support and off-line access.

8. Reporting, analytics, and dashboard. This functionality monitors an enterprise's performance utilizing a variety of pre-defined (yet customizable) reports covering each of the services' main data areas. CRM solutions also allow users to use data filters, so they report on only the information needed, and to subtotal or chart the data to help analyze trends and get a concise picture of what's happening.

9. Administration and setup. This is the area of a CRM solution where an enterprise can import or export data and manage user roles (for information access) and security.

10. Internationalization. Internalization provides support for foreign language and real time currency conversion.

11. Customization. This is the ability to customize the CRM solution to meet industry- and company-specific requirements.

12. Integration. These are tools for integrating the CRM solution with other third party or legacy systems.

Other CRM Functionality

All of the other many functions and features that we found in our CRM product research (that were not part of our definition of core CRM) fell into one of the following categories:

* non-core CRM functionality,
* vertical industry specific features, and
* accounting-related CRM features.

Enterprises that are evaluating CRM solutions that include "non-core" CRM functionality need to be aware of the potential issues associated with these features.

From our experience, there's absolutely nothing wrong with a CRM solution that incorporates any, or all, of these types of functionalities. However, enterprises that are evaluating CRM solutions need to be aware of the potential issues associated with functions and features that are not part of core CRM functionality.

Non-core CRM Functionality

Some CRM vendors seem to be competing for business based on the number of functions and features that they offer. Their assumption is that the more functionality they offer, the better. The thing that distinguishes these features from core CRM functionality is that many enterprises don't need all of these things. Some examples of non-core features are

* Event management
* Project management
* Proposal generation
* Vendor management
* Product defect tracking
* Partner management

The issue is that if you don't need all of this non-core CRM functionality, you don't want any of it to negatively affect the usability (i.e., increase the complexity) of the system for your enterprise.

Of course there's nothing wrong with any of this functionality being incorporated into a CRM solution, particularly because there are enterprises that can benefit from one or more of these features. The issue is that if you don't need all of these things, you don't want any of them to negatively affect the usability by increasing the complexity of the system for your enterprise. So, when evaluating CRM solutions that include functionality that will not be needed by your company, it is imperative that you understand what will be required to remove (or hide) any unneeded functions and features from the user interface.
It is absolutely critical that you evaluate whether or not the process flows embedded into the functionality of each CRM solution being considered match your enterprise's needs.

Secondly, when evaluating CRM solutions, it is not nearly enough to determine whether or not the needed functionality is available in the CRM solutions that are under consideration; you must evaluate whether or not the process flows embedded into each solution match your enterprise's needs. For example, a CRM solution that inherently assumes that four or five people are involved in a particular process (e.g. developing and approving new entries into a customer support, frequently asked question-type knowledgebase) and segments the process into four or five steps will not be a good match for an enterprise that has only one or two people who will want to perform this process in one or two steps.

Vertical (Industry Specific) Features

We are often asked which approach is better: customizing a basic CRM solution to meet an enterprise's industry-specific requirements, or buying an industry-specific CRM solution.

Some customers recognize that there is still a price to pay for accepting easily customizable solutions and opt for vertical market solutions that reduce the need for even further customization. Vertical solutions have built in advantages such as business rules and a data logic that are industry specific. The customer does not have to build in the rules, specific numbering systems, or the common reports that their industry normally uses to track customers, services, and leads. In addition, industry specific workflows can be created, and back-end integration becomes easier as the database logic is likely to be close to the industry norm.
Some companies that tout industry-specific CRM solutions may have something to hide; namely that their software is not that easy to customize, so they've done a lot of it for you.

But, as noted previously in this report, vertical industry specialization did not rank high among many potential CRM buyers.

From our experience CRM best practices don't change all that much from one industry to the next. Sure there are unique data and workflow requirements, but this should be easy to implement. After all, doesn't every business in a given industry have different company-specific needs that they'll want to implement? True, but by all means, be careful out there! Some companies that tout industry-specific CRM solutions may have something to hide; namely that their software is not that easy to customize, so they've done a lot of it for you.

Since most industry-specific CRM solutions are generally more expensive then horizontal (non-industry-specific) CRM solutions, one of the most important evaluation activities is to compare the additional cost of the industry-specific solution to the cost of customizing the non-industry-specific solution, so it will meet your enterprise's needs.

Accounting-related CRM Features

Some CRM vendors incorporate functionality that will ultimately result in financial entries in an accounting system. When a vendor offers a fully integrated accounting solution (like NetSuite does) that your enterprise already has, or is planning to implement, then this functionality is not an issue—except that it will probably add to the complexity of the system's implementation.
The more accounting related functionality that a standalone CRM solution offers, the more difficult, time consuming, and expensive it may be to integrate it to a back-office accounting system.

Problems arise when accounting related features are offered in a standalone CRM solution. For example, when a standalone CRM solution includes functionality for processes, like managing return material authorizations (RMA), job and project management, time tracking, and commission tracking, each of these processes ultimately should result in entries (or access to additional information from an entry) to an accounting system. The more of this type of functionality that a standalone CRM solution offers, the more difficult, time consuming, and expensive it may be to integrate it to a back-office accounting system.

CRM Configuration and Customization

No two companies operate the same way, even if they are in the same industry. In addition, businesses are dynamic and to ensure their continuing success they must continue to adapt to their changing environment. Accordingly, the CRM processes and technology solutions that support those processes must be continuously re-engineered.
One of the most important areas that should be analyzed when evaluating a CRM solution is the ease with which it can be configured and customized.

We believe that one of the most important areas that should be analyzed when evaluating a CRM solution is the ease with which it can be configured and customized.

When new data must be captured using new or modified input/view forms, with re-worked automated processes and customized reporting and analytics, who in the organization will be able to implement these changes?

It's our experience that the best CRM solutions are those that are so easy to configure and customize. Ones where users with administrator privileges can implement most, if not all, of the needed changes on their own, without the need for assistance from technical information technology (IT) personnel.

Why? Because in many companies, ongoing technical resources (or budgets for third party assistance) are often not available to continuously reconfigure and customize the CRM solution.

Over the years, we have been approached by hundreds of enterprises that are looking to change from one CRM technology solution to another because they have become frustrated with the limitations of their current solution.

For many however, the truth of the matter is that this frustration has grown over time because of their inability to continuously configure and customize their CRM solution to meet their ever-changing needs.

When evaluating CRM solution alternatives, be aware that just about every CRM solution provider will claim that their offering is very easy to configure and customize. Have vendors demonstrate these tools to you so that you can gauge the ease of configuration and customization for yourself. And remember, your long-term satisfaction with your CRM solution may end up being directly related to having the ongoing needed resources to work with these tools. The more that non-technical people can do for themselves, the better.



SOURCE:
http://www.technologyevaluation.com/research/articles/comparing-on-demand-customer-relationship-management-service-alternatives-18295/

N-Tier Demand Management

The classic bull-whip effect means that the further a supplier is removed from the end-consumer, the worse are the fluctuations in demand that they see. This has led many to recommend an n-tier approach to demand management, where everyone gets visibility to the end-customer demand at the same time. In practice, very few companies have been able to actually realize this vision. There are some practical approaches that a supplier deep in the supply chain can do to mitigate the bull-whip effect.

Build-to-Consumption

Outsourcing and leaner supply chains are pushing companies to using networked models (real-time sharing of information across multiple tiers) for demand management. Most networks today are still working on building connectivity with their immediate trading partners, but the real promise comes from connecting n-tiers. Successfully managing an n-tier networked model involves sharing of real-time data such as POS data, orders, and changes in plan. This vision does not necessarily mean that companies need to create a detailed model of the n-tier supply chain and run optimization logic as they might within their own organization. Major practical challenges that have kept many companies from realizing the n-tier vision must be dealt with, specifically

* Understanding multi-channel demand
* Avoiding multi-counting

Managing N-Tier Demand through Multiple Channels


Figure 1—Multiple channels for single customer

In an n-tier supply chain, demand to the supplier from a single customer, such as an OEM, may travel through multiple channels (see figure 1). It is up to suppliers to aggregate expected demand for each major [] customer regardless of the channel that it flows through. This requires understanding the total market size, demand elasticity, and share for each customer (see section below "Forecasting Your Customer's Demand"). In addition, many suppliers fail to effectively aggregate demand by channel for each major customer, although it is critical to understanding overall demand. Effectively synthesizing demand across multiple channels requires close dialog with the OEM about demand at the finished-goods level, and systems that are able to explode a complex demand BOM against OEM finished goods demand (see sidebar). That is why it is important to monitor and forecast OEM sell-through rates[]. Once these are in place, the dialogs with OEM about demand can shift from discussion about supplier's parts to discussion about OEMs finished goods, for which the OEM has longer-term data and forecasts than they have in their MRP plans for individual parts.

[1] Aggregating by customer is only worth effort for your top customers (e.g. the top 20% of customers comprising 80% of demand). Demand from smaller customers can be aggregated by channel.

[2] Sell-through means knowing your channels' sales data, in this case the actual sales of the OEM, rather than consumption into their production lines.

Avoiding the Multi-Counting Trap

Suppliers that are several layers removed from the end-customer in multi-tier supply chains are prone to confusion about true end market demand. Multi-counting of the same demand is a common symptom. For example, a large telecommunications carrier replacing their line of cell phones sends out RFQs to multiple phone OEMs, who in turn send RFQs to several contract manufacturers. By the time the demand signal gets to the supplier, it can be grossly overstated.


Figure 2—Multi-counted demand signals

If the supplier is several steps removed from the end customer, they need to use their own intelligence to ferret out big end-customer deals, to get a more accurate picture of actual demand. As they pursue opportunities with OEMs, the account management team should capture information on potential end-customer deals (e.g., end-customer name, project name, size and type of deal, etc.). This data is factored into the forecasting scrubbing process to eliminate duplicate demand (see sidebar "Rationalizing Demand Across Channels"). Getting salespeople to consistently enter this kind of data is not easy. It must be made nearly effortless, and part of their compensation should be based on consistency and accuracy in tracking large end-customer deals. Forecasting Your Customer's Demand Beyond this, you should forecast demand for your customer's whole market and their share. For example, if you are a supplier to Ford, you would create your own forecast of demand for the whole light truck market and for Ford's share. Or a supplier to Juniper Network would forecast the whole enterprise switch market and Juniper Network's share. This way, if several major customers have aggressive forecasts, you can make your own informed opinions about whether the total market is really growing, or whether there is some double-counting going on. Formulating your own market assumptions provides the checks and balances needed to get to the best number you can for each account.

Taming the Bull Whip

Suppliers that are several layers deep in the supply chain can stop being at the mercy of late or incomplete demand information by

* Developing a demand BOM approach to understanding the actual demand as it flows through various channels

* Having a disciplined approach to keeping their "ear to the ground" on what is happening at each of the largest downstream channels and end-customers or large OEMs

* Maintaining their own perspective, getting a good handle on the total market size and using it to sanity check forecasts they receive from their customers

These steps can help upstream manufacturers avoid much of the misery and destructive force of the "bull-whip effect" that is normally the bane of their existence.


SOURCE:
http://www.technologyevaluation.com/research/articles/n-tier-demand-management-17705/

Best Practices for Transporters and 3PL Service Providers

The current state of the goods transport business is such that most transporters and third party logistics (3PL) service providers are forced to offer their services at lower rates while faced with the continual rise in costs for doing business (e.g., increasing fuel prices, employee salaries, and other operating expenses). This scenario calls for transporters and 3PL service providers to streamline business processes and provide value-added services to boost their top lines and improve their bottom lines.

Such results can be achieved by implementing software systems equipped with built-in best practices and with the ability to adapt for future growth, entry into new markets and market segments, and changes in business practices. It also makes sense for transporters to enter into new business lines (e.g., providing services to manage entire supply chains for clients, including managing inventory, warehousing, in-plant services, etc.).

Transportation is the crucial link among all partners in any supply chain. Goods move from suppliers to manufacturers, from manufacturers to distributors, and from distributors to retailers. In cases of rejections, repairs, and customer service, goods move in the reverse direction. Transportation of goods is the lifeblood of most businesses, and in an ever-increasing global market, its role is becoming increasingly vital.

In the agrarian societies of yore, transportation of goods was limited to taking farm produce to the central market of the village. Then came trading communities, which would ship and receive goods via sea routes. Slowly, after the dawn of industrial era, goods were being made on a mass scale, and they were shipped both nationally and internationally.

Now, in the era of global trade, some industries manufacture parts at different geographies, and these goods are then transported and assembled at locations close to end customers. In other industries, products are made at contract manufacturing sites that are located in faraway countries having low labor and materials costs, and are transported and consumed at other locations.

Transporters Have Distinct Needs

Because of the nature of global trade, goods are being transported to faraway places in larger quantities. Transporting goods over long distances both economically and with minimal transportation time requires special knowledge, resources, and expertise. Since the size of transport operations is becoming huge, transport organizations need reliable transportation management systems (TMSs) to communicate effectively with suppliers, distributors, retailers, and service providers. With the help of a capable TMS, transporters can plan and execute their shipments with more accuracy and with less effort. They can also lower their operations costs by means of optimized loading (to get better fill rates) and by reducing empty run miles and wasted time.

Best Practices for Transporters

The unique nature of the goods transport business calls for unique features in a TMS. Transporters deal with many organizations, so they need to have a system to which all of these organizations have access to perform everyday transactions.

Best practices related to goods transportation can be divided into six parts: 1) supply chain management (SCM), 2) billing management, 3) key performance areas measurement (KPAM) management, 4) key account management, 5) quotation management, and 6) fleet management.

1. Supply Chain Management

Transporters need to understand their clients’ requirements and to be an integral part of their clients’ supply chains. They should help their clients achieve the desired visibility level of inventory during transit, as well as reduce transit times, maintain service levels, and reduce transportation costs.

Transporters can devise innovative ways to achieve many of these goals. Technologies such as global positioning systems (GPSs) and general packet radio service (GPRS) can be used to track the location of a vehicle during transit. This will help in achieving better customer service and in making changes in planning at the receiving warehouse (such as appointment scheduling, unloading, put away, etc.) on the fly. Route and load optimization features will assist with route selection to reduce transit times and empty miles run, as well as optimize loading to lower transportation costs.

Providing 95 percent or more visibility during transit can help transporters’ clients reduce their overall inventory levels, and thus save in operations costs. Many times, a vehicle can be loaded at 100 percent volumetric capacity, but it could still be at less than 50 percent in terms of weight capacity. Similarly, sometimes a vehicle is 100 percent full in terms of weight capacity, but less than 50 percent full in terms of volumetric capacity. In these situations, the load planning features of a TMS can help achieve optimized capacity of use of the vehicle. Using load consolidation, which means using opportunities for loading vehicles during return trips, will help transporters’ clients reduce transportation costs.

2. Billing Management

Transporters need to ensure that there are no delays in the payment of their bills. Each bill for each activity they perform must be accurate, and they should ensure no opportunity is lost to bill every activity they carry out. They need to have checks and alerts so that bills are created and presented to clients on time, thereby minimizing payment delays. In addition, transporters need to have an activity-based accounting system so they can bill accurately for each and every activity. They can pass a percentage of the cost savings from reduced operation and transportation costs on to their clients, which will help to maintain a happy and loyal clientele.

3. KPAM Management

Each client of a 3PL service provider signs a service level agreement so that key performance areas can be defined and measured in order to rate the provider’s quality of the service. These agreements differ based on the needs of each client. A TMS with KPAM capabilities should be able to define and measure the agreed-upon key performance areas.

4. Key Account Management

Transporters and 3PL service providers have some major clients for whom they create dedicated customer service, marketing, operations, and accounting teams. In many cases, a team may be comprised of members from different divisions so that all the client’s needs are met through one channel, and the client does not have to deal with several people for a single area or issue.

Another aspect of key account management is that all the client’s needs related to logistics are met by one service provider. For this, the service provider may offer these services itself, or it may procure these services from other service providers to create a single window through which it provides all services to the client.

5. Quotation Management

By using seasonal or historic costs and by comparing rates, transporters can provide accurate quotations to clients. Quotations can take into account opportunities for consolidation, load optimization on equipment, and any other cost-saving measures so that the transporters can pass the cost savings on to their clients, potentially ensuring more business from these clients.

6. Fleet Management

By performing a complete and accurate cost analysis (equipment purchase cost and equipment operations cost) and revenue analysis (revenue realization from equipment being used for the fulfillment of certain orders over a certain period of time), transporters can find out which vehicle types are more profitable and which ones are not. It may be discovered once profit-loss calculations are done that some vehicle types are, in fact, incurring losses. This analysis can help transporters keep a mix of profitable vehicle types in their fleet in order to optimize their margins. Vehicles that create loss for the transporter can be modified to make them profitable (for example, one transporter modified its motorcycle-carrying trucks to accommodate 110 motorcycles instead of the truck’s original capacity of 81 motorcycles).

Recommendations for Transportation Service Providers

Today, most clients are concerned about visibility in the transportation of their goods, reduced transportation times, and fewer hassles in the transportation of their goods and in their SCM. They are also keen to outsource many business processes connected to transportation-, warehousing-, and logistics-related activities so they can focus more on their core business.

Transporters not only have to think about how to deal with their customers well, they also have to think about how to manage their own internal processes properly in order to keep their bottom lines in check. For a long time now, transporters and other 3PL service providers have been operating on thin margins; the time has now come for them to improve their operating environment. By providing better supply chain and transportation management capability, transporters can provide better visibility to their clients, as well as reduce transit times. By providing a single window for all logistics services, they can remove many obstacles from their client’s logistics operations. Such measures will also add much value to the services offered by these service providers.

By taking the actions above to ensure clients are satisfied, transporters have the opportunity to add value to their services by providing new service offerings, thereby increasing their business. Some business lines offer better margins and growth rates, such as express service, warehouse management, consulting services for creating new supply chains or for streamlining existing supply chains, and providing software as a service to clients. Transporters can also improve their bottom lines by bettering fleet management, billing management, and key account management capabilities. By managing and excelling at both customer-facing and internal processes, 3PL service providers have a greater chance of surviving the difficult reality of their business climate.

Recommendations for Transportation Software Vendors

Many of the needs of transporters and SCM service providers are unique. Software vendors would do well to understand these requirements and to develop software features that address these needs. For instance, at the shipment tendering process, players include the client, the broker or fourth party logistics (4PL) service provider, and the transporter. Which player should view what information is a crucial decision, as much of the information is confidential. A TMS should be able to take care of this aspect in addition to providing configuration options to change workflows in the process, depending on client needs.

Similarly, the service provider needs to bill clients for all transportation-related activities. Billing rates will be different for different activities and for each client. Likewise, billing for different equipment used to perform activities will vary. TMS software should provide billing functionality for all of these aspects.

TMS software should also be capable of integrating with any kind of third party software system, as service providers need to have information exchange capability with their clients and their partners. The system should also have interfaces for handheld devices, as employees of these service providers need to work in the field, and they need to constantly exchange information with the core system.


SOURCE:
http://www.technologyevaluation.com/research/articles/best-practices-for-transporters-and-3pl-service-providers-19235/

A Customer Relationship Management Solution Aims To Cover all the Bases

Surado aims to provide a complete CRM suite, rather than a modularized solution targeted towards departmental delivery. Its goal is to build full-featured, integrated, and multifaceted systems, as well as out-of-the-box solutions. The vendor is a Microsoft Certified Partner and Microsoft Business Solutions Certified Gold Partner, and uses the Microsoft Solutions Framework (MSF) as the foundation for its product development. It also touts the merits of the Six Sigma methodology and Design for Six Sigma (DFSS) as quality improvement philosophies.

Surado targets the small and medium business (SMB) market, namely organizations with annual revenues of $1 million (USD) to $1 billion (USD), and approximately 88 percent of its clients fall into this category. To reinforce its position in this market segment, Surado offers Surado Small Business CRM 5.0, designed for ten users or less. Surado Small Business combines the core Surado CRM suite (Contact & Account Management, Sales Automation, Marketing Automation, and Customer Service/Help Desk) with Integration for Exchange (for e-mail, contacts, and tasks), the Surado Integration Module (for connecting to third party databases or creating custom tables and screens), and Surado CRM Web (a web interface for remote user access to basic functionality.

Although Surado CRM is not vertical-centric, it enjoys a wide installed base in traditionally "vertical CRM"-dominated industries, such as technology, health care, education, banking and finance, and government. The vendor has customers in all fifty US states and in over sixty-four countries worldwide. A sampling of its top clients from those vertical industries includes Blackbox, County Regional Medical Center, California State University, Georgia Student Finance, and the City of Riverside Economic Development Agency.

We'll analyze Surado CRM 5.0 from the perspectives of core CRM functionality, look at some of its distinguishing factors, and discuss some of the challenges users may face when considering Surado CRM for small to midsized businesses.

Core Functionality of Surado CRM 5.0

Core CRM functionality covers five aspects:

* contact and account management
* sales management
* marketing management
* customer service and support
* integration

The figure below is a TEC-created table comparing Surado against other vendors and their offerings. Surado performs above other vendors in the areas of marketing automation, sales force automation, customer service and support, and partner management. In the areas of contract management and creation, and project management, Surado's performance is above average, but below the highest-rated competitor.

B2B (Business-to-Business) CRM Module Ratings


Source: http://www.vendor-showcase.com/software/281-16091-idealprofile/Customer-Relationship-Management-CRM/Surado-CRM-by-Surado-Solutions/ideal_customer.html

Contact and Account Management
This area of CRM typically displays and manages detailed account information, such as information related to the company, contacts within the company review of past activities and history, scheduling, and task management.

This module offers a unified interface for account and contact management functionality, where users can review past communications, upcoming activities, sales opportunities, quotes and purchases, support issues, links to relevant documents, and information from back-end systems. In addition, Surado CRM also captures all customer communications, whether through phone, e-mail, fax, the Internet, or personal contacts. A fully integrated workgroup scheduling and task management features the ability to track activities, participants, and resources, including pop-up reminders. A relationships tab also allows users to track the important relationships that may exist between two or more contacts in the system that otherwise might otherwise be overlooked or poorly managed.

Sales Management
This area of a CRM solution focuses on managing sales opportunities and processes. It provides the features and functionality to define, implement, manage, and execute one or more sales cycles, based on individual opportunity types. This allows users of Surado CRM to configure the system to better fit their unique needs rather than having to conform to a generic sales cycle supplied by the system.

The module includes the basics: contact information, correspondence, opportunity and forecasting data, literature and presentations, quotes, orders, and post-sale service history.

Surado CRM 5.0 allows for multi-source data import from lists, or captured leads from a web site through its eLeads module. It also allows inquiry tracking and intelligent leads routing. Automated process can be initiated to distribute literature, schedule follow-up activities, and set conditions to advance opportunities. Managers can use Surado CRM to monitor team activities across customized sales stages across multiple product pipelines. Sales positioning features and functionalities are also available through competitive intelligence analysis and customer analytics, to identify habits, trends, and potential.

Marketing Management
In this area of CRM, the key components to attracting and retaining a customer base are evaluation, design, implementation, and execution of marketing initiatives.

The application can track the results of advertisements, direct mail, and telemarketing, and help design, execute, and manage personalized, permission-based campaigns. Surado CRM 5.0 also allows for the planning, design, execution, and management of multichannel permission-based marketing campaigns. Users can assign tasks and responsibilities according to revenue projections, campaign periods, targeted audiences, and channels. Potential deployment issues can be identified, and resources re-allocated. E-mail and fax campaigns can be set up for automated execution and follow-up.

Surado CRM provides for campaign return on investment (ROI) analysis as a means to track the effectiveness of marketing campaigns, by comparing potential and actual responses and sales.

Customer Service and Support
This area of a CRM solution is where customer service inquiries and support issues are entered, tracked, and in specific cases, escalated to resolution.

Surado CRM 5.0 features a customer service, help desk, and support knowledge base, with keyword searches. It also provides an integrated system that coordinates and tracks customer interactions across multiple contact points to address customer inquires.

Surado CRM automates support and help procedures, by automatically converting incoming e-mail messages into support tickets (including attachments), responding to support tickets, and notifying customers of soon-to-expire service-level agreements (SLAs). It also handles routing, load balancing, escalation based on multiple criteria, automated response, and ticket updates and deletions.

In addition, Surado's Web Self-Service module provides a channel for clients to access an Internet knowledge base search as well as conduct self-service ticket submission and review.

Key metrics are displayed in graphical form, and can provide managers with the information necessary to make rapid decisions regarding re-deployment of resources to the most urgent support areas. Performance gauges (such as support metrics by urgency, touch point, area, type, and support groups) provide managers with the opportunity to act quickly to prevent potential bottlenecks in providing support. Finally, color-coded alerts for events that fall outside defined parameters provide managers the ability to take a proactive approach, preventing escalation of support issues.

Integration
While integration is not traditionally considered to be a functionality, it is nonetheless a critical component of any solution, and needs to be given the same level of consideration as core functionalities. Surado CRM 5.0 is very well designed to run on a Microsoft platform (including operating systems and applications, SQL databases, and Exchange servers), and integrates tightly with front-office programs (Microsoft Office, Outlook, and Project, as well as with mobile devices, scanners and business intelligence [BI] tools) and back-office applications (Great Plains Accounting). Surado CRM 5.0 has also enhanced its level of integration with Intuit QuickBooks. This is in alignment with Surado's focus on the SMB market, where such systems are widespread.

With the optional add-on Surado Integration module, back-office applications like financials, enterprise resource planning (ERP), supply chain management (SCM), logistics, manufacturing, shipping and delivery, human resources, e-business, and industry-specific applications can be integrated to give users a unified view of the disparate back-office application environment within a centralized CRM solution. This module also allows system administrators to create unlimited custom detail data tabs to display information from back-office applications directly from within the Surado CRM solution. Finally, administrators can also create stored procedures to automatically write Surado CRM data into other databases using automatic data exchange (ADX).


SOURCE:
http://www.technologyevaluation.com/research/articles/a-customer-relationship-management-solution-aims-to-cover-all-the-bases-18676/