IT Budget Shift Drives Extended Supply Chain Management

The consultancy believes that ERP vendors are behind both the planning and execution vendors in the area of extended SCM. The ERP vendors will not benefit from this shift given their current portfolio of extended supply chain applications and constraints of their sales models. The demand for extended SCM, coupled with the ERP vendors' inability to deliver scalable solutions beyond the edges of the enterprise, will enable best-of-breed vendors to capture new license revenue from the ERP customer base, Yankee asserts.

According to the consultancy, among the ERP vendors, SAP, with its NetWeaver and xApps strategy, is best positioned to deliver extended SCM solutions. However, SAP customers have not successfully extended SAP applications beyond the edges of the enterprise. Yankee is recommending that customers rigorously test SAP xApps to validate functionality, scalability and interoperability within a networked supply chain context.

Yankee goes on to state that Oracle's extended SCM capabilities have been limited to a handful of industries with specific requirements. Oracle's Shop Floor Management application in the high-tech market (semi-conductor specifically) addresses a limited portion of the networked supply chain, the consultancy reports, and Oracle needs to take the technology and functionality developed in its shop floor applications and bundle it as a lean SCM solution, immediately followed by a network-oriented supply chain application focused on logistics and collaborative decision-support.

Finally, regarding supply chain communication and B2B integration, Yankee believes that as enterprises form tighter and broader electronic relationships, the volume and frequency of data and transactions will increase, benefiting integration vendors with effective enterprise net connector solutions. Sterling Commerce, Cyclone Commerce and Transentric will all benefit as extended SCM expands, according to the consultancy.

Yankee offers several recommendations to enterprises looking to take advantage of this latest trend, including:

• Buy extended SCM as a service in a subscription model. Only the very largest manufacturers and retailers will need to buy software that enables them to be the hub or center of the extended supply chain. Enterprises avoid numerous headaches and costs by opting to deploy extended SCM as a service.




• Upgrade your ERP within the next 12 to 18 months. Communicating and executing across the extended supply chain requires importing and exporting transaction-level data from supply chain systems. Moving to the most current version of SAP, Oracle or PeopleSoft will make it much easier to connect with the supply chain network. Specifically, the Web services capabilities and browser or portal-based delivery of application functionality enables enterprises to integrate data, processes and people across the networked supply chain.




• Take a holistic view of your supply chain. Understanding the flow of information and inventory within the broader supply chain network, as well as within your organization, will enable you to make better decisions and plans about capacity and inventory. Given the widely available event management and translation software and services in the market today, gathering information about what is happening in your extended supply chain is no longer technically challenging.