There are several other trends that are propelling supply chain businesses to adopt EPM in order to drive better enterprise performance:
* Less predictable demand and supply — The often complex demand streams, different product life cycles, varied departmental business processes, multiple forecasts used throughout the business, and general inability by most businesses today to understand plan feasibility easily and early are major challenges that can severely impact the balance between supply and demand. Some companies have opted to use EPM's predictive forecasting, inventory management and operational analytics to bridge this gap, which helps reduce inventory investments while meeting high customer service (fill rate) levels.
* Business-driven reporting — Today's market forces have created the dynamic need to quickly get data out to business users and supply chain partners. As a result, performance analysis and reporting needs to be end-user driven in order to analyze and respond to market conditions in real-time fashion. Today's EPM solutions offer pre-built analytical views and reporting templates to decrease the resources and time typically required by an IT organization to support a company's analytical initiatives. This allows businesses to refocus IT on critical transaction processing areas related to both enterprise and supply chain performance management.
* Demonstrating product category and promotional performance knowledge — EPM plays a key role for businesses that must become "experts" at pinpointing consumer purchasing trends and needs so they can effectively price and promote their products with retailers and react quickly to changes in the competitive landscape. These capabilities have become even more important for manufacturers that need to prove their performance analysis and reporting capabilities when trying to get their products sold through the mass merchandise retail market, as well as for those businesses looking to retain and grow shelf positions with their current retail partners.
* New product classification and tracking standards — With new data standards such as radio frequency identification (RFID) and UCCnet, companies can use EPM to sift through the data produced as a result of these standards and take advantage of information to increase their return on investment. Some organizations even share related product performance information with their supply chain partners to help them improve their processes as well — an investment that pays dividends for the sharer as well as the sharee.
* Sarbanes-Oxley compliance — Getting management and workers the right information to identify and assess both operational and financial risk in the business and then act on mitigating that risk is a key part of Sarbanes-Oxley. EPM supports corporate governance initiatives by presenting — through scorecards, portals and management dashboards — metrics that monitor the health of the business in real time. EPM also supports Sarbanes-Oxley compliance requirements for monitoring and reporting on trade promotion practices.
EPM and the CFO
The Boston-based analyst firm AMR Research views enterprise performance management as a superset of applications and processes that cross the traditional departmental boundaries to manage the full lifecycle of business decision making across the organization. AMR said EPM software helps chief financial officers (CFOs) who realize that demand and supply are not precise, nor are they fixed, but are in fact based on probabilities that are subject to continuing change. EPM analytics quantify these probabilities and engage all the teams in the planning process.
An EPM approach recognizes that demand forecasting must be done in a collaborative way that supports multi-discipline forecasting (i.e. customers by sales, products by marketing and shipments by production). It provides an information infrastructure with standardized reference points so that all parties are looking at one picture when evaluating demand and supply. It also alerts business users to performance anomalies on a continuous basis so that corrective action to be taken before inventory or any other corporate asset — puts a strain on the financial performance of the business.