Making Supply Chain Execution Real-time

Valdero upgrade aims to let manufacturers implement supply-, demand-side replenishment programs

Valdero upgrade aims to let manufacturers implement supply-, demand-side replenishment programs

Palo Alto, CA — June 24, 2003 — Solution provider Valdero this week rolled out the latest version of its supply and demand chain execution application suite, introducing what the company said is the first solution to combine supply chain analytics with replenishment planning and execution functionality.

Valdero said that version 3.0 of its eponymous suite adds application modules for supplier and demand replenishment intended to increase a manufacturer's responsiveness to changes in supply and demand, allowing them to better manage inventory and order-fulfillment processes.

As Valdero sees it, despite substantial investments in enterprise resource planning (ERP) and supply chain planning systems, manufacturers continue to face problems such as the need to manage excess and obsolete inventory, the challenge of balancing supply with actual customer demand to fulfill orders, and the imperative to minimize inventory liability in the sales channel.

The reason, the provider asserted, is that today's supply and demand chains have new requirements that ERP and planning systems do not address. Specifically, ERP systems primarily are intended to be systems of record for processing transactions, and they don't easily integrate information from external suppliers and distribution partners, while planning systems can give you a roadmap for moving forward but don't necessarily take into account daily changes and events, and these systems weren't intended to operate in today's highly outsourced manufacturing environment.

As a result, manufacturers face the problems of low visibility and high latency, making it difficult for them to respond to changes in demand for their products, resulting in supply-demand mismatches and a healthy dose of expediting to meet market fluctuations.

Valdero believes that its new version of its solution can bridge the gap between supply and demand planning and execution, according to Walt Rossi, vice president of marketing at the software company.

The new modules in the Valdero 3.0 suite, for supplier and demand replenishment, are intended to deliver real-time visibility into inventory positions internally and with multiple tiers of suppliers, contract manufacturers and distributors, Rossi said, thereby helping manufacturers automate vendor-managed inventory (VMI) programs and allowing them to postpone inventory and move more to a "pull-based" supply chain model.

The replenishment modules, which will be generally available in the next quarter, include four capabilities, including inventory buffer planning, signal generation when a re-order point is met, replenishment process planning and replenishment execution, including sending out advance shipping notices and tracking the fulfillment of a product back into the channel.

In general, the Supply Replenishment module is intended to enable VMI replenishment programs to postpone purchasing until materials are needed, helping to reduce inventory costs while avoiding stock outs. The Demand Replenishment allows companies to develop vendor managed inventory (VMI) programs with distribution partners to reduce channel liabilities while improving customer service and reducing transportation lead times.

Other modules in the Valdero solution include Multi-Tier Supply Visibility, for tracking global inventory across internal warehouses, contract manufactures and key suppliers to assess the impact of real-time fluctuations in demand; Multi-Tier Demand Visibility, to monitor actual demand, forecast consumption and product sell through at multiple tiers and channels of the demand chain to minimize the impact of forecast inaccuracies and accelerate time to revenue; and Supply Demand Matching, to align inbound supply with multiple consumption points and balance inventory across fulfillment centers to minimize shortages and maximize order fulfillment.

The potential benefits from using this type of solution, Rossi said, include the automation of previously manual processes, reduced inventory levels, improved order fill rates and increased customer service levels.

The target markets for the solution, according to Rossi, include "any companies that have higher volume movement of finished good products or high volumes of inbound components or supplies." Typically these companies have stronger relationships either with their customers and channel or their suppliers. Rossi singled out high-tech, consumer goods, medical devices and automotive companies, in particular.

The modules can be implemented incrementally, and Rossi said that Valdero has seen customers ordering follow-on modules after initial implementations, with deployment times running less than three months.

Moving forward, Valdero is looking to broaden its application for additional vertical markets, although Rossi did not say what markets the provider might target next.