Managing Automation - April 2008 - (Page 31)

Instead, many companies are migrating to tools that allow them to understand and respond to changes in demand more dynamically by monitoring demand based on real-time signals from multiple sources, collaborating easily with multiple stakeholders inside and outside the enterprise, and easily integrating demand plans with supply and production plans. “Manufacturers are struggling to make traditional demand planning processes fit with reality because so many things keep changing,” says Randy Littleson, vice president of marketing at supply chain services provider Kinaxis. “They have a critical need to continuously get a true sense of demand and then to be able to quickly make adjustments on how they are going to allocate supply so they can satisfy customers.” Indeed, because of the intensifying requirements of manufacturers to better understand and react to demand changes, many say they will enhance or replace their traditional demand planning systems soon. According to a recent survey of 336 IT and line-of-business executives by AMR Research, 34% of process manufacturers and 21% of discrete manufacturers said they would upgrade their demand management software tools or implement new ones over the next 12 months. The most commonly expressed reason for such investments was to improve profitability. A SWEET DEAL Many companies are replacing tools that supported only static and isolated demand planning processes. One such manufacturer is Sunsweet Growers, a maker of food products for global distribution. Until fairly recently, the company relied on a few domain experts using spreadsheets and manual processes to track demand levels. The time-consuming process allowed Sunsweet’s planners to do only some very basic analysis, such as determining the right inventory levels for make-tostock items or what was needed in a given location to meet demand. With transportation and other supply chain costs rising rapidly, however, Sunsweet needed a way to keep up with regional demand changes and easily analyze the wide array of choices open to the company in meeting changing demand levels. The company last year replaced its manual processes and tools with automated demand and supply management tools from Supply Chain Consultants. By automating the process, Sunsweet has achieved a more current view of demand and can update its plans as often as every two weeks. More important, however, the SCC Zemeter tools have allowed Sunsweet to quickly look at a much wider range of variables when deciding how to respond to changes in demand. Because the Zemeter Demand Planner tool integrates directly with Zemeter tools for inventory planning and supply planning analysis, Sunsweet can consider issues such as production constraints in specific facilities, transportation costs, and labor costs when deciding how to meet changing demand. The tools also let Sunsweet factor in the impact that new product launches and DEMANDING CHANGE promotions will have on overall Planned demand management application demand. upgrades over the next 12 months: “Now we are able to made decisions like carrying an eight-week Process manufacturers supply of a particular product at 34% a given location because carrying Discrete manufacturers that inventor y is cheaper than 21% downstream transpor tation costs,” says Harold Upton, SunServices companies sweet’s vice president for strate29% gic business processes. “Before, Source: AMR Research we just couldn’t do that kind of analysis manually.” The results have been impressive. Before revamping its demand and supply planning, Sunsweet, a grower cooperative, was able to return to its members profits of $869 per ton of fruit. Last year, Sunsweet returned $1,500 per ton, at least partly because of reduced supply chain costs. Sunsweet selected the Zemeter tools over SAP’s Advanced Planner and Optimizer (APO) demand and supply planning tool, even though Sunsweet uses SAP’s ERP suite. The reason: Planners found Zemeter easier to use and more directly relevant to Sunsweet’s business model. As manufacturers such as Sunsweet look to revamp their demand management processes, many are going against enterprise software industry trends by choosing so-called “best-of-breed” applications over demand planning tools that are part of broader ERP suites. Though widespread vendor acquisitions, coupled with manufacturers’ preference for relying on fewer software suppliers, have undermined best of breed in customer relationship management, product lifecycle management, and other enterprise software categories, manufacturers implementing new demand management processes are showing renewed interest in best-of-breed tools. “We’re seeing a bit of a resurgence in best-ofbreed solutions in the supply chain management space, including demand management, compared to a few years ago,” says Noha Tohamy, a research director at AMR Research. “We’re no longer seeing that big a preference for buying demand manage- reality check 31 April 2008

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Managing Automation - April 2008 Contents Take 1 Camstar to Introduce Software that Combines Quality, MES, and Intelligence SAP Revamps Maintenance, Raises Fees 29% New TAGSYS Chief Sees Opportunity in Broader Approach Siemens Turns to Security Weaver for Compliance Supply Chain Company Takes Next Step in U.S. Notes Cover Story: The Long Climb Special Report - Undertanding Enterprise Performance Management Caught Between Supply and Demand Taking Off the Blindfold No Room for Error Product Scan Advertiser Index Next

Managing Automation - April 2008

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