Effective supply chain execution solutions are available to midmarket companies, too

By Sid Geddam

The Need to Focus on Technology
Recently, one of the biggest manufacturers of ambient control equipment in the US redesigned its delivery network. The manufacturer was a pioneer in its field for over 50 years. Five years ago, it operated a centralized distribution center, shipping products to dealers and channel partners throughout the US. Its market was growing, customers loved the product, and the company became the darling of its distributors who were able to maintain healthy profit margins. In short, everything seemed perfect.

For this manufacturer, managing costs had always been important. However, its impressive profit margins hid inefficiencies that existed within the organization and especially within the delivery network. The unforeseen economic downturn had a significant impact on the company. Suddenly it faced contracting margins, lower profits, and an increased need to differentiate itself from the competition. All of these pressures led the manufacturer to redesign the delivery network to better and more skillfully manage diverse customer requirements.

While senior executives in the company understood they were doing most things right, there were a few gaping holes. They needed to maximize available resources to produce the most desired results. “Make more with less” became their credo. With this thought in mind, it was clear that technology would be a key part of the solution.

At the time, the manufacturer had been using a popular Enterprise Resource Planning (ERP) solution for 15 years. The supply chain system was also firmly in place, and supply side constraints were addressed through a planning and forecasting tool that came with the ERP system. All of this was still not enough to deliver better value and services to the company’s customers and channel partners.

The manufacturer decided to go back to the drawing board and formed a team to focus on managing a revised network. The team realized that some of the issues faced by the manufacturer were part of the physical supply chain and other issues were related to existing technology solutions. Ultimately, the team recommended a completely decentralized distribution model.

Changing Logistics
Over the next three years, the company opened regional distribution centers (DCs) across key markets in the US. While the general business ERP was robust, it was unable to support an operation with multiple DCs that could ensure last-mile coverage. In addition, collaborating with suppliers and vendors was nearly impossible as the company was unable to provide third-party access to its supply chain data.

To solve the above problems, the manufacturer implemented a delivery network that was managed by adding a Supply Chain Management (SCM) solution to its existing ERP system. The SCM solution primarily comprised an integrated Warehouse Management System (WMS) and Transportation Management System (TMS). This new system worked seamlessly across the multiple DCs and could fulfill more than two million order lines a year.

This combined ERP and SCM solution had an impact on every level of the manufacturer’s operations. As a result, there was a dramatic shift in the way business was run and significant improvement in the efficiency of the entire delivery network. For example, in the past distributors were required to stock buffer inventory every week from the central DC. Now, they are able to expect replenishments from the regional distribution center, almost on a daily basis.

In addition, large volumes of in-transit inventory were substantially reduced. At the same time, because the regional distribution centers were just a day away, distributors had better visibility of their shipments, which allowed them to make more frequent customer deliveries and ultimately increased sales. Other successes included a 10 percent increase in inventory turns, better accuracy of fulfillment, and higher efficiencies. The company also reported significant gains from consolidating shipments, the ability to optimize routing and scheduling based on demand, and order inflow from the points of sale.

Linking Physical Supply Chain with Technology
This company is one of many organizations that have combined the physical aspects of the supply chain execution with a major focus on technology to improve results.

Today, more and more companies are realizing the pitfalls of keeping the supply chain isolated from core enterprise strategy. In an era where transportation accounts for more than 40 percent of the logistics costs, business performance will continue to be strongly tied to supply chain optimization and performance improvement. To do this, organizations must complement what their ERP system offers with best-of-breed supply chain management capabilities. Finding the right technological solution and the expertise to implement it is critical.

Within supply chain management, supply chain planning has been the focus of organizations for a long time. Now, organizations increasingly view supply chain execution as the key to unlocking full value from their distribution network and optimizing the “last mile” (and the one closest to the customer). Supply chain execution technology comprises solutions for warehousing, distribution, transportation, and a complete aftermarket service portfolio (in some industry segments). Historically, only big companies that combined multiple disparate software systems could afford robust supply chain execution solutions. In most cases, these systems involved significant on-premise solutions with high investments, long implementation times, and even longer payback periods.

Not Just for Big Companies
The NetSuite ERP, with the eBizNET supply chain execution solution built directly on the platform, provides exciting and affordable opportunities for all markets. NetSuite has redefined the landscape of how SaaS/cloud-based applications can be made accessible to mid-market companies so those companies can better manage complex business operations.

Perhaps your company is like the company described in this article (or possibly a distributor), trying to better manage costs in the supply chain by reducing inventory, storage, and transportation expenses. Most likely, you do not have the luxury of buying cumbersome, expensive, on-premise solutions with their associated long, costly implementation times.

NetSuite and eBizNET can provide an “always-on” ERP with best-of-breed supply chain execution capabilities in warehousing, distribution, and transportation. Synchronizing ERP demand planning with supply chain execution, the NetSuite/eBizNET cloud-based supply chain solution helps you collaborate with your trading partners across multiple tiers of your network. Better collaboration improves information flow, which results in more accurate and on-time fulfillment of demand across the value chain. With a cloud-based solution, NetSuite and eBizNET are increasingly bridging the supply chain maturity gap between experienced companies and growing ones.

About Author

Sid Geddam, founder and chief technology officer of eBizNET Solutions, is responsible for driving design and development of SaaS technology solutions to address common supply chain challenges. He is the chief architect and force behind the development of the award-winning eBizNET Supply Chain Suite, which is positioned as “Visionary” in the 2012 Gartner WMS magic quadrant. Sid has been working with leading best-of-breed supply chain software systems for more than 18 years and has overseen the successful implementation of over 100 supply chain and ecommerce projects in North America, Asia, and Europe, many involving Fortune 500 companies. He is also a trained and certified NetSuite ERP consultant and has been involved with NetSuite implementations since 2006.

The statements and opinions herein are those of eBizNET Solutions and not of NetSuite. NetSuite has not verified any statements or claims herein and assumes no responsibility for such statements or claims.