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— July 5, 2006

Planning & Forecasting

ARC: Moderate Growth Seen for Supply Chain Planning Solutions Market
Over the last two years, the market for supply chain planning solutions has contracted moderately and undergone substantial consolidation, says ARC Advisory Group in its report, “Supply Chain Planning Worldwide Outlook: Market Forecast and Analysis Through 2010.” The Dedham, Mass.-based research firm notes that many of the smaller suppliers, in both enterprise resource planning and SCP, have been acquired by larger ERP and supply chain management providers.
ARC sees moderate growth in SCP-a compounded annual growth rate of 2.4 percent over the next five years. It says the market was $1.05bn in 2005 and is forecasted to be more than $1.18bn in 2010.
“ERP suppliers continued to gain market share at the expense of best-of-breed suppliers,” says Clint Reiser, a SCM analyst and the principal author of the study. “This is because of the superior installed base of ERP suppliers, the lower price-point associated with SCP functionality offered by ERP vendors, and the perceived ease of integration attributed to a holistic enterprise solution offered by a single solution provider.”
SCP solutions suppliers have seen increased attention from the automotive industry and from such distribution intensive industries as consumer packaged goods and food and beverage. The increases in demand are believed to be partially attributable to the relocation of production facilities to low-cost regions and globalization factors such as outsourced manufacturing, longer supply chains, and a greater number of trading partners, ARC says. Many suppliers also are seeing considerable demand from retail industries looking to improve the scalability of their forecasting and replenishment processes.
Newer SCP solutions that use standardized architectures like J2EE, Microsoft .NET and XML can be much easier to integrate, easier to scale, and less costly to deploy, according to ARC. These architectures can take advantage of packaged services to reduce development risk and time-to-market. The high upfront, negligible, marginal-cost structure of upgrading solutions to SOA enhances the means for suppliers to profitably offer cost-effective, advanced solutions to Tier 2 clients through a “write once - sell many times” go-to-market business model. As the reputation of these standardized architectures and the associated integration benefits proliferate, these architectures possess the potential to mitigate uncertainty surrounding application integration. Such a reduction in uncertainty could weigh in favor of best-of-breed providers offering advanced SCP functionality designed to complement ERP systems.
http://www.arcweb.com

Yacht Builder Plans with Latest Version of Infor Tool
Luxury-boat builder Viking Yachts, a $250m privately held company, will implement Infor's SyteLine 7 enterprise resource planning technology. The action is an upgrade for the company, which manufactures yachts ranging from 45 to 74 feet long and priced as high as $4m. Viking began using an earlier version of SyteLine in 2001 to control operations at its production facility in New Gretna, N.J., and its customer-exclusive marina and service center in Riviera Beach, Fla.
Viking employs Infor SyteLine, part of Infor's Manufacturing Essentials suite of solutions for discrete manufacturers, to manage product configuration, inventory control, production, procurement, and financial management, while it uses Infor's Field Service-Plus software for service history, scheduling and execution. With Infor SyteLine 7, Viking will take advantage of new functionality for controlling operations in multiple sites.
Infor says the solution has allowed Viking to achieve major improvements in its operations. “Islands” of IT programs and information have been eliminated. “All the information is processed the same way and is available to everyone based on access levels,” explains John Kasinski, vice president of finance for Viking Yachts.
Options and wording on work orders have been standardized. Every option has the same name, description and number every time. “We feel that this standardization has decreased the time our supervisors spent chasing paper and following up on questions by about 40 percent,” Kasinski says.
Costing has become more accurate. Managers now can review real-time costing for any boat in the manufacturing process or in the field, improving profitability-based decision-making relating to its product line. For example, Kasinski says, “Once we were able to accurately capture the costs through SyteLine, we were disappointed in the low margins on our 43-foot product line. We discontinued that product and replaced it with a newly-designed 45-footer that became more profitable and is still in production today.”
Infor says its ERP solutions integrate every aspect of discrete manufacturing production, including master production schedules, firm planned order processing, material requirements planning, production scheduling and execution, detailed lot tracking, inventory management, multiple production reporting methodologies. Its solutions address such areas as supply chain planning, enterprise asset management, relationship management, demand management, ERP, warehouse management, and business intelligence.
http://www.infor.com

SmartForecasts for Lighting Products Manufacturer
Smart Software of Belmont, Mass., a provider of demand forecasting, planning and inventory optimization solutions, says that EYE Lighting International of North America Inc. has purchased its flagship product, SmartForecasts in an effort to improve its inventory management.
The company, located near Cleveland, manufactures and distributes high-intensity discharge and halogen lighting products to serve commercial, industrial, utility, and retail markets worldwide. It is a business unit of Iwasaki Electric Co. Ltd., a $675m, publicly traded corporation headquartered in Tokyo.
SmartForecasts reportedly is being used by marketing and forecasting personnel at EYE Lighting to analyze the company's demand patterns, as well as plan inventory levels that are appropriate to meet future customer orders. SmartForecasts provides a method to import EYE Lighting's demand history and facilitates the interdepartmental sharing of system forecast results. This permits the marketing department, for example, to receive system forecasts and then adjust them to reflect changing field marketing conditions. Besides laying the basis for a sound consensus forecast, SmartForecasts also provides EYE Lighting with accurate estimates of inventory stocking level requirements to satisfy any specified lead time and service level combination.
“At EYE Lighting, we pride ourselves on providing our customers with high-quality HID and halogen lighting products at high service levels. Our job is to make sure we have the right products at the right time to meet demand,” says Robert Petti, manager of procurement and forecasting at EYE Lighting. “Things that were difficult to do in the past, like evaluation of historical data, are much more easily accomplished since we installed SmartForecasts this past October. We've learned that much of our demand is a real challenge to predict, and SmartForecasts allows us to understand demand patterns better and more quickly, which then allows us to correctly plan our inventories to accommodate the demand volatility.”
http://www.smartcorp.com

RedPrairie Absorbs BlueCube's Forecasting Expertise
RedPrairie Corporation says it has boosted its product offering in forecasting with the recent acquistion of BlueCube Software.
“Whereas traditional supply chain forecasting drives decisions from manufacturers to the store shelf, RedPrairie, through its acquisition of BlueCube Software, is embracing and enabling a more efficient, forward-thinking, consumer-driven supply chain,” says RedPrairie company leader John Jazwiec. “By extending shelf level visibility and control downstream to manufacturing, we are creating a model in which a consumer purchase acts as the trigger for replenishment. This enables retailers to transfer inventory management responsibility to suppliers to effectively reduce inventory carrying costs and cycle times.”
Kim Eaton, BlueCube president, comments, “RedPrairie will provide BlueCube Software customers new opportunities to drive revenue through a comprehensive suite of supply chain solutions. Through this acquisition, we will be able to help customers reach further into the supply chain to connect store operations with suppliers, resulting in even greater operational control, visibility and efficiencies.”
BlueCube Software, Atlanta, reportedly serves 120 of the world's leading, grocery, retail and food service operators and has implemented its solutions at more than 25,000 sites worldwide. It says its clients are able to lower their cost of operations, optimize product inventory and labor, and enhance customer service.
http://www.bluecube.com
http://www.redprairie.com

Valogix Reports Two Forecasting, Inventory Planning Success Stories
Valogix, a developer of inventory planning and optimization solutions, says a recent reseller agreement in South Africa has paid off right away. IT service provider iServe (Pty) Ltd. of Sunninghill, Sandton, near Johannesburg, has brought Zhou's Enterprises on board. Zhou's distributes bearings, power transmission and seals to customers, manufacturers and distributors in various industries. Valogix provides advanced inventory planning solutions for finished goods and service parts and MRO inventory planning and optimization.
Professional, qualified resellers and consultants are one of the focal points of our business plan,” says Richard Vaccaro, president and CEO of Valogix. “We are very pleased to have iServe as part of our international partner community.”
Zhou's is a SAP Business One user, and Kimberleigh Yeomans of iServe says, “SAP Business One in conjunction with the Valogix Inventory Planner provides a comprehensive inventory forecasting, materials requirement planning, stock optimization and order recommendation system. Zhou's not only required a solution that would help them manage their inventory planning and procurement, but a system that would also provide dynamic information on the stock levels and future requirements in each branch in order to generate more accurate order recommendations for each location. Valogix Inventory Planner has provided a cost effective solution which will reduce stock wastage across the organization and optimize the reorder of stock for each branch ensuring stock is not over or under procured. As this is a scalable solution, Zhou's Enterprises can build or remove functionality around it as and when required, ensuring long term business benefit.”
In a separate development, the Sarasota Springs, N.Y.-based company reports that Translectric, a 38-year old parts distributor for the automotive and heavy equipment industries, has replaced its Excel spreadsheets with the Inventory Planner.
With an inventory of more than 8,000 items, the company was plagued by a high number of back-orders and other problems. Valogix says Translectric, Jackson, Mo., has since reduced its inventory by nearly $200,000 by returning stock, canceling outstanding orders and implementing new sales campaigns.
http://www.valogix.com

Surgical Instruments Manufacturer Lowers Inventory with Trade Management Tool from TradeBeam
TradeBeam Inc., which offers global trade management software and services, says that surgical tools manufacturer Stryker Instruments has reduced inventory by 30 percent with TradeBeam's vendor-managed inventory application.
Faced with the challenge of sharing real-time forecast and consumption rate data information with suppliers, Stryker suffered inflated inventory levels, stock-outs and a variety of time-consuming supply chain administrative issues and costs. Stryker needed to give its U.S. and overseas suppliers a window into the division's data without administering a costly EDI solution. The organization was looking for more efficient scheduling and replenishment processes, as well as a means of rating supplier performance.
TradeBeam says its application enables vendors to see the supply chain process from end to end, while allowing them to use a Web browser to provide advanced shipping notice and promise-to-ship information to customers. It uses active alerting technology to allow proactive event-based management of the direct material supply chain.
The system has helped Stryker reduce its direct material inventory by 30 percent. Just as important, its suppliers also have gained efficiencies. By having complete visibility of supply and demand activities for their components, suppliers are able to design more efficient manufacturing scheduling, replenishment and shipping processes. In some cases, suppliers have been able to reduce their component inventories by as much as 25 percent.
“We are leveraging information from Stryker that we never had before, and we are importing it directly into our production system,” said John Macchia, president, Advance Turning & Manufacturing. Inc. “As a result, we have reduced our inventory levels, dramatically improving our production schedules for parts to Stryker Instruments. Thanks to TradeBeam, we now have complete visibility for our outgoing shipments.”
http://www.tradebeam.com

Planning Institute Sets Two-Day Seminar
A two-day session in forecasting will be offered by the Institute for Business Forecasting Aug. 28-29, 2006, at the Radisson Hotel in Chicago.
Entitled "Business Forecasting: A Tutorial," the event promises to show attendees how to design a forecasting process, measure forecasting performance, and use forecasts to reduce inventory. Additionally, the impacts of sales and operations planning and CPFR will be studied.
http://www.ibf.org

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