A few random supply chain observation that may be of interest…
The Digitization of more and more physical goods generates two related thoughts in my mind. The news this week that Apple is launching a full-length DVD download service is likely to juice the video on-demand market in a way that existing efforts have not been able to ignite.
What it means ultimately is that supply chain and logistics professionals involved in the physical movement of products than can be digitized (mostly media and software-related products now: CDs, DVDs, music, desktop software, etc.) should be looking to broaden their skills sets, as it just seem inevitable that most of that movement will just go away. Books, magazines, newspaper, financial documents, etc. – the huge relative cost of physical distribution and the overwhelming preferences of younger customers for digital media means more and more goods that can be distributed digitally will be.
I occasionally wonder too whether supply chain and logistics/distribution professionals should play any role in electronic distribution. Once a product becomes digitized, are distribution processes and decisions now only under the province of IT and marketing?
Probably so, but a new discipline of “electronic distribution” will probably emerge somewhere…do any traditional logistics concepts apply?
Speaking of new disciplines, in our excellent Supply Chain Videocast™ yesterday on “Low Cost Country Sourcing Revisited,” Ariba’s Tapan Pandya made the point that the potential savings from offshore/Low Cost Country Sourcing initiatives often fail to materialized because the execution is left to buyers without the right skill sets to see the implementations through. I’ll add that often the implementation responsibilities are very distributed across sourcing, manufacturing, logistics, the import/export/trade group, etc., and a lot of dollars simply fall through those seams.
The on-demand version of the Videocast will be available for you tomorrow. Check www.scdigest.com.
We’ll be writing in the next few weeks about Service Oriented Architectures, or SOA, and what it means to supply chain and logistics managers. But an interesting angle has already emerged. As Gartner’s Andew White commented to us last week on our story about i2 suing SAP over potential violations of i2 supply chain software patents, as vendors (slowly) move to SOA-based software platforms, the potential for real issues with regard to software intellectual property and licensing are likely to emerge, and end users will be caught up in them.
To quickly summarize, in SOA-based systems, functionality (at various levels) can be “exposed” as services and usable by other services in the core application – or external applications. So, for example, if a Warehouse Management vendor has a service component that does inventory allocation, can a customer – or even another third party application – build a piece of software that uses that service? In effect, leveraging the originating vendor’s development for free?
It’s a tricky issue, and I don’t believe any of the vendors have really thought about this from a licensing or contractual basis. Nor am I sure what the right policies should be, if any. Stay tuned on this one...
A few weeks ago, Information Week magazine ran a cover story on “ERP Gets a Makeover,” featuring a cover illustration of a pig wearing new lipstick (which probably generated a few phone calls from ERP providers). There were guarantees from Oracle, SAP, Micosoft and a few others that the new (SOA-based, by the way) generation of ERP will be easy to use, integrate, adapt, etc. We’ll see. The reality, I think, is that ERP is no worse or harder than any other software (that doesn’t mean it is as functionality rich in specific areas such as supply chain), but the scope and pervasiveness of the never ending installs magnify everything.
The multi-billion dollar question, of course, is whether we’ll be down to just a few ERP vendors and not many other software/best-of-breed providers, or will the more open approach enable best-of-breed applications to plug and play much easier? Everyone seems to agree there will be some new era post the current ERP one – there always is – but no one seems to know what it really will look like. My own take: you are never going to stop the desire for innovation, so companies will always in part look to solutions outside those provided by the same ERP vendor thousands of others have to gain competitive advantage. However, I do believe in the mid-term you will have a scenario almost like the old IBM mainframe days, where there will be a collections of vendors certified to run say on SAP’s Netweaver platform, and you will only choose from those if you are an SAP shop…
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Do you think traditional supply chain has any role in digital distribution? Do we need a clear sub-discipline of global sourcing implementation in supply chain? Can you see IP issues emerging with SOA-based applications? What will be beyond the current ERP paradigm?