SCM in a New Flavor: Real Time and Demand Driven
Written By: Hans Mercx
Published On: October 14 2005
The current market is becoming more demand-driven and the need for real time decision support capabilities in the supply chain is inevitable. As a result, service oriented vendors are emerging. They are developing solutions through next generation applications with customization, workflow, extensible markup language (XML), and third-party integrated software that is embedded in their applications. These vendors have a greater, real time, demand-driven scope, and can better meet the new demands in the market.
The market is currently driven by service oriented architecture (SOA), which provides a methodology enabling developers to orchestrate and document an enterprise's capability to support the integration of different modules. SOA is believed to help businesses respond more efficiently and effectively in the changing environments and conditions organizations face.
The main benefit of a SOA is how it defines and delivers services. A service can be seen as a function that is defined and does not depend on the context or state of other services. SOA can be used in Web services with languages like XML, a standard format that is used to share data over the Internet.
Traditional supply chain management (SCM) solutions that do not use SOA can be problematic because implementations may take a lot of time, and because "out of the box" solutions need a lot of attention, customization, and modification to meet the client's needs. With the SOA approach, vendors can adapt to the functional requirements of organizations a lot faster.
Apptricity is one such company that uses SOA in its solutions. It was founded in 1999 in response to a growing concern among corporations over the costs and inefficiencies of enterprise software deployments. It offers off-the-shelf solutions with dynamic adaptability for the SCM market. Solutions include Supply Chain Apptricity for SCM, Supplier Apptricity for supplier relationship management (SRM), and Employee Apptricity, to manage workforce assets. The company has several offices in the US, and is headquartered in Irving, Texas (US) and its solutions are being used in several different industries, including energy, financial services, health care, manufacturing, and transportation and logistics.
Enterprise Apptricity for Energy automates supply chain transactions to increase visibility and communication between departments, either internally or externally. The Financial Services Module automates the service, product, or solution offering and its associated transaction flow cycle, from setting up a new account to the authorization and approval phase. The Health Care Module automates resources scheduling and processes to optimize the use of facilities and personnel, and control procurement expenditures. The Transportation And Logistics Module reduces the time spent on employee data entry, scheduling, price, and quantity reconciliation by automating the shipment cycle and the associated transaction flow.
The vendor focuses on value chain and human capital management applications to drive strategic transactions both outside and within a company and specializes in workforce component of SCM, SRM, and employee expense management. Its framework has modules that can be build on top of its narrow point application. The peripheral areas within Apptricity's SCM solution are schedule management and asset management and in the manufacturing industry, Apptricity focuses on automating the procure-to-pay and order-to-cash cycle to shorten the transaction time and increases internal control.
Apptricity seeks to differentiate itself from traditional vendors by using SOA, which allows it to leverage object-oriented architecture in an advanced framework. SOA creates an open, scalable, and flexible solution that adapts dynamically to complement and extend any legacy mainframe infrastructure or contemporary ERP suite. By using a SOA oriented solution, the time to implement and integrate with legacy systems will be reduces which results in a lower cost to implement and a faster Return On Investment (ROI). Traditional ERP vendors have long depended on their large professional services organizations and system integrator partners to configure and often re-develop and reinvent their solutions on a customer by customer basis only to reinforce the customers pain. Coining the software as "Dynamic Adaptability," the vendor claims to eliminates the cyclical reinvestment in professional services cost which is associated with upgrades and new purchases from the traditional ERP vendors.
For more information see SOA-based Applications and Infrastructure—The Next Frontier?
Apptricity has developed a platform, called Advanced Framework, which gives a company the ability to adapt any module within an organization's current structure, using the organization's best practices or business rules. Advanced Framework uses integrated customization, rule building, and workflow tools to conform to the organization's business requirements. Java classes are automatically compiled, based on the changes that are made. Additionally, all applications operate with an engine that leverages XML, which streamlines and enhances interface connectivity. This provides a fast integration with different interfaces and legacy and third-party systems. Its framework supports the most current security measures, operating systems, database, application servers, browsers, and hardware platforms. It also includes a built-in interface repository of a wide variety of ERP and payroll systems. All the modules are Web-based, and use the concept of hosted applications.
Apptricity and TXU Corporation
One of Apptricity's main modules is the spend management module. It has been successfully implemented at several client sites, including TXU Corporation (TXU). TXU is a Dallas-based (US) energy company, that manages a portfolio of competitive regulated and unregulated energy businesses primarily in Texas, but also throughout North America. For the company's unregulated business, TXU Energy provides electricity and related services to more than 2.4 million competitive electricity customers in Texas, more customers than any other retail electric provider in the region.
In order to accommodate its aggressive growth objectives during the deregulation of the energy sector, TXU moved to a shared services model with the goal of consolidating procurement practices company-wide, and to improve the management of its supplier relationships.
Streamlining business processes related to vendor invoicing and employee spend was paramount to TXU. TXU's vision for creating cost-saving efficiency was similar for both internal and external transactions. It wanted to eliminate the manual, paper-based process for submitting, processing and reconciling procurement transactions through web-based automation and enable a unified approach for automating spend transaction for vendors and employees, whether the purchases are product or service oriented.
According to TXU, it was able to leverage Apptricity's solutions to process approximately $1 billion (USD) non-capital procurement transactions in the first year. The implementation also resulted in process improvements such as improved process compliance, faster procure-to-pay turnaround, and maximized use of personnel time. TXU was able to replace several of its in-house applications with a Web services based solution and implement a common front-end interface and back-end integration for its financial services, and it now has a system that can facilitate Sarbanes-Oxley compliance.
Currently Apptricity's does not have all the functionality in place to make it a full SCM suite. As it stands, Apptricity is currently floating between the ERP and SCM industry, and does not offer a full suite on either side. However, needs to focus on the analysis functionality and asset management. Apptricity's CEO, Tim Garcia, plans to forge ahead with its current roadmap: "We have built dynamic adaptability into our architectural framework so customers can continue to invest in building its best practice and competitive advantage, rather than spend time and dollars feeding the traditional ERP vendors consulting practices."
For organizations that are currently looking for SCM functionality that is easy to implement, and based on an open concept with a smooth integration to several legacy systems, an SOA-based solution like Apptricity's may be an option. Make sure you take into consideration any future ERP and SCM functionality that might be of importance to you and that this functionality is also available. This will ensure that you have an integrated solution.